In 2016, Congress passed the Defend Trade Secrets Act (the “DTSA”). The vote was unanimous in the Senate and 410 to 2 in the House. President Obama signed it on May 11, 2016. Codified at 18 U.S.C. §1836, et seq., the DTSA created a federal private right of action for trade secret owners to sue for the misappropriation of their secrets.
But, as I pointed out in a recent blog post, “the DTSA is far from perfect. Like the Uniform Trade Secrets Act on which it was based, the DTSA can be improved as trade secret law evolves.”
A recurring problem under the DTSA is that many defendants get caught up in the DTSA’s enforcement mechanism far longer than they should be. For example, some defendants (typically former employees) are either wrongfully accused of taking information that they did not take, or are accused of taking information that they did take, but that they had not intended to take or even realized they took. For example, employees often forget that they have company information on thumb drives they used for work, or in their email, or backed up on personal devices as part of routine computer or cellphone backups. There are also plenty of employees who made a mistake of judgment and took information they should not have taken.
Many of the employees who have their former employer’s information will — at least once counsel is involved — promptly realize the error of their ways and cooperate with the trade secret owner to ensure that all information is returned and that all copies are permanently removed from their possession. Nevertheless, in many of those cases, the former employer continues to press the misappropriation claim, long after any potential material harm has been addressed.
Having represented many such defendants, I’ve identified two proposed amendments to the DTSA:
- (1) a “safe harbor” provision for penitent defendants who have agreed to an injunction and are cooperating in a litigation; and
- (2) a trade secret identification requirement similar to the Model Local Rule suggested by the Sedona Conference’s Trade Secrets Working Group.