As expected, overwhelming support for the Defend Trade Secrets Act of 2016 led to its passage in the U.S. House of Representatives yesterday by a 410-2 vote. During the floor debate, one Congressman noted that “Congress has the responsibility to give industries the tools they need to protect their intellectual property and, in turn, encourage job creation and economic growth. This bill takes a step forward in better protecting American innovation.” As reported earlier this month, the Senate previously passed the Act on an 87-0 vote. The Obama Administration has voiced strong support for this Act, which the President is expected to sign.
The Act provides a truly uniform, nationwide set of standards for protecting trade secrets, plus a private right of action to sue in federal court. By creating a private right of action in federal court, the Act seeks to harmonize the varied state-by-state implementations of the Uniform Trade Secrets Act and other state law currently governing trade secret disputes.
Importantly, like the Senate version of the bill, the House version also includes a whistleblower immunity notice provision, which allows limited disclosure of a trade secret by an employee when reporting a suspected violation of the law. Under the Act, any employee contracts or policy documents governing the use of trade secrets entered into or updated after enactment should provide notice of the whistleblower immunity provision. Compliance with that notice requirement also includes an employer’s “cross-reference to a policy document provided to the employee that sets forth the employer’s reporting policy for a suspected violation of the law.” Otherwise, failure to provide notice forfeits recovery of exemplary damages or attorneys’ fees for trade secret disclosure under the Act.
The Obama Administration has also voiced its continued support of increased efforts to protect trade secrets. In a Statement of Administration Policy relating to the Act, the Administration lauded bipartisan efforts as “[establishing] a federal civil private cause of action for trade secret theft that would provide businesses with a more uniform, reliable, and predictable way to protect their valuable trade secrets anywhere in the country.” Clear support from the President is a strong indicator of his signature in the near future.