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A New Federal Claim For The Theft Of Trade Secrets

What should employers take away?

August 09, 2016

(press release: cdklawyers) // Dallas, Texas // Keith Clouse

President Obama signed into law the Defend Trade Secrets Act of 2016 (“DTSA”). For the first time, companies and employers have a federal civil remedy for an employee’s misappropriation of trade secrets. In general, “[a]n owner of a trade secret that is misappropriated may bring a civil action under [the DTSA] if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” If this jurisdictional burden is not met, an employer’s only remedy may be under the Texas Uniform Trade Secrets Act.

As courts begin to hear cases brought under DTSA, what should employers take away today?

(1)  Whistleblower Notice Provision:

Employers must update their confidentiality agreements to include a “whistleblower” notice provision. The DTSA requires employers to provide employees with notice of their immunity from DTSA liability should they disclose trade secrets to government officials for the sole purpose of reporting or investigating suspected violations of the law. 18 U.S.C. § 1833(b)(1). Failure to do so could prohibit recovery of exemplary damages and attorneys’ fees that may otherwise be available under the DTSA.

(2)  Ex Parte Orders:

The DTSA also provides for ex parte orders “providing for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.”18 U.S.C. § 1836(b)(2)(A)(i). The burden to obtain this civil seizure procedure is stringent and is only available in extraordinary circumstances. However, it is important to note, the Texas Uniform Trade Secrets Act does not have a similar provision.

To speak to an employment law attorney about non-compete agreements, send an email to debra@clousedunn.com or call (214) 239-2705. This article is presented by the Dallas employment law lawyers at Clouse Dunn LLP.