Kang Haggerty News
Businesses develop mechanisms and procedures to cut costs, increase efficiency and otherwise set themselves apart from their competition. Methods and inventions developed to achieve these goals are often considered to be trade secrets of the business, and many businesses remain vigilant to guard their assets against a possible threat—for example, a departing employee who takes the business’s trade secrets and other confidential information and uses it to compete against the former employer.
To this end, businesses have lobbied for uniform federal legislation both to support businesses’ rights to protect their trade secrets and to ensure that their proprietary information will be adequately protected, regardless of the jurisdiction in which the matter arose. In 1979, the Uniform Trade Secrets Act (UTSA) was proposed by the Uniform Law Commission in an effort to provide uniformity of trade secret law across the nation and streamline trade secret litigation. Because states were free to adopt the entire act, adopt some of it, or reject it outright, many states adopted only portions of the UTSA, while customizing other sections of the act. The disjointed acceptance of the UTSA and, consequently, a divergence in courts’ interpretation of the UTSA essentially negated the “uniformity” that the UTSA sought to achieve in the first place. When facing a novel issue under the UTSA, for instance, many courts would look to their states’ “precedents” before the adoption on the UTSA rather than looking at sister courts’ treatment of the issue under their versions of the UTSA.
In a renewed effort to harmonize trade secret law, Congress passed the Defend Trade Secrets Act of 2016 (DTSA), which was enacted on May 11. Generally, the DTSA: creates a federal cause of action for misappropriation of trade secrets, thereby permitting plaintiffs to assert their claims in either state or federal courts; grants the right to seek an ex parte seizure of an alleged misappropriator’s property in an effort to contain the misappropriated trade secrets; and requires that employers provide notice of the whistleblower immunity contained within the DTSA where trade secrets or other confidential information is available to employees, consultants, and independent contractors.