Congresses Passes the Defend Trade Secrets Act

secretAfter being passed unanimously by the U.S. Senate, the House of Representatives voted 410-2 to approve the “Defend Trade Secrets Act” (“DTSA”). The legislation, which is supported by the Obama administration, would open the door for companies to sue in federal court for damages related to theft of trade secrets.

Historically, trade secret protection has been left to the states and state law. More than 40 years ago in Kewanee Oil v. Bicron, the Supreme Court observed that “Congress, by its silence over these many years, has seen the wisdom of allowing the States to enforce trade secret protection.” Congress appears to have changed its tune.

Modeled after the Uniform Trade Secrets Act, the DTSA creates an exclusively federal court claim for trade secret misappropriation. The DTSA does not replace or preempt state law or state trade secret claims. The Senate Report explains that the new federal remedies “are intended to coexist with, and not to preempt, influence, or modify applicable state law.”

Among other things, the DTSA provides for ex parte seizures of misappropriated trade secrets in “extraordinary circumstances where necessary to preserve evidence or prevent dissemination of a trade secret.”

The law will go into effect immediately once President Obama signs the bill into law.


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