Obama Signs Law Boosting Federal Trade Secret Protections

By Wayne Rash  |  Posted 2016-05-11 Print this article Print
Trade Secret Law

Milligan said that he and two other lawyers have developed a set of guidelines for his firm's clients to help them understand how this would affect them, including how to incorporate new provisions into employment and contracting agreements.

"Now there's uniformity," Milligan said. While most of the states in the United States have their own trade secrets laws based on the Uniform Trade Secret Act, Milligan said that the states have adopted different versions of that earlier act and that state courts may interpret it differently. In addition, the states may have incorporated unique features to their versions of the UTSA, creating what Milligan called a "Patchwork of regulations."

It's worth noting that the DTSA is actually an amendment of the Economic Espionage Act of 1996, which provided criminal penalties to the theft of trade secrets and other intellectual property. Now, with the DTSA, protections are extended into civil cases.

It's also worth noting that nothing in the DTSA pre-empts the existing state laws created under the UTSA. This means that legal action can still be brought under state laws and that the states can change those laws as needed to fit the circumstances of the companies operating within their borders. However, there is at least some consistency in how trade secret cases are handled, even in state courts.

Unfortunately, the DTSA does nothing to protect against the loss of trade secrets across national borders. While the European Union has also adopted its own trade secret rules, that's not the case elsewhere. This means that the law does nothing to help companies seek redress from trade secrets lost as a result of cyber-attacks on their networks initiated by nation-states' hackers with the express intention of stealing trade secrets from U.S. companies.

In addition, there's going to be a period of time in which various federal courts argue over their own interpretations of the DTSA as cases begin to show up to test the law. While the wording of the DTSA is unusually clear in stating what the law means and how it is to apply, it doesn't—and can't—apply to all circumstances.

It's a pretty sure bet that the details of how the DTSA will be handled will be in flux until the first cases brought under the law make their way to the Supreme Court. There, the clarity of the law and the fact that it was passed by a nearly unanimous bipartisan vote in both houses of Congress will probably reduce the range of interpretations that can be adopted by the courts. But at least now, there is more uniformity at the federal level



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