What is the Defend Trade Secrets Act?

Glenn W. Peterson

There are many protections available for your intellectual property in California. It is important to understand them and know the details of such protection, including what remedies you have if someone were to violate your rights. The American Bar Association notes a 2016 bill, called the Defend Trade Secrets Act, offers you better protection if you have a trade secret. The DTSA provides a new definition for trade secret, along with giving you a better venue in which to pursue trade secret violations.

Prior to the enacting of the DTSA, you were at the mercy of state courts where laws differed. If you had to go outside the state to another state court, it could get confusing. The idea of the DTSA is to provide a universial set of laws and procedures, along with giving federal courts jurisdiction.

Some of the important aspects of the law include the clear definition of a trade secret, along with a clearer definition of misappropriation. There is a whistleblower protection included in the law, too, to protect those who share trade secrets with attorneys or officials during an investigation. It grants courts the right to make an injunction to prevent a threat of a secret being revealed. Courts are also allowed to award damages, including attorney fees. It also enacts the ability for civil seizure. This is the seizure of property that could lead to misappropriation. It should be noted this is only allowed in very specific situations. This information is only intended to educate and should not be interpreted as legal advice.

If your California-based company has trade secrets, then you understand the importance of laws that protect this type of intellectual property. What makes a trade secret special is that it must be kept secret in order to retain the legal protection you are awarded for it. If even one person tells someone else, then your protections are lost. The American Bar Associations notes that while state laws have been enacted to help you prevent someone from spilling your trade secrets and to punish anyone who does so knowingly, which is called misappropriation, these laws are not consistent across all states.

In order to provide a more cohesive law, including punishments, the federal government decided to create the Defend Trade Secrets Act. The DTSA allows you to sue in federal court instead of in state court. It also streamlines the definitions of misappropriation and trade secret. Misappropriation under the DTSA can occur if someone shares your trade secret without your permission or acquires the secret by illegal means. Something is considered a trade secret if it is information of any kind that you have taken steps to keep secret and that your business gains a financial edge and benefit from.

If you choose to go to federal court under the DTSA, then the court may award damages to you if it is found that misappropriation occurred. Mainly, you will be given monetary remedies. However, do remember that once your trade secret has been shared, it is no longer protected. So, even if you do take the person to court, your legal protection of the information is already lost. This is general information only and is not intended to provide legal advice.