Companies may soon have a new way to respond to hacking. On Wednesday, April 27, the House passed the Defend Trade Secrets Act (“DTSA”) by a vote of 410-2. The bill has already been approved by the Senate and has the Obama administration’s support, which means little stands in the way of DTSA becoming law within the next week.
If enacted, the DTSA may significantly change courts’ treatment of trade secrets and provide additional safeguards for companies that have struggled to protect such important information against rapidly evolving risks of cyberattack. Under current U.S. law, out of the four traditional types of intellectual property (IP)—patents, trademarks, copyrights, and trade secrets—only trade secrets have lacked protection with a federal civil cause of action. Instead, trade secret disputes have normally been litigated between companies in state court, landing in federal court only if the government prosecuted the thief or if another federal statute were relevant.
The DTSA would correct this, providing plaintiffs with a private cause of action to sue for trade-secret theft and pursue damages in federal civil court. Significantly, plaintiffs could also seek an ex parte order of seizure or unlimited injunctive relief – putting some real teeth into the remedy.
In passing the bill, Congress has recognized that the protections of state court are no longer sufficient given the ability of the criminal element or other countries to infiltrate company systems and steal such secrets. The DTSA offers a needed line of defense to help companies struggling to protect valuable trade secret information stored on company networks from potential cyber-intruders.
The text of the bill is available here.