Federal Trade Secrets Law Takes Another Step Toward Reality

Posted by Benjamin I. Fink on

The Defend Trade Secrets Act emerged from the Senate Judiciary Committee this morning after a voice vote in favor of its passage.  This is a significant step toward passage of a federal trade secrets statute.  It is unclear at this time when it will be presented to the full Senate for a floor vote.  It is also unclear when the House may consider the proposed legislation, though the House introduced its own version of the DTSA last July.  The House version now has more than 100 co-sponsors.

Some of the noteworthy amendments to the DTSA that were recommended by the Senate Judiciary Committee are as follows:

  1. The statutory language limiting injunctions that would restrict employee mobility has been strengthened, meaning that an injunction under the DTSA likely cannot prevent someone from accepting employment. It appears there would need to be proof of actual or real threatened misappropriation for an injunction placing conditions on employment.
  1. The statute of limitations has been reduced from five to three years.
  1. A whistleblower immunity provision has been added to protect employees or others from potential trade secrets claims if they disclose information confidentially to relevant government officials or agencies in connection with the violation of law.
  1. Employers desiring to seek to recover attorney’s fees or exemplary damages under the DTSA will have to provide notice of this right to employees in their agreements or policies.
  1. Further restrictions on the ex parte seizure order have been added prohibiting copies of the seized property and requiring that the order provide specific instructions to law enforcement officers executing the seizure as well as explicit protections for other information seized as well as appointment of technical experts etc.
  1. Exemplary damages are limited to double the awarded damages rather than treble damages.