DTSA Legislation Opens Federal Courts for Pursuit of Trade Secret Claims

06/29/2016 / James Quinn

New legislation will now give companies an opportunity to pursue claims in federal court in cases of trade secret disclosure. On May 11, President Obama signed the Defense of Trade Secrets Act of 2016 (the “DTSA”), which Congress passed in April. Before the legislation was signed, trade secret claims were only heard at the state court level.

Broad Application

Like many other areas of law, the protection of trade secrets has been subject to a patchwork of state enactments. The new law applies to trade secrets related to goods and services that travel in interstate commerce, which is essentially everything. While it won’t replace state laws, it will give injured parties access to federal courts and some remedies that had not always been available previously.

In addition to an injunction to prevent a loss, the DTSA provides for the recovery of actual damages, special damages, and attorneys’ fees. In exceptional cases, the DTSA also allows for the seizure of materials without providing a hearing to the alleged perpetrator. Time will tell how the courts interpret and enforce this new law (some lawsuits have already been filed in response to the legislation). For now, employers should consider revising employment agreements to include specific language about employee immunity in connection with whistleblower activity and disclosure of trade secrets.