On May 11, 2016, President Obama signed into law the Defend Trade Secrets Act of 2016 (“DTSA”) , which dramatically expands federal jurisdiction over trade secret claims. The impetus for this law was to provide some response to the reports of Chinese and possibly Iranian hacking into U.S. corporate and government sites. Prior bills were introduced in 2013 and 2014. These served as models for the eventual statute. The new law, however, closely resembles in many ways the current state trade secrets laws but provides jurisdiction in federal courts. The federal Intellectual Property protection scheme until now has been a three-legged approach: Patent protection, trademark laws, and copyright provisions. After the DTSA, however, the trade secrets protection of the enactment becomes the fourth leg. While the new law overlaps in many respects the Uniform Trade Secrets Act (“UTSA”) on the books in 47 states (including Virginia, Maryland, and D.C.), the DTSA changes the federal jurisdiction analysis, expands the definition of “trade secrets,” adds new remedies, and includes express whistleblower protections. While the DTSA does not significantly alter the substance of U.S. trade secrets law, the procedures and available civil remedies – especially the civil ex parte seizure terms – introduce new and potentially powerful enforcement tools. The DTSA arrives as an amendment to the Economic Espionage Act of 1996, 18 USC § 1331 et seq. The coverage below highlights five points in the new law.
- Federal Jurisdiction. Just about any trade secret claims is now a federal claim which can provide subject matter jurisdiction in the federal courts. 2(b)(1) allows for civil actions this way:
- Broader Definition of “Trade Secrets?” Much of the new law’s substance is found in the Definitions, either already included in or added to 18 USC § 1839. For example, the current “trade secrets” definition reads:
- Ex Parte Seizure Remedy. The DTSA goes beyond the state laws where it includes in Sec. 2(b)(2) a “Civil Seizure” remedy:
- Trade Secrets Misappropriation as Racketeering Activity. 3(b) amends the RICO statute’s definition of Racketeering Activity found in 18 USC 1961(1) to include “sections 1831 and 1832 (relating to economic espionage and theft of trade secrets).”
- Whistleblower Protection. 7(b) provides immunity from all criminal and civil liability for disclosure of trade secrets made “in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney” provided the disclosure is “solely for the purpose of reporting or investigating a suspected violation of law . . .”
- Summary—What to Expect from the DTSA