Defend Trade Secrets Act of 2015 Passes House, Heads to President Obama’s Desk

On April 27, 2016, the Defend Trade Secrets Act (“DTSA”) passed the House of Representatives with a 410-2 vote. The two no votes were from Rep. Justin Amash (R-MI) and Rep. Thomas Massey (R-KY). Earlier this month, on April 4, the Senate passed the DTSA by a unanimous vote of 87-0. Now, the DTSA heads to President Obama’s desk for his signature.

As we previously reported, the DTSA will authorize a private civil action in federal court for the misappropriation of a trade secret that is related to a product or service used in, or intended for use in, interstate or foreign commerce. Trade secret misappropriation was formerly treated exclusively as a matter of state law, governed by versions of the Uniform Trade Secrets Act in most states. However, the Act was not enacted uniformly throughout all states. States adopted different definitions of trade secrets and different burdens of proof for misappropriation, resulting in a legal maze for one seeking to bring a trade secret misappropriation action impacting multiple jurisdictions.

The DTSA will not preempt existing trade secret state law, but rather, it will act as a uniform legal base: “[n]othing in the amendments made by this section shall be construed to modify the rule of construction under section 1838 of title 18, United States Code, or to preempt any other provision of law.” Unlike current state laws, the DTSA will provide a single definition of trade secrets and a definition of “improper means” of obtaining trade secrets. Moreover, all actions brought under the DTSA will be uniformly guided by the Federal Rules of Civil Procedure.

In addition to creating a uniform standard for trade secret misappropriation, the DTSA will also provide parties pathways to injunctive relief (including available ex parte seizure orders) and compensatory damages. Further, the DTSA will create remedies for trade secret misappropriation that are similar to other violations of intellectual property rights, for example, including exemplary damages and attorneys’ fees available in the event of willful and malicious misappropriation of a trade secret. The law will be effective on the day of its enactment and apply to any trade secret misappropriation that occurs on that date onward.

Gibbons P.C. will continue to monitor and report on the final enactment of the DTSA into law and its practical impact on trade secret litigation and enforcement in the courts.

Thomas J. Bean is a Director in the Gibbons Intellectual Property Department. This blog also appeared on the Gibbons Business Litigation Alert on May 9, 2016.
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