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Obama Signs the Defend Trade Secrets Act Providing Federal Jurisdiction for Civil Claims

Publications - Client Alert | May 18, 2016

Last Wednesday, President Obama signed the Defend Trade Secrets Act (DTSA) into law as an amendment to the Economic Espionage Act. The DTSA allows owners of trade secrets to bring civil causes of action in federal court for theft of trade secrets related to a product or service that is used in, or intended to be used in, interstate or foreign commerce. The new law provides enhanced enforcement techniques by permitting courts to issue ex parte seizure orders in extraordinary circumstances to prevent the dissemination of trade secrets. Other provisions of the law have a limiting effect, including provisions preventing injunctions that limit employee mobility, protecting whistleblowers who disclose trade secrets, and permitting damages for abuse of a seizure order.

The DTSA largely embodies provisions of the Uniform Trade Secrets Act and is expected to create a more consistent and predictable body of trade secrets case law. Currently, the state-by-state application of the Uniform Trade Secrets Act has led to inconsistent results. The DTSA vests the federal court with original jurisdiction, but it does not preempt state trade secret laws.

An important aspect of the DTSA for businesses is its requirement to include a notice provision in any agreements or contracts with employees, consultants or contractors that are formed or updated after enactment. The notice is intended to alert employees that they are immune from liability for delineated disclosures of trade secrets. Failure to comply with the notice requirement prohibits a company from being awarded attorneys’ fees and exemplary damages, which otherwise may be available under the DTSA.

Additional Information

For additional information about DTSA, or to discuss protecting your intellectual property assets, please contact your Kutak Rock attorney, the authors of this client alert or one of our intellectual property lawyers listed below.