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“Defend Trade Secrets Act” creates new federal cause of action and requirements for employers

May 13, 2016

This week, the President signed into law a bill entitled the Defend Trade Secrets Act of 2016 (DTSA). The DTSA is effective immediately. The law bolsters employers’ efforts to preserve the confidentiality of trade secrets; most importantly, by creating a new private, federal cause of action for trade secrets misappropriation. The new federal cause of action is in addition to remedies already available under state law. Employers, other entities and individuals now may seek an injunction and other relief in federal court where trade secrets used, or intended to be used, in interstate commerce have been misappropriated. The DTSA, in addition to other available economic relief, awards attorneys’ fees and exemplary damages to a prevailing plaintiff. The DTSA also permits certain equitable remedies, including the issuance of court orders seizing materials containing misappropriated trade secrets, without notice to the defendant.

To take advantage of the DTSA’s attorneys’ fees and exemplary damages provisions, however, employers must include specific language within applicable employment agreements, non-disclosure agreements and other contracts concerning confidentiality and trade secrets protections. Particularly, employers must advise employees and contractors of their right to make limited disclosures of trade secrets in certain instances of whistleblowing or when claiming retaliation by an employer. If you have any questions about the DTSA, including what specific language must be added, please contact one of Honigman’s Labor and Employment attorneys.