Valuable trade secrets are not easy to create or protect, but if a company satisfies certain notice requirements, the new federal Defend Trade Secrets Act ("DTSA") provides a powerful deterrent for would be thieves of valuable protected company property.

Effective May 11, 2016, the DTSA permits an employer to recover not only its damages caused by a misappropriation of a trade secret, but also exemplary damages of up to 2 times the award of damages and attorneys fees where the trade secret is willfully and maliciously misappropriated.

However, the exemplary damages and attorneys fees are available only if the contract or agreement with the employee or contractor includes exception language that protects legitimate whistleblowers from the enhanced damages. The exception language must describe the employee's or contractor's right to immunity from civil and criminal liability where the trade secret is either disclosed to the government or an attorney and solely for the purpose of reporting or investigating a suspected violation of law or is disclosed in a complaint or other lawsuit document under seal.

Action Items

  • Identify the agreements, contracts and policies used by the company to protect its trade secrets, such as employment and confidentiality agreements, non-disclosure agreements and similar agreements.
  • Do not enter into or renew any agreements, contracts or policies that address confidentiality of company information and property without evaluating the benefits of including the notice.
  • Inform internal parties (HR/legal) of the need to have new and updated agreements evaluated for notice language.

The DTSA also includes powerful tools for pre-judgment seizure of misappropriated trade secrets, jurisdiction in federal courts and the exemplary damages and attorney fees when trade secrets are misappropriated by anyone (no notice is required when the wrong doer is not an employee or other service provider).

We Can Help You

Please contact your Barack Ferrazzano attorney if you have any questions or would like additional information concerning these issues.

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