You hear right. On April 27, 2016, by a vote of 410-2, the US House of Representatives passed the Defend Trade Secrets Act (DSTA). The Senate had already approved it, and it’s expected that President Obama will sign it very soon. It’s a major step forward because before this law, trade secrets were only protected under various state laws, and many of these laws were very weak. The DSTA establishes a federal cause of action for misappropriation (stealing) a trade secret that is used in interstate commerce. What’s a trade secret? Here’s what the law actually says:
“…all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if-(A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the another person who can obtain economic value from the disclosure or use of the information.” (18 U.S.C. § 1836(b))
It seems that just about the only thing that is not a trade secret is something known, but never physically represented! (And, of course, stuff that is not really secret, or is worthless – duh!) The new law allows a federal civil lawsuit against one who misappropriates a trade secret, and includes a provision for the court to order seizure by law enforcement officials as a preventive measure. This is a lot like federal trademark law, where infringing goods may be seized and held to prevent their being sold. The law also contains provisions for injunctions, reasonable royalties, damages, double damages, and attorney’s fees.
Who loves this law? Employers, who will now be able to bring a big-ol’ federal lawsuit against competitors who hire away key employees to get at secret information, and against former employees who threaten to use secret information outside their former company. Who hates this law? Workers who will be sued, just to keep them from job-hopping or from starting a new company to compete against their former employer. Who REALLY LOVES this law??? The Doc, and all other intellectual property lawyers, naturally!
Need to protect a trade secret? Talk to the attorneys at LW&H. They’re up to speed on DSTA (and it’s not even a law yet!)
Until next month,
— Lawrence A. Husick, Esq.