President Obama Signs Defend Trade Secrets Act of 2016

Today President Obama signed the Defend Trade Secrets Act of 2016 into law, culminating a three year, bipartisan effort to create a federal trade secret law that can be used by private parties in civil litigation. Until now, federal trade secrets claims could only be brought by the Attorney General of the United States. Private litigants were subject to trade secret laws which vary from state to state, with 48 states enacting some form of the Uniform Trade Secrets Act (New York and Massachusetts were the hold outs).

The DTSA creates a system which includes uniform standards for identifying trade secret misappropriation, for obtaining injunctive relief and for remedies that will apply in the event misappropriation is proven, including treble damages. The DTSA also establishes standards for the ex parte seizure of property when necessary to protect the propagation or dissemination of trade secrets. The new law further serves to protect whistleblowers who disclose trade secrets under certain circumstances. Perhaps most importantly, the DTSA opens the federal court system to trade secret cases.

Proponents of the law have long argued that that a federal civil cause of action for trade secret misappropriation was needed to address inconsistencies in state law and to combat a growing rise in trade secret theft from competitors and foreign hackers. Recent amendments to the Economic Espionage Act of 1996 which expanded the definition of trade secrets and increased penalties are a reflection of the government’s effort to tackle some of these problems using federal criminal laws. The DTSA, which is also an amendment to the EEA, rounds out that effort on the civil side by allowing for private litigants to more efficiently address civil trade secret disputes without struggling with a patchwork of state laws that in many respects were not designed to deal with modern trade secret problems.

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