The U.S. Trade Secrets Act is a piece of legislation that gives people the right to file a civil lawsuit at the federal level if a trade secret related to foreign or interstate commerce has been misappropriated.

Basics of the Defend Secrets Act

In 2016, the Defend Trade Secrets Act, also known as the U.S. Trade Secrets Act, was signed into law. The DTSA is a very important piece of legislation, as it created the ability for a civil cause of action at the federal level for trade secrets theft.

Under the DTSA, there is a statute of limitations of three years, and the remedies that are available for trade secrets theft are very similar to those found in state law. The bill received bipartisan backing, with only two dissenting votes in the House of Representatives and no dissension in the Senate.

Now that the DTSA has taken effect, companies in the United States are better able to protect their trade secrets and can pursue compensation when a secret has been stolen.

Federal Causes of Action

Prior to the passing of the DTSA, companies whose trade secrets were misappropriated only had the ability to file a lawsuit in state court. This proved to be very difficult, as laws related to trade secret theft could vary greatly between states.

Some of these differences included:

  • Varying definitions of trade secrets.
  • Different statutes of limitations.
  • Dissimilar remedies for trade secret theft.

Fortunately, with the DTSA, there is a federal framework for trade secret misappropriation. One of the main purposes of the U.S. Trade Secrets Act is to cement common law related to trade secrets and to make clear the remedies available to companies that have been damaged by trade secret misappropriation. To be clear, the U.S. Trade Secrets Act does not supersede state law. However, it does provide companies the options of suing in federal court, which is a powerful tool when it comes to protecting trade secrets.

Companies that are interested in protecting their trade secrets should consider responding to the U.S. Trade Secrets Act in four ways:

  1. Make sure that your confidentiality and employment agreements are up to date and that they include information about the U.S. Trade Secrets Act's whistleblower provision, so you can receive double damages in a lawsuit.
  2. Reexamine your company's policy for suing for trade secret infringement. With the DTSA in place, filing a lawsuit for trade secret misappropriation is much easier than it once was.
  3. Perform an inventory of the trade secrets owned by your company and decide if the protections you have in place are adequate.
  4. Spend time developing a plan for responding to suspected trade secret theft or handling a seizure order.

In most cases, trade secret litigation progresses very rapidly. It's important that you have a plan in place for taking action after your trade secrets have been stolen. This will help you avoid delays in filing your litigation that may cause you to lose your rights. Similarly, if your industry is very competitive, and you have a high rate of employee turnover, you need a formal plan for seizures.

The purpose of this plan is to limit disruption to your business when a seizure occurs, as well as to make it easier for your attorneys to respond to the seizure order, whether it's pursuing a dissolution or filing a wrongful seizure claim. 

Under the U.S. Trade Secrets Act, companies interested in filing a lawsuit for trade secret theft will have access to the federal courts. Thanks to the DTSA, trade secret law is much more predictable, and it is considerably easier for damaged parties to pursue litigation after trade secret misappropriation has occurred.

Trade Secret Definition

In the U.S. Trade Secrets Act, you can find uniform definitions for both misappropriation and trade secret. The trade secret definition, however, is very broad so that it can cover an array of intellectual property. Essentially, a trade secret is considered to be any type of information that is valuable in a commercial sense. 

The reason that this information needs protection is that it is not widely known or easily detected, meaning the company that holds this information is the only entity with access to and the ability to use the information.

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