The Defend Trade Secrets Act (DTSA) was signed into law by President Obama over a year ago. This legislation is a powerful tool that enables companies to bring lawsuits for trade-secret misappropriation under federal law. The DTSA amended the Economic Espionage Act of 1996 expanding trade secret protection while creating several new obligations for owners to take benefits from them. Here we briefly discuss the provisions of the Defend Trade Secrets Act (DTSA) to help you understand how you can use it to your advantage.
A Federal Cause of Action
Before the DTSA, the only option for companies seeking legal recourse for trade-secret misappropriation was to settle matters in state court. Laws protecting trade secret owners differ among states – they have different statutory guidelines for remedies and statute of limitations. With the enactment of the DTSA , a uniform nationwide legislation is now available, for companies to file a law suit in federal court and bring a federal cause of action for trade secret misappropriation. Moreover, the DTSA does not preempt any existing state trade-secret laws.
Ex Parte Seizures
Under the DTSA, if a trade secret owner can show extraordinary circumstances, they can apply for an ex parte seizure of intellectual property in order to prevent the dissemination or propagation of a trade secret. This is perhaps the most powerful remedy available to plaintiffs, especially when there is a risk the trade secret may reach overseas markets and lose its value through public disclosure. Ex parte seizures, however, require plaintiffs to meet a high threshold in order to leverage this extraordinary relief. This means a plaintiff must be able to establish other less drastic remedies are inadequate in their situation, and the court must approve their request for an ex parte seizure.
Protection to Whistleblowers
The DTSA provides criminal and civil immunity to whistleblowers who disclose trade secrets under special circumstances. If a person discloses a trade secret in confidence to a local, state, or federal government official solely for the purpose of reporting a suspected violation of law, the DTSA will provide protection against civil or criminal liability under any state or federal trade secret law. The DTSA also provides immunity to individuals disclosing trade secrets in anti-retaliation lawsuits or in a court filing, provided they disclose it to their attorney, under a seal, and pursuant to a court order.
The DTSA’s provision for the award of damages and injunctive relief is another powerful remedy for trade secret owners. Damages awarded can include:
- Actual losses the plaintiff suffered because of trade secret misappropriation;
- Unjust enrichment caused due to trade secret misappropriation not addressed in calculating damages for actual loss; and
- In the case of willful and malicious misappropriation of a trade secret, the court may award exemplary damages equal to double the amount of the total damages sustained by the plaintiff, plus attorney fees.
Whether you are a multinational corporation or startup, it is likely you have trade secrets and intellectual property that needs protection. It is essential for you to understand how you can use the provisions of the DTSA to your advantage and fortify your defense against misappropriation.
Contact Maldjian Law Group LLC today to schedule an initial consultation and discuss your intellectual property needs with our experienced attorneys.