American companies soon will have a powerful new tool to combat the taking and unauthorized use of their confidential business information. The Defend Trade Secrets Act of 2015 (the DTSA) was introduced on Wednesday, July 29, 2015 with support from both political parties, both houses of Congress, and many companies and business organizations across the country. After several previously introduced bills withered on the vine, hopes are high that the broad base of support for this bill will carry it through passage.
Although the DTSA is similar to and connected with other statutory provisions – it is an amendment to the federal criminal Economic Espionage Act and borrows much of its definitional scheme from the Uniform Trade Secrets Act, some version of which has been adopted in every state except New York – its adoption will bring dramatic change to trade secret protection law in several ways.
First, the DTSA will provide a federal civil cause of action to aggrieved trade secrets owners, provided they can show that the trade secret is related to a product or service to be used in interstate commerce. Plaintiffs utilizing the new legislation will be able to sidestep the current patchwork of state laws – both statutory and common law – that currently provide civil trade secret claims and remedies. A unified federal civil statutory scheme should help equalize the nature and extent of relief available from state to state.
Second, the DTSA will provide powerful new remedies for trade secret misappropriation. In addition to the remedies currently available under state law (including damages and injunctive relief), plaintiffs will be able to seek, for example, ex parte seizure orders. Similar seizure provisions have sparked dissention regarding previous legislative initiatives, with critics expressing concern about abuse. The DTSA’s punitive damage provision, which allows up to three times the amount of a compensatory damage award, is consistent with other punitive damages rules and is likely to be less controversial.
Procedurally, the DTSA will smooth the way to judgment for trade secrets plaintiffs, making it easier for plaintiffs to conduct discovery, and enforce subpoenas and judgments, across state lines. Finally, the statute of limitations for claims brought under the DTSA will be five years – longer than for state statutory claims.
Calls for these changes have been loud and sustained. The proposed new legislation has broad support across party lines and across all sectors of American business, and its passage is expected soon after congress reconvenes in the Fall.