President Obama Signs Defend Trade Secrets Act

On May 11, President Obama signed the Defend Trade Secrets Act (DTSA), providing federal protection respecting trade secret misappropriation. Among key aspects of this new federal law:

1. Federal district courts are given jurisdiction for civil actions under DTSA, although not exclusive jurisdiction. In order for federal jurisdiction to lie, claimants need to show that the trade secret related to a product or service used in or intended for use in interstate or foreign commerce.
2. DTSA allows for ex parte seizure provisions, allowing courts to order the seizure of property if deemed necessary to prevent wrongful propagation or dissemination of the trade secret. However, the moving party has to demonstrate extraordinary circumstances warranting the seizure, and provides for defendants to seek damages for abusive or wrongfully-acquired seizure orders.
3. DTSA has whistleblower provisions precluding civil or criminal liability under any federal or state trade secret law for disclosures made "in confidence" to a federal, state or local government official, or to an attorney, if solely for the purposes of reporting or investigating suspected violations or in a complaint or other litigation document, if the filing is made under seal.
4. Employers are required to provide notice of DTSA's immunity provision in any contract or agreement with an employee that contains provisions governing the use of a trade secrete or other confidential information; applying to all contracts entered into or amended after May 11, 2016. Employee is broadly defined to include independent contractors and consultants.
5. DTSA includes provisions intended to address international trade secret theft, including private rights of action.
6. DTSA requires the Attorney General to biannually report to the House and Judiciary Committees on international trade secret theft affecting U.S. companies.

DTSA is sure to have immediate impacts. To what extent it helps deter trade secret theft will remain to be seen, but most immediately is certainly has important impacts upon companies' efforts to establish and maintain confidentiality policies and enforcement.