Trade Secrets

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On Wednesday, President Obama signed the federal Defend Trade Secrets Act of 2016 (the “Act”) that passed both houses of Congress in late April.  The statute is the first federal statutory protection afforded to trade secrets and could have a significant impact on trade secrets litigation nationwide.  The passage of the law comes as no surprise, and much has already been written about what it means for the future of these disputes.  But what about those who are currently involved in trade secrets litigation —could the Act change the course of those cases?  There is not a definitive answer, but it is something that all litigants should consider now that the Act has become law.

The first question is whether the Act applies at all in such instances. The Act applies to “any misappropriation of a trade secret (as defined in section 1839 of title 18, United States Code, as amended by this section) for which any act occurs on or after the date of the enactment of this Act.” S. 1890, 1144th Cong. § 2(e) (emphasis added). “Misappropriation” is defined as “(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (B) disclosure or use of a trade secret of another without express or implied consent.  18 U.S.C. § 1839(5).  So, in litigation where the “use” of trade secrets is ongoing, there may be an argument that the Act applies.
Continue Reading Impact of Defend Trade Secrets Act on Pending Cases is Unclear

On May 11, 2016, President Obama signed into law the Defend Trade Secrets Act (DTSA). Unlike other forms of intellectual property, trade secrets issues have been addressed mainly through state law. The DTSA provides a new federal court civil remedy for acts of trade secret misappropriation, among other key provisions:

Ex Parte Seizure of Property

The most controversial aspect of the DTSA is the ex parte seizure provision, which permits a court to order the seizure of property if deemed necessary to prevent the propagation or dissemination of the trade secret. A party seeking an ex parte seizure will have to demonstrate that “extraordinary circumstances” exist warranting the seizure. The ex parte provision also allows a defendant to seek damages for abusive or wrongfully-acquired seizure orders.

Jurisdiction

The DTSA provides that the U.S. district courts have original jurisdiction over civil actions brought under the law. Such jurisdiction is not exclusive. To establish jurisdiction in federal court, a plaintiff will have to show that the trade secret is “related to a product or service used in, or intended for use in, interstate or foreign commerce.”
Continue Reading President Obama Signs the Defend Trade Secrets Act into Law: What You Need to Know Now