What the Defend Trade Secrets Act Means for Your Business

Senior partner and intellectual property attorney Jonathan Brown wrote a guest column that appears in the July 11 issue of the Buffalo Law Journal. “Law provides new tools to protect trade secrets” describes a new federal law, called the Defend Trade Secrets Act, recently signed into effect by President Obama. The DTSA is the first federal civil cause of action regarding misappropriation of trade secrets and it provides some consistency and predictability to their protection.

Read the full article on the Buffalo Law Journal website.


Notice of immunity

The DTSA does not preempt state law, but it does provide some clarity to what is required of employers regarding trade secrets. For example, under the DTSA, employers must notify employees, contractors, and consultants that they are provided with immunity if they disclose trade secrets to the authorities in order to report what they suspect to be illegal activities. This immunity applies whether or not the disclosure is subject to a lawsuit and, if notice of it is not given, the employer may not be able to receive damages that otherwise may have been available.

Inevitable disclosure

The DTSA also rejects the “inevitable disclosure” doctrine. This doctrine assumes that a company’s former employee will give trade secrets to their new employer. The DTSA requires that, if a previous employer is seeking to restrict someone’s employment, this prevention must be “based on evidence of threatened misappropriation and not merely on information the person knows.” This means that federal law requires the employer to have real evidence that a former employee has misappropriated, or threatened to misappropriate, a trade secret.

Statute of limitations

Under the DTSA, employers are subject to a three-year statute of limitations on trade secret misappropriation. This statute starts when the first misuse of the trade secret was or should have been discovered. If the same employee continues to misappropriate the trade secret, it does not restart the statute and is considered the same misappropriation.

Who to call

If you are concerned about how the Defend Trade Secrets Act may affect you and your business, call Lipsitz Green Scime Cambria. The firm’s intellectual property attorneys are well-versed in the most comprehensive trade secret protection strategies and have significant experience dealing with large intellectual property portfolios. Contact the firm today to find out how Lipsitz Green’s intellectual property attorneys can help protect your business.