New Federal Civil Cause of Action for Trade Secrets

New Federal Civil Cause of Action for Trade Secrets

On May 11, 2016 the President Signed into law the new “Defend Trade Secrets Act” (Public Law No: 114-153). This creates a federal civil cause of action for trade secret misappropriation.

The law is similar to many state laws already on the books because it was modeled on the Uniform Trade Secrets Act, which is the basis for many state laws. As with most existing state laws, this new law provides civil damages and injunctions for violations of trade secret rights. As with most state trade secret laws, a “trade secret” is information that is not generally known or readily ascertainable, that gives a business an economic advantage over its competitors. Most state laws require that a plaintiff take reasonable precautions to ensure the secrecy of the “trade secret.” With the new law, damages can also be doubled for willful or malicious conduct and attorney fees may also be awarded in such cases to the prevailing party. The cause of action must be brought within three years of the discovery of the misappropriation. The law also provides for ex parte seizures by federal agents, provided a plaintiff complies with fairly rigorous application standards. Importantly, the law was not intended to preempt state trade secret laws (18 USC Sec.1836(f)).

So, as litigants we have some new options to consider for enforcement of trade secrets. Practically speaking, whether plaintiffs will opt to file in state court or federal court will depend on a variety of factors, including likely jury pools, related causes of action in play, requirements of the state/fed laws to make early disclosure of trade secrets, and whether there is a need to access federal law enforcement agencies such as Homeland Security/Customs for purposes of enforcement against defendants.

By John Buche, J.D. John Buche is a litigator and trial attorney who practices principally in California and Texas, and who is experienced with federal litigation of trade secret matters. www.buchelaw.com