Washington — The role of the federal government in protecting the trade secrets of U.S companies expanded significantly under a new law signed by President Barack Obama.
Previously, owners of intellectual property had federal protection for patents, trademarks and copyrights, but decisions on trade secrets went to various state courts, under the Uniform Trade Secrets Act of 1979.
The Defend Trade Secrets Act (DTSA) allows the rightful owner of stolen trade secret to bring a federal civil action if the trade secret is related to a product or service used — or even intended for use — in any interstate or foreign commerce.
The new law also allows a wronged company to take its protected materials back from thieves — immediately.
“It is an extraordinary remedy allowing an employer to seize materials from a culprit even before any litigation is filed,” said Paul Starkman, an expert on the new law with Chicago-based employment and labor law firm Clark Hill P.C.
Trade secret owners can obtain an ex parte order in extraordinary circumstances for the seizure of property to prevent reproduction or dissemination of a trade secret, all without a hearing or even notice to the accused party.
At a time when hackers can clean out a database from another country, or a disgruntled employee with a flash drive can steal secrets in seconds, waiting around for a hearing or to even track down an international thief can end up being costly in more ways than just cash.
“Once information is out and available on the internet, it's almost impossible to reel that back in,” Starkman said. “Manufacturers especially tend to have some kind of trade secret, in their processes, in their designs, in their manufacturing, so they certainty are a prime candidate to benefit from this law.”
Trade secrets protected under the law include more than just manufacturing processes or product formulas. Protected information ranges from customer lists and surveys to pricing and margin information to test data, research results and market studies.
With this sweeping new law comes some responsibility on the part of companies, Starkman said. Whistleblowers are immune from prosecution if they disclose of trade secrets to local, state or government officials or to an attorney because of suspected illegal activity. And employers must now notify employees who are bound by agreements and contracts dealing with the use of trade secrets or other confidential information of their immunity options and repercussions in the event of a breach of secrecy in contracts, employee handbooks, non-disclosure agreements and separation agreements as needed.
“Get your new corporate documentation worded properly, add to what already exists,” Starkman said. “It's yet another kind of disclaimer that needs to be added to people's corporate documentation, but it could cost you in the long run if it's not documented properly.”