- A New Federal Tool to Defend Against Trade Secret Theft
- June 13, 2016 | Authors: Drew Sorrell; Stephen C. Thomas
- Law Firms: Lowndes, Drosdick, Doster, Kantor & Reed Professional Association - Orlando Office; Lowndes, Drosdick, Doster, Kantor & Reed Professional Association - Melbourne Office
A new federal law, the Defense of Trade Secrets Act (DTSA), was signed into law on May 11, 2016 by president Obama becoming Public Law No. 114-153. The new law is authorized by the Commerce Clause of the U.S. Constitution and is an amendment to the Economic Espionage Act.
The DTSA provides federal remedies for the protection of trade secrets. Currently, the only remedies for theft of trade secrets are provided under state statutes. The new federal law, however, authorizes a trade secret owner to file a federal civil action seeking relief for trade secret misappropriation related to a product or service in interstate or foreign commerce. It establishes remedies, such as injunctive and monetary relief. The monetary damages may include actual loss or unjust enrichment, or, alternatively, a reasonable royalty for the misappropriator's use of the stolen trade secret. The statute of limitation is set at three years from the date of discovery of the misappropriation, or the date that, by exercise of reasonable diligence, the misappropriation should have been discovered.
A much-debated aspect of the DTSA is a provision allowing a trade secret owner to apply to the court for a seizure order to prevent dissemination of the trade secret if the court makes specific findings, including that an immediate and irreparable injury will occur if seizure is not ordered. The order may provide for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action. The court must take custody of the seized materials and hold a seizure hearing within seven days.
The new law provides other measures, such as an exception for trade secrets disclosed in confidence to a Federal, State or local government official.
Trade secret theft is a serious threat to commerce in the United States, with some estimates of annual losses due to such theft at over $300B annually.