IP Law Daily House passes ‘Defend Trade Secrets Act,’ sends bill to President
Wednesday, April 27, 2016

House passes ‘Defend Trade Secrets Act,’ sends bill to President

By Jody Coultas, J.D.

The U.S. House of Representatives overwhelmingly passed the Defend Trade Secrets Act of 2016 (DTSA) today, a bill that will create a federal cause of action for the misappropriation of trade secrets. The vote was 410-2, with 21 members not voting. Earlier this month, the Senate unanimously approved the measure, which now heads to President Obama, who is expected to sign it.

Trade secret misappropriation is estimated to cost businesses more than $300 billion a year, and trade secrets have become more vulnerable to theft as a result of technology and a globalized economy. Supporters of the bill noted that while other types of intellectual property are protected under federal laws, no such federal law currently protects trade secrets. Many states have their own trade secret laws with various levels of protection. Without the right to sue in federal court, companies face a hodge-podge of state laws when seeking to protect their trade secrets.

On April 4, the Senate unanimously passed the DTSA (S. 1890), which would amend the Economic Espionage Act of 1996, currently a criminal statute, to create a federal private right of action for trade secret misappropriation. On April 20, the House Judiciary Committee approved the senate version (S. 1890) by unanimous voice vote. Over 150 House members supported the bill. The Obama Administration has voiced strong support for the DTSA and the president is expected to sign the bill.

The Defend Trade Secrets Act:

  • Creates a uniform federal standard for trade secret misappropriation. A company can craft one set of nondisclosure policies secure in the knowledge that its trade secrets will be protected by federal law.
  • Provides for injunctions and damages, including a narrow, but powerful, ex parte seizure authority when it is needed to prevent the disclosure or further dissemination of a stolen trade secret. The bill also authorizes appropriate final monetary and injunctive relief to account for the economic harm to American companies whose trade secrets are stolen, while also safeguarding the freedom of employees to move from one job to another.
  • Is consistent with the remedies provided for other forms of intellectual property, such as patents, trademarks and copyrights, which are all covered by federal civil law.

MainStory: TopStory TradeSecrets TechnologyInternet

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