The Defend Trade Secrets Act (DTSA), signed into law in 2016, establishes a federal civil cause of action for trade-secret misappropriation, allowing businesses to take their cases to federal court when their trade secrets — such as proprietary formulas, designs, or business strategies — are stolen or improperly used. This law provides a unified legal framework across states, which previously (and still do) generally had varying trade-secret laws, offering businesses a more consistent way to enforce their rights as an employment litigation lawyer can explain in more detail:
DTSA
The DTSA defines a “trade secret” broadly, including a wide range of business, scientific, and technical information that has economic value because it’s not publicly known. For information to be considered a trade secret, it must be protected by reasonable measures and derive value from its secrecy. Misappropriation occurs when this information is acquired or used without authorization, often through improper means such as theft or breach of trust.
One of the key features of the DTSA is the civil seizure mechanism. This allows companies to request a court order to seize property to prevent further dissemination of stolen trade secrets before a final court decision is made. However, this provision is only applicable in extraordinary circumstances where immediate harm could occur.
The law also includes important protections for whistleblowers, granting immunity to employees who report trade secret violations to attorneys or government officials.
The DTSA provides businesses with several legal remedies, including injunctive relief, monetary damages, and, in cases of willful or malicious misappropriation, double damages and attorney’s fees. Courts may grant injunctions to prevent further use or disclosure of misappropriated trade secrets, and companies can recover actual losses as well as unjust enrichment gained by the wrongdoer as our friends at Exhibit G Law Firm can share.
Additionally, businesses should be aware that while the DTSA offers significant federal protections, it does not preempt state trade secret laws. Many states still operate under the Uniform Trade Secrets Act (UTSA), which shares similarities with the DTSA but may differ in application and enforcement. Companies should develop comprehensive trade secret protection strategies that align with both federal and state regulations.
To ensure compliance with the DTSA and maximize protection, businesses should implement strong security measures such as confidentiality agreements, restricted access to sensitive data, employee training on trade secret policies, and regular audits to assess risks. Being proactive in safeguarding trade secrets can mitigate the risk of misappropriation and strengthen a company’s legal standing in case of a dispute.
Furthermore, businesses engaged in litigation under the DTSA should work with experienced legal counsel to work through issues such as defining trade secrets, proving misappropriation, and assessing damages. Given the potential for significant financial and reputational harm from trade secret theft, swift and strategic legal action is often necessary to protect proprietary assets.
While this is a general overview, the DTSA includes several additional provisions, including those related to damages, injunctions, and reports to the Attorney General. The law provides a robust toolkit for U.S. businesses to safeguard their intellectual property against theft and misuse, though there are some nuances and additional details not covered in this summary. Businesses should familiarize themselves with the full scope of the DTSA to effectively leverage its protections.
Contact a lawyer today if you need assistance with protecting your trade secrets or navigating the complexities of the Defend Trade Secrets Act.