Protecting Trade Secrets – Congress and the President Agree

Protecting Trade Secrets – Congress and the President Agree

By Chuck Baxter

May 2016

Bipartisan consensus in Washington? Yes, it happens, when U.S. companies need help protecting their confidential information! In a rare show of unity Congress and the President passed the Defend Trade Secrets Act of 2016 (DTSA), creating a private civil remedy in federal courts for misappropriation of trade secrets. The law passed the Senate 87 to 0, and passed the U.S. House of representatives 410 to 2, before being signed into law by President Obama on May 11, 2016.

Why do we need this legislation? According to the DTSA, “trade secret theft, wherever it occurs, harms the companies that own the trade secrets and the employees of the companies.” DTSA, Sec. 5. This type of confidential information often provides the “secret sauce” that sets one company above others in the marketplace, and can be crucial to that company’s value.

Previously, civil actions to enforce trade secrets were governed by a patchwork of state laws, most of which followed some variation of the Uniform Trade Secrets Act without offering a single source of precedent.  Meanwhile, other intellectual property rights like patents, trademarks, and copyrights had consistent federal causes of action. The new DTSA does not preempt the state statutes, but permits much of the same relief as the UTSA with the added benefits of national court system.

Under both the DTSA and UTSA, the statute of limitations is three years from the time misappropriation is discovered or could reasonably be discovered. Both allow equitable remedies, injunctions, and actual and exemplary damages, and the DTSA includes provisions for ex parte seizure in extraordinary circumstances.

Under IPISC’s Enforcement insurance, you can schedule your company’s trade secrets as intellectual property. The IPISC forms have now been updated to permit enforcement of those trade secrets under the DTSA. If your confidential information matters, you should enhance its protection with an Enforcement policy from IPISC.

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