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DTSA opens federal courthouse doors

Gavel to Gavel

published in The Journal Record | June 29, 2016

Gavel-to-Gavel_feature

By Jessica John Bowman

In May, President Obama signed into law the Defend Trade Secrets Act of 2016, which permits trade secret owners to seek relief for trade secret misappropriation in federal court.

Although the DTSA provides rights and remedies that are similar to those that were previously available – and remain available – under state law, there are a few key elements of the act that all trade secret owners should be aware of when considering whether to take advantage of the new federal legislation.

First, the DTSA permits a trade secret owner, upon the submission of a verified complaint satisfying certain requirements, to obtain an order for the seizure of goods and property. This relief is available only in extraordinary circumstances and requires a showing that alternative forms of equitable relief, such as an injunction, are unlikely to be effective.

A trade secret owner who obtains such relief will be required to appear for a hearing within seven days of such a seizure. As a result, any company that may seek this remedy should take steps now to ensure that all documentation concerning its trade secrets, its methods of protecting those trade secrets and any other materials necessary at such a hearing are up-to-date and readily accessible.

Second, the DTSA permits a trade secret owner to recover exemplary damages and attorney’s fees in certain extraordinary circumstances. However, to be eligible to obtain such relief, the trade secret owner must first update its contracts governing the use of trade secrets to include a provision notifying its employees, contractors and consultants that they will not be liable for trade secret misappropriation if they disclose a trade secret to an attorney, law enforcement officer, or government official solely for purposes of reporting or investigating a suspected violation of law or making a complaint or filing a legal document under seal in a legal proceeding.

The DTSA provides a new forum, new remedies, and the hope of uniformity to trade secret owners seeking to police their intellectual property. Be sure to take these steps to ensure that the new forum and new remedies are available to you.

This article appeared in the June 29, 2016, issue of The Journal Record. It is reproduced with permission from the publisher. © The Journal Record Publishing Co.