Federal Law And Jurisdiction For Protecting Trade Secrets – Defend Trade Secrets Act Of 2016

By: Jeanne Hoffmann, Capital Member

In May of this year President Obama signed into law The Defend Trade Secrets Act of 2016 (the “DTSA”), 18 U.S.C.A. § 1832 et. seq. Unanimously passed in the Senate and ratified by the House of Representatives in a 410-2 vote (a miracle in and of itself), the DTSA provides a federal cause of action and federal court jurisdiction for misappropriation of trade secrets.

Prior to enactment of the DTSA 48 states had adopted some form of the Uniform Trade Secrets Act (“UTSA”), which was first published in 1979 as an attempt to provide a uniform legal framework for trade secret protection across the country. The DTSA has largely taken UTSA and codified it as federal law, similarly defining what constitutes a “trade secret” (“all forms and types of financial, business, scientific, technical, economic, or engineering information”, that the owner has kept sufficiently secret so as to derive economic value from so doing), and utilizing a 3-year statute of limitation for bringing suit.  The DTSA does not preempt existing state law, so plaintiffs now have the option of pursuing federal or state law claims for misappropriation of trade secrets and deciding which court system, state or federal, to select.

Notable new features of the DTSA include a provision authorizing a civil, ex parte seizure in extreme circumstances where the party against whom the seizure is ordered “would destroy, move, hide, or otherwise make such matter inaccessible to the court” (although it does require that a hearing be held “at the earliest possible time, and not later than 7 days after the order has issued”), and a provision designed to protect whistleblowers from retaliatory misappropriation claims by permitting them to disclose trade secret information to the government or court in confidence.

Chicago, Illinois 312-377-1501 | Schererville, Indiana 219-488-2590

Chicago, Illinois


Schererville, Indiana