HammerTrade secret owners have a powerful new remedy to protect their stolen trade secrets, one that is not generally available in civil actions. The Defend Trade Secrets Act (DTSA) provides a right for the trade secret owner to ask the court for an ex parte order to seize property (18 U.S.C. § 1836). Ex parte means that the trade secret owner, without notifying the possessor of the stolen trade secret, can alone ask the court to order seizure of property containing the stolen trade secret. This procedure is one of a very few where a court need not hear from both parties to a dispute before acting.

If the ability to seek a court ordered injunction against the use or dissemination of a trade secret is a hammer provided trade secret owners, the ability of a trade secret owner to go to court ex parte is the sledge hammer provided in the new statute. Seizure would be effected by having federal or local law enforcement officials enter and take possession of and secure the seized material from physical or electronic access including, if necessary, breaking entry locks to achieve access. The situations in which such a drastic remedy would likely be used might involve among others the imminent disclosure of the trade secret such as through sale of goods, publication of the trade secret, or dissemination of information describing or containing the trade secret. Once seized, no one has a right to the property until permitted by the court .

Since this remedy is so drastic, the standards the trade secret owner applicant must meet are set accordingly high before the court will issue a seizure order. The applicant must allege that: other forms of relief such, as an injunction,  would be inadequate; there would be immediate harm to the applicant if seizure is not ordered; the information is a trade secret; the trade secret was misappropriated by improper means; the person against whom the seizure order will issue has possession of the trade secret and any property to be seized; the applicant can describe the matter to be seized and its location; and if the person against whom the seizure order will issue would make the matter inaccessible if that person would have notice of the application to the court.

To protect the rights of the person against whom the seizure order is issued, the DTSA requires that the court set a hearing as soon as possible but no later than 7 days after the seizure order issued. At the hearing, the applicant must prove the facts supporting the application for the seizure order, and, if not, the order will be dissolved. The person against whom the order is issued may argue that it was improper and ask the court to dissolve the order. In addition, the court can require the applicant to provide security for the payment of any damages that any person may be entitled to as a result of a wrongful or excessive seizure.

In short, trade secret owners have a powerful new seizure tool that must be used with great care.

— Laurence Weinberger, Esq.