On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 (DTSA), which amended the Economic Espionage Act of 1996 to create a federal civil remedy for trade secret misappropriation.
The DTSA governs misappropriations occurring after the effective date of May 11, 2016.
Although trade secret theft has been a federal crime since 1996, civil claims for trade secret misappropriation were almost always governed by state law. A corporation unable to establish a basis for federal jurisdiction was thus limited to state court. Although every state but two has adopted a variation of the Uniform Trade Secrets Act, these statutory variations and differing court interpretations created uncertainty in the application of trade secret law, an area of growing importance for companies increasingly dependent on electronic security.
The DTSA defines the term misappropriation broadly to include disclosure or use of a trade secret of another without express or implied consent, as well as acquisition of a trade secret by one with reason to know the trade secret was acquired by improper means.
In tandem with the ability to pursue all wrongdoers with reason to know they are using trade secret information, providing companies the option of litigating in federal court under what practitioners believe will be an increasingly uniform body of trade secret law will make the civil pursuit of trade secret theft a far less arduous course for companies.
On Friday, June 17, 2016, the Government Compliance, Investigations & Litigation team filed one of the first lawsuits ever brought under the DTSA on behalf of Monsanto Company.
After a surprise resignation by a key employee, Monsanto discovered that the employee’s computers were loaded with highly sophisticated and unauthorized software that could be used to perform reconnaissance of Monsanto’s secure electronic environment, exfiltrate data, and conceal activity on the device. Monitoring the final days of the employee’s time with Monsanto, the company discovered that at 3:47 a.m. on Friday, June 10, 2016, fifty-two files containing trade secret information were removed from its secure environment through the unique account access credentials assigned to the employee.
Husch Blackwell filed a Complaint against the employee and any other individuals with whom he was acting in concert. The DTSA also specifically provides injunctive relief. On that basis, HB sought and obtained for Monsanto a temporary restraining order against the individual requiring him to return all trade secret information ever misappropriated by him, prohibiting him from using or disclosing any misappropriated trade secret information for any purpose, and compelling him to identify all of his cloud data storage accounts, as well as providing user names and passwords for those accounts to allow Monsanto to recover its confidential business information and trade secrets.
Protection of trade secrets belonging to American companies and entrepreneurs was the primary purpose of the DTSA. In this instance, the employee had recently interviewed with an agricultural company in China, so the statute’s key aims—protection of American innovation and jobs—may have been promoted by Monsanto’s lawsuit and restraining order.