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Client Alert: The New ‘Defend Trade Secret Act’ Set to Become Law

April 29, 2016

With President Obama’s anticipated signature, The Defend Trade Secret Act provides the first federal cause of action for trade secret misappropriation. Cantor Colburn's Client Alert, below, and White Paper interpret the law.

Cantor Colburn Client Alert: Interpreting the Defend Trade Secrets Act

Intellectual property law currently has three areas of federal protection: copyright, trademarks, and patents. On Wednesday, April 27, 2015, a fourth protection became one step closer to being created when the House of Representatives passed the Defend Trade Secrets Act (DTSA), paving the way for its enactment with President Obama’s expected signature. The DTSA would be the first federal cause of action for trade secret misappropriation. Companies would now be able to bring a suit in federal court for trade secret theft.

Prior to the DTSA, an owner of a trade secret would be forced to go to state court in order to try their case. This led to unpredictable results as trade secret laws vary from state to state. The new law provides a unified approach to trade secret cases, but it does not overrule any state’s laws that are already enacted. The DTSA includes injunctive relief, damages, and reasonable attorney’s fees if a claim is made in bad faith. One part of the bill would allow the court to seize certain property without prior notice to the defendant, although the bill limits the seizure to “extraordinary circumstances” and provides damages to victims of wrongful seizures.

Trade secrets include confidential, commercially valuable information intended to provide competitive advantage.  Publicly traded U.S. companies are estimated to own $5 trillion worth of trade secrets (US Dept. of Commerce).  Examples include the secret formula for Coca-Cola, the Kentucky Fried Chicken secret recipe, and the Google algorithm.  Cantor Colburn is closely monitoring the progress of the DTSA.  Please contact our attorneys if you have any questions regarding the DTSA and your trade secrets.

This alert is for informational purposes only and is not legal advice and may not be adequate or appropriate for a specific situation or circumstances.  Please do not hesitate to contact Cantor Colburn LLP if you have any questions or would like to discuss your situation in depth.

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