In Seyfarth’s sixth installment, attorneys Robert Milligan, Daniel Hart and Amy Abeloff, described the key features of the Defend Trade Secrets Act (“DTSA”) and compared its key provisions to the state Uniform Trade Secrets Act (“UTSA”) adopted in many states. They also provided practical tips and strategies concerning the pursuit and defense of trade secret cases in light of the DTSA, the handling of employment relations, and provided some predictions concerning the future of trade secret litigation.
As a conclusion to this well-received webinar, we compiled a summary of three takeaways that were discussed during the webinar:
- The DTSA was passed after many failed attempts to pass trade secret legislation allowing for a federal cause of action for misappropriation. The bill was passed with overwhelming bipartisan, bicameral support, as well as backing from many significant companies in several business sectors. The DTSA now allows trade secret owners to sue in federal court for trade secret misappropriation, and seek remedies heretofore unavailable, including an ex parte seizure order.
- The DTSA contains an immunity provision that protects individuals from criminal or civil liability for disclosing a trade secret if such disclosure is made in confidence to a government official or attorney, indirectly or directly. The provision applies to those reporting violations of law or who file lawsuits alleging employer retaliation for reporting a suspected violation of law, subject to certain specifications (i.e., trade secret information to be used in a retaliation case must be filed under seal). The DTSA places an affirmative duty on employers to give employees notice of this provision in “any contract or agreement with an employee that governs the use of a trade secret or other confidential information” that is entered into or updated after May 11, 2016. Employers that do not comply with this requirement lose the ability to recoup exemplary damages or attorney fees in an action brought under the DTSA.
- Though the passage of the DTSA creates a new federal cause of action for trade secret misappropriation, the passage does not render state law and state causes of action irrelevant or unimportant. The UTSA is still an available cause of action in 48 states, and state law still plays a vital role in drafting non-disclosure and non-competition agreements. Additionally, under the DTSA, employers may be able to seek injunctive relief against former employees in the event of misappropriation, but such injunctive restrictions must comport with relevant state law.