Defend Trade Secrets Act Creates New Federal Claim For Misappropriation of Trade Secrets

by Smith Anderson

On May 11, 2016, President Barack Obama signed the Defend Trade Secrets Act of 2016 (DTSA) into law, creating a federal civil right of action for the theft of trade secrets. Until now, trade secrets had been protected only at the state level, with most states adopting their own version of the Uniform Trade Secrets Act. The DTSA is intended to supplement, rather than preempt, state trade secret law.

Pursuant to the DTSA, the owner of a trade secret may bring a private civil action for misappropriation in federal district court “if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” Misappropriation, under the DTSA, is defined as the “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means” or “disclosure or use of a trade secret of another without express or implied consent.”


  1. Access to Federal Courts and Potential for Uniformity. The most obvious change is that the new law provides plaintiffs the opportunity to bring their trade secret claims in federal district court. It also provides the opportunity for plaintiffs to take advantage of federal procedures, like nationwide subpoena power. In addition, a new federal remedy may enable the development of a uniform body of trade secret case law, which could increase predictability of trade secret protection over time.
  2. Ex Parte Seizure Order. The DTSA provides an ex parte seizure remedy that is unlike any remedies provided by state trade secret law. Under the DTSA, the court may issue an order to seize property “necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.” Under the DTSA, a plaintiff can file an ex parte seizure application without providing any notice to the adverse party. The ex parte seizure procedure establishes a high standard that the plaintiff must satisfy in an affidavit or verified complaint in order to obtain the ex parte order and will likely apply only in extreme situations, such as where the theft of information will cause serious harm and cannot otherwise be prevented with an injunction.
  3. Whistleblower Protections and the Notice Requirement. The DTSA also contains a separate provision protecting whistleblowers who disclose trade secrets if the disclosure is made to report an alleged violation of law. The DTSA requires that employers provide notice of the whistleblower protection in any agreement with an employee that relates to the use of trade secrets or other confidential information. If the employer fails to provide this notice, then the employer may not be able to take advantage of certain remedies provided by the DTSA, including exemplary damages and attorneys’ fees. 
  4. Rejection of the Inevitable Disclosure Doctrine for Obtaining Injunctive ReliefThe inevitable disclosure doctrine, recognized only in some states, allows employers to enjoin former employees from working for competitors where employees may inevitably disclose or use their knowledge of the employer’s trade secret information in their new employment. The DTSA rejects the inevitable disclosure doctrine for injunctive relief for threatened misappropriation. The “threatened misappropriation” provision of the DTSA allows an employer to obtain an injunction to prevent an employee from taking a job based on “evidence of threatened misappropriation,” but “not merely on the information the person knows.”


In addition to the steps that employers already should be taking to protect their trade secrets, including using confidentiality agreements with employees and implementing measures that reasonably protect the secrecy of the company’s trade secrets, employers can take further steps in light of the new federal law:

  1. Review Employment Policies and AgreementsEmployers should review their company’s policies and agreements to ensure they include required language under the DTSA regarding the whistleblower provisions. The failure to include this required language prevents an employer from obtaining exemplary damages and attorneys’ fees.
  2. Evaluate Strategy for Proceeding Under State Law, the DTSA, or BothBefore a trade secret claim arises, employers should evaluate their state law and the DTSA to determine the advantages and disadvantages of bringing a trade secret misappropriation claim under state law, the DTSA, or both. Time spent thoroughly performing this evaluation on the front end will maximize the opportunity to enforce a company’s trade secret rights when the emergency arises.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Smith Anderson | Attorney Advertising

Written by:

Smith Anderson

Smith Anderson on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.