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Trade Secrets Bill Proceeds to President's Desk

On April 27, the House of Representatives by a 410-2 vote passed the Defend Trade Secrets Act (DTSA), which creates a federal cause of action for trade secret misappropriation, providing trade secrets with a degree of protection akin to other forms of intellectual property. The Senate passed the bill earlier this month by a unanimous 87-0 vote.  President Obama is expected to sign the bill into law. The bill gained over 155 cosponsors, with endorsements across sectors, including leaders in the fields of technology, life sciences, manufacturing, energy, automotive, agricultural, and telecommunications.

If enacted, the DTSA would amend the Economic Espionage Act to provide a federal cause of action to allow trade secret owners to file civil actions in U.S. district courts for trade secret theft, provided the trade secret is “related to a product or service used in, or intended for use in, interstate or foreign commerce.” In addition, under the DTSA, an owner may request that the court issue an order providing for the seizure of property if necessary to prevent the propagation and dissemination of the trade secret during the pendency of the action. The DTSA would not preempt existent state law.

The bill expresses Congress’ sense that trade secret misappropriation occurs around the world, including within the United States, and harms both the companies that own the trade secrets, as well as the employees working for those companies. Therefore, the bill balances the need to prevent or remedy theft with the need to respect third parties and the “legitimate interests of the party accused of wrongdoing.”

The statute of limitations under the DTSA is three years from the date the misappropriation is discovered, or should have been discovered via the exercise of reasonable diligence. Within two years of enactment, the Federal Judicial Center is required to use existing resources to develop “recommended best practices for (1) the seizure of information and media storing the information; and (2) the securing of the information and media once seized.” These best practices will be updated from time to time. 

© 2019 Bracewell LLP


About this Author

Jeffrey B. Andrews, Bracewell Outsourcing matters Attorney, Technology Transactions lawyer,

Jeff Andrews’ broad transactional practice focuses on outsourcing, sourcing and technology transactions. He is best known for structuring and negotiating complex domestic and international information technology and business process outsourcing agreements. Jeff has assisted clients in outsourcing all major business functions and operations. He has negotiated opposite every major multinational and Indian outsourcing service provider. His clients span a wide range of industries, including energy, financial services, consumer products, retail, manufacturing, pharmaceuticals...

Erin Hennessy, trademark, copyright attorney, Bracewell law firm

Erin Hennessy is a partner in Bracewell's Technology Group and is the head of the firm’s Trademark and Copyright practice. Her practice focuses on trademark law, copyright law, and internet and social media issues spanning many industries including media, publishing, technology, retail, fashion, and financial services.  Having served as a former chief trademark counsel in-house, she brings an innate business sense and first-hand insights to her practice.

Erin counsels clients on all aspects of IP with a particular emphasis on supporting legal, business and marketing teams with branding issues facing their businesses.  She handles worldwide trademark matters including trademark counseling, clearance, registration, protection and enforcement, domain name and internet issues, litigation, licensing and transactional work. She has worked on various policy issues such as the launch of the new gTLDs, trademark dilution, domain name tasting, and cyber-squatting. She has served as lead trademark counsel on major corporate transactions such as the $9.6 billion spin-off of Time Warner Cable from Time Warner Inc. and the $2.6 billion divestiture of Warner Music Group.