In Seyfarth’s third installment of its 2016 Trade Secrets Webinar series, Seyfarth attorneys Robert Milligan, Justin Beyer and Daniel Hart, provided attendees with a thorough discussion of the fundamentals as well as latest updates on the Defend Trade Secrets Act and the proposed EU Trade Secrets Directive. The panel gave insight into the limitations and benefits of the Act and the proposed Directive.
Below are three takeaways from the well-received webinar:
- With the passage of the Defend Trade Secrets Act by the U.S. Senate, look for the House to act on the bill before the election. The House bill presently has 127 supporters. The President has already indicated that he will sign the Senate’s version of the bill. There are significant additions to the Senate bill that are not presently contained in the House bill, including a whistleblower immunity provision, a shorter statute of limitation (3 years v. 5 years), lower exemplary damages (2 times v. 3 times actual damages), as well as increased criminal penalties for a violation of the Economic Espionage Act and it also includes portions of the DTSA as predicate offenses for the RICO Act.
- Because the Senate’s version of the Act contains language requiring that an employer include information relating to whistleblower immunity for employers to obtain exemplary damages, it is important for employers to monitor the final bill and determine how, if at all, the reconciliation process addresses this language as it relates to employers’ pre-existing employment contracts. Further, and to the same point, assuming the Bill passes, employers will need to evaluate whether offering supplemental language through a notice relating to the whistleblower immunity provision (which would be appended to an employment agreement) is sufficient to trigger the Senate’s exemplary damage language or whether they will need to enter into new agreements. This only underscores an important point to anyone maintaining employment agreements which contain restrictive covenants: it is imperative for employers to monitor applicable state and federal law to best preserve and maintain their rights and employment agreements.
- Later this week, the European Parliament is scheduled to vote on the revised compromise text of the European Commission’s proposed directive on trade secrets protection. If the Parliament approves the proposed text (as it is widely expected to do on a first reading) and if the directive is approved by the European Council (as is also expected), the directive will mark a sea-change in protection of trade secrets throughout the European Union. Once approved, each of the EU’s 28 member states will have a period of 24 months to enact national laws that provide at least the minimum levels of protections afforded to trade secrets by the directive. Assuming that the directive is approved, look for greater consistency in trade secrets protection throughout the European Union in the years ahead.