The new ex-parte seizure remedy created by the Defend Trade Secrets Act contains many hurdles that may prove highly difficult for trade secret owners to clear. Given that the DTSA does not preempt state trade secret law, trade secret owners may fare better petitioning state courts for an ex parte writs of possession or attachment instead.
Under the DTSA, a court may issue an order for the seizure of property to prevent dissemination of a trade secret upon ex parte application if the applicant proves a number of factors. These factors borrow heavily from section 34 of the Lanham Act (15 U.S.C. § 1116), which allows a court to grant an order, upon an ex parte application, providing for the seizure of goods having counterfeit marks in violation of trademark laws. Common requirements include:
- an immediate and irreparable injury would occur;
- the balance of harms favors the applicant;
- the applicant is likely to succeed on the merits;
- the person against whom seizure would be ordered, or persons would destroy, move, or hide the matter to be seized if notice were provided; and
- the applicant has not publicized the requested seizure.
Other requirements are similar, but have slight differences. These include:
- The DTSA requires a grant of a preliminary injunction or temporary restraining order to be inadequate, whereas the Lanham Act requires more generally that “an order other than an ex parte seizure order” to be inadequate;
- The DTSA requires the applicant to describe with reasonable particularity the matter to be seized and, to the extent reasonable, its location, whereas the Lanham Act requires the applicant to show that “the matter to be seized will be located at the place identified in the application.”
Finally, the DTSA has an additional requirement not present in the Lanham Act – a showing that the person against whom seizure would be ordered has actual possession of the trade secret and any property to be seized.
Despite the similarities between the DTSA and Lanham Act seizure requirements, a critical difference between the two Acts lies in their preemptive power. Although Congress promulgated both Acts pursuant to its power to regulate interstate commerce, the Lanham Act expressly forbids “state interference” with federal trademarks. 15 U.S.C. §§ 1121 and 1127 (intent clause). In contrast, the Economic Espionage Act (which the DTSA amends, and which provided a public cause of action for trade secret violations) expressly states that it “shall not be construed to preempt or displace any other remedies, whether civil or criminal, provided by … State… law for the misappropriation of a trade secret”, 18 U.S.C. § 1838, and the DTSA reaffirms this principle, stating “[n]othing in the amendments made by this section shall be construed to modify the rule of construction under section 1838 of title 18, United States Code, or to preempt any other provision of law.” Therefore, litigants may continue to defend trade secrets using applicable state law.
Depending on the specifics of applicable state law, obtaining an ex parte writ of possession from a state court may be considerably easier. For example, in California, an ex parte writ of possession may be issued if the defendant gained possession of the property by feloniously taking the property from the plaintiff. Cal. C.C.P. § 512.020. Alternatively, the writ may be issued if: (1) the defendant acquired possession of the property in the ordinary course of his trade or business; (2) the property is not necessary for the support of the defendant or his family; (3) there is an immediate danger that the property will be concealed, destroyed, or transferred; and (4) the ex parte issuance of a writ of possession is necessary to protect the property. Id. Each of these two alternatives has considerably fewer requirements than the DTSA, and may afford relief in cases where the DTSA can’t.