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  May 11th, 2016 | Written by

New Law Places Focus on International Trade Secret Theft

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  • There is no body of international law or treaty that specifically addresses the protection of trade secrets.
  • The U.S. didn’t receive international cooperation in protecting trade secrets for lack of its own federal statute.
  • The central provision of the DTSA is to provide a federal court remedy for acts of trade secret misappropriation.

The Defend Trade Secrets Act of 2016 (DTSA), passed by the U.S. Congress in late April, came about largely because of a congressional concern over international economic espionage.

Legal experts say that one of the thrusts spurring congressional action are the weak protection of trade secrets within the rules of the World Trade Organization and the fact there is no body of international law or treaty that specifically addresses the protection of trade secrets.

The legislation is expected to be signed by President Obama.

“Some have argued that the United States has not consistently received cooperation from international jurisdictions in protecting trade secrets in part because it does not have its own federal civil statute to reference in encouraging the adoption and enforcement of similar legislation by its treaty partners,” wrote Scott McDonald and Jackie Johnson, attorneys with the international law firm of Littler Mendelson, on the law firm website.

“The DTSA remedies this problem,” they conclude.

There are a number of features in the DTSA that are designed to address the international theft issue.  A seizure feature, which allows a trade secret owner to apply for the seizure of misappropriated material without notice to other party, is designed to be used “in instances in which a defendant is seeking to flee the country …”

The DTSA also requires the Attorney General to make a biannual report to the House and Senate Judiciary Committees on international trade secret theft affecting U.S. companies. “The report is to include recommendations for legislative and executive actions to address the problem along with educational material for U.S. companies to help protect themselves and to provide a means for U.S. companies to report any theft occurring outside the United States,” wrote McDonald and Johnson.

The central provision of the DTSA is to provide a new federal court civil remedy for acts of trade secret misappropriation. That means trade secret owners have a uniform federal law which will allow them to pursue trade secret misappropriation claims.

Among the other key features of the DTSA, the statute provides uniform definitions for “trade secrets” and “misappropriation.” It allows companies to apply for an injunction as well as to sue for up to two times the amount of actual damages. The law provides protection from prosecution for whistleblowers. It doesn’t eliminate state law remedies related to trade secrets.

The DTSA’s definition of trade secret covers “all forms and types of” information provided the owner has taken measures to keep the information secret, and the information has independent economic value from not being generally known.

Under the DTSA definition, “misappropriation” includes both improper acquisition and improper use or disclosure.

DTSA’s seizure provisions provides are designed to prevent the compromise of the secret or its destruction or removal as potential evidence before an evidentiary hearing can be held. The statute allows a trade secret owner meaning to apply, without notice to the opposing party, for a court order to have the trade secret material seized by law enforcement authorities until an evidentiary hearing can be held.

The DTSA whistleblower provision prevents criminal or civil liability under any trade secret law for the disclosure of a trade secret that is made “in confidence” to a government official or to an attorney if made as part of a report or investigation of a suspected legal violation.