Just five years ago, on May 11, 2016, President Obama signed the Defend Trade Secrets Act (the “DTSA”). This important legislation created a new, federal civil cause of action for trade secret misappropriation. The DTSA came on the heels of the 2011 America Invents Act (the “AIA”)—the most significant overhaul of the U.S. patent laws in decades. Together, the DTSA and AIA are game changers for federal IP litigation.
While aspects of the AIA are well known, such as the momentous shift from a “first-to-invent” to a “first-to-file” patent system, the trade secret implications of the AIA are less familiar. For example, the AIA notably eliminated the failure to disclose the “best mode” as grounds for holding a patent claim invalid or otherwise unenforceable. The best mode requirement of 35 U.S.C § 112 mandates that an inventor set forth the “best mode contemplated by the [inventor(s)] for carrying out the invention.” In exchange for disclosing the details of how to practice a patented invention to the public, an inventor obtains the right to exclude others from practicing the claimed invention for a certain period. Pre-AIA, if an inventor withheld a trade secret preferred embodiment of the invention from a patent, an alleged infringer could argue the asserted patent claims were invalid for failure to disclose the best mode.
IP lawyers thus traditionally counseled their clients on the potential risks of too little disclosure (which could result in patent invalidity) or too much disclosure (which could negate trade secret protection). Many inventors grappled with the dilemma of having to disclose their IP to the world to seek a patent for a limited time or keeping the IP a secret and perpetually protecting it through state trade secret laws. Often, inventors therefore elected either patent protection or trade secret protection.
Post-AIA, inventors may not have the same predicament. While an inventor must still disclose the best mode to obtain a patent, the AIA has largely removed the consequences for failing to do so by eliminating it as an invalidity defense. Inventors may be able to enforce both patent and trade secret rights covering various aspects of an invention, without risking invalidation of the asserted patent claims for failing to disclose trade secret details as the best mode of practicing the claims. Although there are still other challenges to protecting and enforcing such dual IP rights, due to the AIA and DTSA, inventors who have both trade secrets and patents in their IP portfolio at least have the option to assert their patents, trade secrets, or both in federal litigation, without the pre-AIA best mode invalidity risk.
On the 5th anniversary of the enactment of the DTSA, here are 5 things to remember should one choose to assert IP as a trade secret under the DTSA:
In sum, in the post-DTSA and post-AIA era, there are many considerations in deciding what types of IP to assert. If one chooses to bring a trade secret misappropriation claim, it is important to consider these and other relevant factors in deciding whether to bring a DTSA claim in federal court.