IP and Employment Implications of the Defend Trade Secrets Act to be Discussed at May 24-25 Roundtable Programs

Farella Braun + Martel’s Intellectual Property and Employment groups will host roundtable discussions in San Francisco (on May 24) and Palo Alto (on May 25) to discuss the implications of the DTSA and its likely impact on trade secret litigation, including what changes companies and their lawyers should consider to their internal policies and practices as a result of this new legislation. An invitation with specific details on these programs will be in your inbox in the coming weeks.

President Obama is expected to sign into law in the next few days the Defend Trade Secrets Act (DTSA), which was previously overwhelmingly approved by both houses of Congress. The DTSA provides trade secret owners with a new and potentially more powerful strategic option to bring trade secret lawsuits under the new federal law, which includes several key differences from the provisions of the Uniform Trade Secret Act laws prevailing in most states (including California). The DTSA provides for the first time a civil cause of action under federal law for trade secret misappropriation, allowing trade secret plaintiffs to bring suits directly in federal court on claims for theft of trade secret information. While Forbes has hailed the DTSA as the “biggest IP development in years,” it does not preempt state trade secret misappropriation laws or the right for plaintiffs to continue to choose to bring suit in state rather than federal court.

The DTSA presents a number of important questions for companies, individual employees and attorneys to understand, including some that may take the courts years to resolve. These include:

• The interpretation and implications of the DTSA’s ex parte seizure provisions, which is a remedy not available under current state laws;
• The degree and manner in which federal courts will require trade secret holders to specifically identify the trade secrets they claim have been misappropriated prior to taking any discovery, as is required for example under California’s version of the Uniform Trade Secret Act;
• Whether plaintiffs choosing to bring suits under the DTSA in federal court will find it easier or more difficult to prevail, and identification of the key factors driving the strategic decision of whether to choose to proceed under the DTSA rather than just under state trade secret law;
• The jurisdictional questions likely to arise if there are both federal and state claims asserted over the same issues, including the extent federal courts will allow trade secret holders to assert various common law causes of action that state trade secret laws preempt but the DTSA does not;
• The changes employers should consider to written employment policies and employment and nondisclosure agreements; and
• Will the DTSA result in a flood of new trade secret litigation brought for illegitimate or anti-competitive reasons or result in more “trolling” trade secret lawsuits at a time when protecting innovation through patents has become more difficult.