The Defend Trade Secrets Act of 2016

The Defend Trade Secrets Act of 2016

by Robert L. Rediger, Esq.

On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 (DTSA) into law. The new law creates a right for an “owner of a trade secret” to bring a civil claim in federal court for the misappropriation of such and obtain remedies that include monetary damages and injunctive relief. The DTSA does not displace state laws that protect trade secrets, and it amends the federal Economic Espionage Act of 1996 (EEA) that established criminal penalties for the theft of trade secrets. The DTSA defines “trade secrets” broadly, encompassing categories of financial, business, scientific, technical, economic, and engineering information, and including customer lists, computer source code, manufacturing methods, and formulas. Similar to California’s Trade Secrets Act, an employer will need to show that it took “reasonable measures” to maintain the confidentiality of its trade secret, and that such information is valuable to the owner.

The DTSA also permits an employer to provide its employees with a detailed “immunity notice” that they may report possible violations of law to a specified agency or person without fear of violating the employer’s prohibitions of an employee disclosing its trade secrets or the DTSA, to be able to obtain all the advantages of the new law. Any employer that relies on “trade secrets” in its business should consult with counsel to include whistleblower immunity notice in its employment agreements, non-disclosure agreements, personnel policies, etc.