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Pennsylvania Federal Court Explores the Contours of the DTSA

Recently, the U.S. District Court for the Eastern District of Pennsylvania determined a former employee did not violate the Defend Trade Secrets Act (“DTSA”) where she disclosed confidential information of her former employer to her husband and her attorney.

In Christian v. Lannett Company, Inc.,1 plaintiff Wendy Christian sued her former employer, Lannett, alleging violations of Title VII, the ADA, and the FMLA. In response, Lannett counterclaimed, alleging Christian violated the DTSA by misappropriating Lannett’s trade secrets.  The DTSA defines a misappropriation of trade secrets where one discloses or uses another’s trade secret without the consent of the trade-secret owner.  However, the DTSA also provides immunity for the disclosure of a trade secret “in confidence…to an attorney…solely for the purpose of reporting or investigating a suspected violation of law.”2

Here, Lannett alleged that Christian violated the DTSA by disclosing Lannett’s trade secrets to (1) her husband and (2) her attorney. Christian moved to dismiss the DTSA claims. With regard to the alleged disclosure to her husband, Christian argued that any alleged disclosure predated the DTSA’s effective date and, thus, she did not violate the DTSA as a matter of law. The Court agreed, reasoning the DTSA does not provide for retroactive enforcement.

Similarly, Christian’s disclosure to her own attorneys in discovery -- coincidentally carried out one day after the DTSA’s effective date – also did not amount to a misappropriation under the DTSA.  Indeed, the “disclosure” of Lannett’s trade secrets was made to her own attorneys pursuant to a discovery order of the Court, and, further, Lannett had not pleaded any facts showing that Christian’s attorneys intended “to use or disclose the purported trade secrets they acquired to anyone other than Defendant, to whom the trade secrets belong.”

Though it is imperative for employers to protect their proprietary information and trade secrets, this case serves to remind employers to think carefully about their business objectives prior to raising DTSA claims.  Employers considering whether and how to best protect their trade secrets and proprietary information would do well to consult counsel. 


1. No. 2:16-cv-00963-CDJ, E.D. Pa.

2. 18 U.S.C. §1833(b).

© Polsinelli PC, Polsinelli LLP in California

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About this Author

Kelly J. Muensterman, Polsinelli PC, Client Development Strategies Attorney, Employee Relations Lawyer,
Associate

Kelly Muensterman firmly believes that no two client issues are exactly alike, which drives his approach to tailoring advice and counsel that fits a business’s specific needs. He also knows that in the dynamic world of employment law, it is critical to understand and meet the numerous challenges that clients face. Kelly works with both private and public companies on a variety of employment law matters and supports the firm’s efforts to develop client strategies that enable them to effectively navigate challenges with regulatory, employee relations and workplace issues...

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