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On May 11, 2016, President Obama signed the Defend Trade Secrets Act (“DTSA”) into law. The DTSA is intended to create a more predictable, nationwide body of trade secrets law through a single federal statute. The new law, which overwhelmingly passed both houses of Congress, will give companies a direct path to federal court as a plaintiff. Until now, employers and businesses had to bring trade secrets claims under state law, which often presented disadvantages for large employers operating in multiple states. The DTSA creates a federal cause of action that, for the first time, gives federal district courts original jurisdiction over trade secret disputes, including contract and tort claims that are currently asserted under state laws. Companies can now consolidate their claims and file directly in federal court, which many argue is better equipped than state court to handle the often complex and highly technical aspects of trade secret cases. This is important for employers who face daunting hurdles in protecting their trade secrets, especially given the constantly increasing risks associated with technological advances and cyber security issues. It is important to note that the DTSA does not preempt state law, but will co-exist with state trade secret laws.
Employers must also be cognizant of the DTSA’s other important provisions, such as the following:
The DTSA contains a number of critical changes to trade secret law that employers need to be aware of. The DTSA gives employers unique opportunities to protect trade secrets in federal court and to employ forceful mechanisms to prevent dissemination. Employers, however, must also be aware of the compliance requirements and limiting provisions of the DTSA, including the communication of certain whistleblower rights to employees, the consequences of a wrongfully implemented seizure, and the provisions aimed at preventing injunctions that unfairly restrict employee mobility.
For more information, please contact Mike Wolak at email@example.com or at 770.303.8638.