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Federal Trade Secrets Act Passes Senate

Senate unanimously passed the Defend Trade Secrets Act (“DTSA”) — a bill that would allow companies to pursue trade secret theft through civil litigation in federal court. This long-awaited measure is a major step towards elevating trade secrets to the level of federal protection enjoyed by the other intellectual property, such as patents, copyrights, and trademarks. Currently, if companies want to sue for trade secret theft, they are generally relegated to state courts where there is a patchwork of inconsistent laws modeled after the Uniform Trade Secrets Act (“UTSA”). The DTSA would create a uniform standard for trade secret misappropriation and provide companies with pathways to injunctive relief and monetary damages to preserve evidence, prevent disclosure, and account for economic harm suffered from misappropriation.

The Legislation.  The DTSA would 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. The proposed legislation defines “misappropriation” consistently with the UTSA, and provides for similar remedies, including injunctive relief, compensatory damages, exemplary damages and attorneys’ fees for willful or malicious cases of misappropriation. But the DTSA also differs from the UTSA in several important aspects that could greatly assist companies.  Most importantly, the DTSA provides a direct avenue for companies to use the federal court system to protect trade secrets. The DTSA also provides preemptive measures that companies may utilize to preserve evidence, and to thwart dissemination or theft before it occurs. For instance, companies who suspect that the confidentiality of their trade secrets may be compromised could apply for an ex parte order that allows the government to seize its trade secrets before giving any notice of the lawsuit to the defendant. This seizure protection goes well beyond what courts are typically willing to order under existing state and federal law. The DTSA’s statute of limitations period is also five years, as compared to just three under the UTSA. Additionally, the DTSA allows for treble exemplary damages and, unlike the UTSA, contains no language preempting other causes of action that arise under the same common nucleus of facts.

The Implications. Of the four types of intellectual-property rights — copyrights, trademarks, trade secrets, and patents — trade secrets are unique. Trade secrets are not registered with any federal agency, and companies currently have no direct avenue to protect them under federal law through civil litigation. The DTSA addresses these unique qualities by opening the doors of federal courts to companies looking to protect what they consider to be valuable trade secrets. If the House and Senate come together on final legislation, it would be the federal government’s most aggressive response to trade secret theft. We will keep you updated as the DTSA moves to through Congress and the White House.

© 2020 Jones Walker LLPNational Law Review, Volume VI, Number 110

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About this Author

Thomas P. Hubert, Jones Walker, Defamation Lawsuits Lawyer, Unfair Trade Practices Attorney
Partner

Thomas Hubert is a partner in Jones Walker's Labor & Employment Practice Group and a lead trial attorney for the firm's Trade Secret Non-Compete Team. Since 1989, Mr. Hubert has practiced primarily in the area of labor and employment law, as well as in areas that fall under more traditional commercial claims. Specifically, Mr. Hubert has focused on business and commercial litigation, as well as labor and employment (including commercial contracts, Unfair Trade Practices Act, Trade Secret Act, covenant not to compete agreements, defamation, errors and omissions for...

504.582.8384
Joseph F. Lavigne, Jones Walker, unfair trade practices lawyer, noncompete violations attorney
Partner

Joe Lavigne is a partner in Jones Walker's Labor & Employment Practice Group and a lead trial attorney for the firm's Trade Secret Non-Compete Team. His practice focuses on prosecuting and defending claims of employee misconduct including trade secret violations, unfair trade practices, noncompete violations, invasion of privacy, Computer Fraud and Abuse Act, and theft. He also advises clients on employment policies and practices and negotiates employment agreements for employers. 

504.582.8610
P.J. Kee, Jones Walker, trade secret theft attorney, computer fraud lawyer
Associate

P.J. Kee is an associate in the firm's Labor & Employment Practice Group and a member of the Trade Secret Non-Compete Team. His practice focuses on protecting clients from—as well as defending clients against alleged—trade secret theft, computer fraud and abuse, unfair competition, conspiracies, and non-compete violations. He regularly litigates cases involving these disputes in both state and federal courts, and has been on trial teams that have not only successfully obtained and fended off injunctions, but also prevailed on the merits at trial. Recently, he was...

504.582.8230