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A New Day for Businesses Seeking to Protect the “Secret Sauce” – Federal Trade Secret Protection

June 8, 2016
Attorney At Law Magazine - Twin Cities Edition
Author: Brooke D. Anthony

Businesses are now able to protect their trade secrets in federal court with a federal civil cause of action as a result of the Defend Trade Secrets Act (DTSA). President Obama signed the DTSA into law May 11, 2016. The DTSA is a rare example of bipartisan agreement and passed by overwhelming margins in both the House of Representatives and the Senate.

For American innovators, this new federal remedy could not come soon enough. Unlike patents, trademarks and copyrights which find value in registration and publication, trade secrets are valuable because they are cloaked in secrecy. Businesses try to protect that secrecy by limiting who has access to information about trade secrets, where such information is kept and how it is communicated. In an increasingly digital and mobile workplace, however, employees routinely transfer work documents to personal computers or other devices which their employers do not necessarily control. Even if employees never intend to keep that information, it would not be unusual for them to fail to delete it when their employment ends. Still, others intend to and do retain and use their former employer’s trade secrets for improper means.

Prior to the DTSA, businesses that sought to protect trade secret information were required to do so under various state laws. Though state trade secret laws overlap significantly, there are still some differences. The DTSA is an effort to streamline the requirements for protection and to provide much needed consistency. That said, although the DTSA provides additional options for businesses, it does not preempt state law. The key benefit of the DTSA is that employers can now go straight to federal court based on this new federal law. Read more.