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The Defend Trade Secrets Act: A Federal Remedy for the Misappropriation of Trade Secrets
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The Defend Trade Secrets Act ("DTSA"), recently passed by Congress, will soon permit companies and/or individuals with trade secrets to file civil lawsuits in federal court to remedy the misappropriation of such secrets. Thanks to DTSA, trade secrets will now receive similar federal legal protections to those that exist for patents, copyrights, and trademarks.
Prior to DTSA, companies/individuals seeking to remedy trade secret misappropriation were left only with remedies under state laws - namely, the Uniform Trade Secrets Act. (Massachusetts is one of two states not to have enacted some variation of the Uniform Trade Secrets Act; instead, Massachusetts offers a mix of common law and statutory remedies to protect trade secrets.) Now, upon receiving the President's signature, DTSA will permit the "owner of a trade secret that is misappropriated [to] bring a civil action...if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce." This right will supplement state law remedies.
The most significant additional benefit from DTSA is that a company/individual may, under extraordinary circumstances, petition the court for an ex parte hearing to seize any property containing the trade secret. For the court to allow such a seizure, however, the plaintiff must demonstrate:
- That the misappropriating party would evade, avoid, or otherwise not comply with the order of a court;
- That an immediate and irreparable injury will occur if such seizure is not ordered;
- That the harm to the applicant in denying the application outweighs the harm to the legitimate interests of the person against whom seizure would be ordered in granting the application, and substantially outweighs the harm to any third parties who may be harmed by such seizure;
- A showing that the person misappropriated the trade secret by improper means or conspired to misappropriate the trade secret through improper means;
- That the alleged misappropriating party has actual possession of the trade secret and any property to be seized;
- A reasonably particular description of the property to be seized, and, to the extent reasonable under the circumstances, knowledge of the location of the property;
- That the person against whom seizure would be ordered, or persons acting in concert with such person, would destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person; and
- That the plaintiff has not publicized the requested seizure.
DTSA also vests courts with the authority to issue injunctions (except in two circumstances) and award monetary damages. DTSA contains a three-year statute of limitations which begins to run when the misappropriation is discovered or when, by the exercise of reasonable diligence, the misappropriation would have been discovered.
If you have any questions about DTSA, please contact a member of the Labor & Employment Group.
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