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Powerful New U.S. Federal Trade Secret Act

In May 2016 U.S. President Obama signed into law the Defend Trade Secret Act of 2016 (Act), which is the federal government’s attempt to bring uniformity to trade secret litigation by creating a federal private right of action for trade secret misappropriation. The bill was supported by a broad industry coalition that included manufacturers and organizations, and was passed by the Senate and House of Representatives with near unanimous support. Prior to the Act, federal law only protected trade secrets through the Economic Espionage Act of 1996, which provides criminal sanctions for trade secret misappropriation. The Act is the first federal legislation that allows private citizens, without first having to obtain patent, trademark or copyright registration, to sue in federal court to protect their trade secrets.

Trade secrets act Ally Law

The law provides for the award of damages for trade secret theft as well as injunctive relief. It even includes a provision allowing a court to grant ex parte expedited relief to trade secret owners under extraordinary circumstances to preserve evidence or prevent dissemination of the trade secret. The advantages of nationwide subpoena power, uniform rules and application of law, and more sophisticated federal jurists make powerful tools for employers to utilize. However, the Act specifically says it does not preempt state trade secret laws; currently, all U.S. states have trade secret laws which may vary as to definitions, rights, and obligations from state to state. How effective the Act is in ensuring uniform application of trade secret law and providing a desirable vehicle for misappropriation lawsuits will become clear in the coming months as litigation is filed and moves through the courts. In any event, following the guidelines specified in the Act for identifying and protecting trade secrets should be considered a “best practice” and will be important to assure best results under the Act. Consult with your Ally Law member firm to assess your current trade secret policies and procedures and ensure they are compliant with obligations in the Act, as well as your state laws, for maximum protection.  Every Ally Law member firm has attorneys with specialized knowledge about employment and trade secret laws, and they will work with you to determine best practices to protect your valuable intellectual property. For more information about Ally Law member firm services in this area, contact us at yourally@ally-law.com.

By David Lester of Musick, Peeler & Garrett.