On May 11, President Obama signed the Defend Trade Secrets Act (DTSA) of 2016, providing a federal cause of action for misappropriation of trade secrets. Until now, companies suing to defend their trade secrets had to resort to state courts. While most states have laws protecting trade secrets, outcomes under these laws were neither uniform nor predictable. The DTSA should bring some measure of uniformity and predictability to the law of trade secret protection.
Now, companies can act quickly to protect misappropriated trade secrets by applying to a federal court for a seizure order before giving notice of the lawsuit to the defendant. This would allow the government to seize the trade secrets to prevent their use. This is more protection than what most state laws provide. Further, the DTSA provides for recovery of treble damages, compared with double damages under most state laws.
The DTSA is a welcome development for companies concerned about their trade secrets in today’s highly mobile and information-driven economy. The law should provide much needed predictability and allow companies to plan more efficiently.