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Thursday, 12 May 2016 14:04

The Defend Trade Secrets Act of 2016 Signed Into Law

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President Barack Obama on Wednesday signed the Defend Trade Secrets Act of 2016 ("DTSA") into law, creating a federal system of trade secrets law. The DTSA extends the current Economic Espionage Act of 1996 ("EEA") which criminalizes trade secret theft, and creates a new Federal cause of action allowing companies to sue to defend their trade secrets. This means that for the first time, trade secret owners can now bring civil suits in federal district courts. The bill was largely uncontroversial passing the Senate 87-0 and the House of Representatives 410-2.

Under the DTSA, for example, a federal court could have jurisdiction over a claim of misappropriation of a trade secret that is used exclusively on an internal basis by the victim or one that is related to a product or service that is in the development stage, so long as the trade secret is related to a product that is intended for use in interstate commerce.

The DTSA adopts the EEA's broad definition of a trade secret meaning almost any kind of tangible or intangible type of information can qualify as a trade secret so long as: (1) the information is actually kept secret; (2) the owner took reasonable measures to maintain that secrecy; and (3) independent economic value is derived from that secrecy.

The theft of trade secrets costs the economy more than $300 billion a year, according to the Commission on the Theft of American Intellectual Property. The DTSA represents the most significant expansion of Federal intellectual property law in a generation, fully recognizing a fourth type of intellectual property right, and is a major step forward in the protection of intellectual property in the United States. 

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