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Protecting Your Business' Trade Secrets

Protecting Your Business' Trade Secrets

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The newly enacted Defend Trade Secrets Act (DTSA) broadens the causes of action available for an owner of trade secrets and potentially allows for new remedies to trade secret misappropriation. However, in order to avail oneself to all of the remedies provided in the DTSA, careful adherence to certain whistleblower notices should be followed, requiring implementation by employers, small businesses, and H.R. departments.

The Defend Trade Secrets Act was signed into law on 11 May 2016 with broad Congressional support.[1] It amends the previously enacted Economic Espionage Act (18 U.S.C. §1832). Most importantly, the DTSA creates a federal civil cause of action for the misappropriation of trade secrets. Previous to the DTSA, the only civil causes of action were state. The definition of trade secrets in the DTSA is broader than most state definitions, including Oklahoma’s definition which is modeled on the Uniform Trade Secret Act.[2] The DTSA does not preempt current state laws protecting trade secrets, allowing claimants to still make claims in state court.

Among the remedies available in the Defend Trade Secrets Act, is the possibility of an ex-parte order for the seizure of misappropriated trade secret assets.[3] Although this remedy is only available in extraordinary circumstances, it is nonetheless, a powerful tool for those wishing to protect their trade secrets.

Other DTSA remedies include exemplary damages and the payment of attorney’s fees for successful claims. However, these remedies are not available unless notifications of whistleblower protections are made.[4] The Defend Trade Secrets Act is designed to protect whistleblowers who reveal trade secrets in order to expose illegal action. This protection is only afforded to whistleblowers in certain circumstances.[5] Businesses and other trade secret owners are required to give notice of the whistleblower protection to their employees and contractors.[6] Without such notice, claims cannot be made for exemplary damages and attorney’s fees.[7] The DTSA allows for several methods of giving notice of the whistleblower protection to employees and contractors. These methods should be carefully followed.

A number of commentators have suggested that the number of claims relating to trade secret misappropriation will increase; lighter docket loads may allow federal courts to accommodate trade secret cases in a more efficient manner than state courts.[8] Furthermore, the untested ex-parte order for seizure may be a powerful tool for those wishing to protect their trade secrets.

As a business owner, the processes, code, software, and unique business practices are often your most valuable business asset. Protecting those assets is critical to the long-term viability of your business. The attorneys at Smith Simmons are prepared to assist you in protecting your trade secrets from those looking to steal your best ideas. Contact us today to discuss how we may be able to assist you in protecting your business and helping it grow into the coming years.

[1] https://www.congress.gov/bill/114th-congress/senate-bill/1890/text

[2] Compare 78 O.S. §86 (4) and 18 U.S.C. §1839 (3).

[3] 18 U.S.C. §1836 (b)(2).

[4] 18 U.S.C. §1833(b).

[5] 18 U.S.C. §1833(b)(1).

[6] 18 U.S.C. §1833(b)(4).

[7] 18 U.S.C. §1833(b)(3)(C).

[8] http://www.ipwatchdog.com/2016/05/23/defend-trade-secrets-act-2016-creates-federal-jurisdiction-trade-secret-litigation/id=69245/

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