Q: What is the Defend Trade Secrets Act? 

The Defend Trade Secrets Act of 2016 (DTSA) is a new federal law that, once signed by President Obama, will amend the Economic Espionage Act of 1996 and provide a private civil cause of action for misappropriation of trade secrets.

Q: Is the act already a law?

Not yet, but it is expected to be soon! The U.S. Senate passed the amended 2015 bill on April 4, 2016 and the U.S. House of Representatives approved the bill on April 27, 2016. President Obama has voiced his support for the DTSA and is expected to sign it very soon.

The act will become law immediately upon being signed.

Q: What do you need to know about the act?

  1. Original Federal Question Jurisdiction

The DTSA creates original federal question jurisdiction for theft of trade secret causes of action that will grant access to the federal courts for claims related to trade secrets used in or intended to be used in interstate commerce.

  1. State Law Preemption

Unlike the Uniform Trade Secrets Act (UTSA), the DTSA does not specifically address preemption of state law, other than as it relates to employee immunity, as discussed below.  

  1. Ex Parte Seizures of Property

Unlike the UTSA, the DTSA allows for ex parte orders to “seize property necessary to prevent the propagation or dissemination of the trade secrets [at issue].”  The act includes specific provisions designed to prevent abuse of this seizure authority.  

  1. Employee Immunity and Notice Provisions

The DTSA states that employees are immune from liability under the act for certain confidential disclosures to government officials or attorneys in connection with reporting or investigating violations of the law. However, employers must put employees on notice of this immunity or lose their right to seek attorneys’ fees and exemplary damages under the act. “Notice” may be made by cross-referencing a separate policy document.

  1. Remedies

The act also makes changes related to the inevitable disclosure doctrine, preserves existing state laws, and has new remedies and statute of limitations language.