5 Keys To Federal DTSA

By John Alan Doran

Today, President Obama signed into law the Defend Trade Secrets Act (“DTSA”). The DTSA essentially federalizes trade secrets law by creating sweeping civil remedies and penalties for theft of trade secrets. Here are five key things you need to know about the law: (1) The DTSA creates federal court jurisdiction for trade secrets cases. This is excellent news for companies who care about their trade secrets because enforcement under state trade secrets laws such as the Uniform Trade Secrets Act (“UTSA”) has been inconsistent and oft-times cumbersome. (2) For better or worse, the DTSA allows for ex parte seizure orders under exceptional circumstances. This is essentially an order by a court, without prior notice to the alleged trade secrets thief, instructing the government to seize materials that may constitute or contain protected trade secrets. (3) Federal law defines the term “trade secrets” in a fashion that is broader than many states, including Arizona and its Court of Appeals decision in Orca Communications v. Noder. This is excellent news for employers in states where courts have whittled away at the definition of trade secrets under the common law or the UTSA. (4) The DTSA expands the civil penalties available against trade secrets thieves, including treble damages penalties and injunctive relief. (5) The DTSA requires employers to provide written notice to employees (and contractors who will be exposed to trade secrets), that a whistleblower who provides trade secrets to a government agency, court, or attorney for the purposes of reporting a suspected violation of the law is entitled to immunity under the DTSA. The DTSA also requires that this caveat be placed in all employment contracts and contractor agreements that involve trade secrets. Overall, this is excellent news for employers who value their trade secrets, and a major bummer for employees and companies who try to steal those secrets.