Defend Trade Secrets Act: Overview, definition, and example
What is the Defend Trade Secrets Act (DTSA)?
The Defend Trade Secrets Act (DTSA) is a U.S. federal law passed in 2016 that provides a civil cause of action for the theft or misappropriation of trade secrets. It allows businesses to file lawsuits in federal court if their trade secrets are stolen or improperly used, giving them the ability to seek monetary damages, injunctive relief, and, in certain cases, the seizure of property. The DTSA strengthens the protection of trade secrets by allowing for nationwide enforcement and providing whistleblower protections.
Why is the Defend Trade Secrets Act important?
The DTSA is important because it creates a federal standard for trade secret protection, making it easier for companies to protect their intellectual property across state lines. Prior to the DTSA, trade secret misappropriation was primarily addressed under state laws, leading to inconsistencies and difficulties in enforcement. The DTSA provides a uniform legal framework for handling trade secret theft, which is especially important in today’s global economy where businesses may operate across multiple jurisdictions. Additionally, the law provides whistleblower protections, which encourage employees to report trade secret theft without fear of retaliation.
Understanding the Defend Trade Secrets Act through an example
Suppose a software company discovers that a former employee has stolen its proprietary code and shared it with a competitor. Under the DTSA, the company can file a lawsuit in federal court to stop the competitor from using the stolen code, seek damages for any harm caused, and request the court to order the return of the stolen property. The company can also take advantage of the whistleblower protection provision if the theft was reported by an employee.
Example of how the Defend Trade Secrets Act may be referenced in a contract
Here’s how a reference to the Defend Trade Secrets Act may appear in a confidentiality or non-disclosure agreement:
"The Parties agree to protect the confidentiality of trade secrets and other proprietary information in accordance with the Defend Trade Secrets Act of 2016 (DTSA), and any violations of this Agreement may result in legal action under federal law, including remedies such as damages, injunctive relief, and potential seizure of misappropriated trade secrets."
Conclusion
The Defend Trade Secrets Act significantly strengthens the protection of trade secrets in the U.S., providing businesses with an effective federal remedy for trade secret theft. It also offers important whistleblower protections, encouraging individuals to report theft without fear of retaliation. Companies should be aware of the provisions of the DTSA and take appropriate steps to safeguard their trade secrets through contracts, policies, and legal action if necessary.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.