The Passage of the DTSA Will Be a Watershed Event in Trade Secret Law

February 8, 2016

Trade Secrets

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On October 11, 1996, President Clinton signed The Economic Espionage Act of 1996 (“EEA”) into law.  The EEA made the theft of trade secrets a federal criminal offense. However, over the next 12 years, it became clear that two critical amendments were necessary.  In 2008, these two critical amendments were discussed by this author in a law review article published in the John Marshall Law School Review of Intellectual Property Law: (1) the addition of a private civil cause of action;  and (2) the addition of ex parte seizure provisions to preserve evidence and to prevent the destruction or the unauthorized transfer of trade secrets upon notice of the trade secret misappropriation lawsuit.

Fast forward to 2016, eight years later,  after introducing various versions of bills in the House and the Senate, and the vetting of these two proposed EEA amendments by every constituency, including law professors, big companies, small companies, intellectual property bar associations, business groups, inside and outside counsel, transactional lawyers and trial lawyers—we are almost there!

On January 28, 2016, the Senate Judiciary Committee held a voice vote in favor of passing the Defend Trade Secrets Act of 2016 (“DTSA”) with various amendments that strengthen the legislation. Senators Orrin Hatch and Chris Coons wrote:  “At a time when trade secret theft is more prevalent than ever, U.S. companies must be able to protect their trade secrets in federal court. Our legislation offers that protection by creating a federal private right of action for misappropriation of trade secrets. It also allows business owners to seek court orders to retrieve trade secrets before stolen information is shared with competitors.”

The DTSA is now ready for presentment on the Senate floor.  The House version of the DTSA—HR 3326–should be passed out of the House Judiciary Committee next with 107 sponsors at last count.  The House will likely adopt the Senate amendments and the final bill should pass quickly and be sent to President Obama for his signature and enactment into law.

The passage of the DTSA will be a watershed event in trade secret law. The DTSA will be to trade secret law what the creation of the Federal Circuit was to patent law. The United States, utilizing the full machinery and resources of the federal courts, will ensure the strongest protection for trade secrets anywhere in the world. This will translate into a stronger economy and a stronger country.