The Defend Trade Secrets Act of 2016 (the "DTSA") was enacted by the U.S. Congress and signed into law by the President on May 11, with immediate effect. The DTSA co-exists with state trade secret laws, but provides nationwide uniformity that was lacking before its adoption.

The DTSA bolsters the protections available to owners of trade secrets in several key ways:

  • Enabling owners of stolen trade secrets to bring a civil action for damages and other remedies in federal court, which many view as a more sophisticated venue for intellectual property claims than most state courts.
  • Enhanced remedies, including injunctions, increased monetary damages for intentional trade secret theft by entities, and the possibility of double damages for willful and malicious theft.
  • A mechanism in certain cases for law enforcement officials to recover stolen trade secrets and bring them within the custody of the court to prevent their dissemination, followed by an expedited hearing.
  • Procedures to safeguard the confidentiality of trade secrets disclosed during litigation.
  • Increased criminal penalties for foreign economic espionage and trade secret theft.

Whistleblower Immunity Notice Required

The DTSA immunizes individuals from criminal and civil liability under federal and state trade secret law for the disclosure of a trade secret: (a) in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law or (b) in a document filed under seal in a lawsuit or other legal proceeding.

Employers are required to include notice of that immunity in any agreement entered into with an employee, consultant or independent contractor that governs use of trade secrets or other confidential information. Alternatively, notice may be given by cross-reference to a company policy document that is provided to the employee, consultant or independent contractor.

Failure to include such a notice will bar the employer’s right to recover exemplary damages and attorneys’ fees in a legal action for trade secret theft against an employee, consultant or independent contractor who should have received the notice.

Extraterritorial Application

The DTSA applies to conduct occurring outside the U.S. if: (a) an act in furtherance of the offense was committed in the U.S. or (b) the offender is a citizen or permanent resident alien of the U.S. or an entity organized under the laws of any state or other political subdivision of the United States.

This information is intended for the convenience of our clients and other visitors to our website,
and does not constitute legal advice or fully explain all provisions of applicable law.