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12 May 2016

US trade secrets bill signed into law

US President Barack Obama has signed the Defend Trade Secrets Act (DTSA) into law, meaning trade secrets will now have federal protection and be brought into line with other forms of intellectual property.

Obama signed the bill yesterday, May 11.

In April, the bill was passed by 410 votes to 2 by the US House of Representatives. Earlier that month, it was passed by the Senate by 87 votes to 0.

Under the act, owners of trade secrets will be able to secure federal relief for the misappropriation of their knowledge as opposed to going through individual state courts.

Also, under “extraordinary circumstances”, a judge may order the seizure of another party’s property in order to “prevent the propagation or dissemination of the trade secret that is the subject of the action”.

Michelle Lee, director of the US Patent and Trademark Office, hailed a “new day for innovators”.

“While trade secrets may be the oldest form of IP, they are also unique. Unlike the federal protections that have traditionally been afforded to patents, trademarks and copyright, trade secrets have been protected historically not by a federal right but by a patchwork of state statutes,” she said.

She added: “This new law provides yet another arrow in the quiver of IP protections by creating a federal civil cause of action for trade secret theft, including the availability of a uniform, reliable and predictable means of protecting valuable trade secrets anywhere in the country.”

Robert Milligan, partner at law firm Seyfarth Shaw in Los Angeles, also welcomed the news.

“The livelihood of many businesses depends upon these important IP assets. With the new law, they are put in their rightful place among patents, trademarks, and copyright,” he said.

“Trade secrets will only grow in importance as a result of the new law. As companies have begun to move from seeking patent protection, the DTSA will help fill that void by providing a property right that can be protected in federal court,” he added.

Jane Schlicht, partner at law firm Hinshaw & Culbertson in Milwaukee, said the law should provide “much needed relief” but added that employers should be aware that the act also includes “whistleblower protections”.

“Employers must notify employees in any contract that is related to trade secrets or confidential information of their right to provide confidential information to the government if illegal activity is suspected,” she said.

Employers who do not provide notice and pursue a trade secrets claim will not be able to recover attorneys’ fees or exemplary damages if they are successful.

WIPR has been closely following the bill’s passage. You can read some of our stories on the developments below.

Trade secrets bill introduced to US Senate

US trade secret reform: an efficient way of protecting ideas

US Senate passes federal trade secrets act

Trade secrets bill nears completion after House approval

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More on this story

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28 April 2016   The US House of Representatives has passed a bill that promises to give victims of trade secrets theft the power to sue in a federal court, bringing laws into line with other forms of intellectual property.
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18 May 2016   A Virginia-based building company has filed a lawsuit under the US’s new trade secrets law accusing the City of Miami Beach of improperly passing on confidential information to an electricians’ union.
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15 August 2016   The Federal Trade Commission and the Department of Justice’s Antitrust Division are asking for public comments on a proposed update to the Antitrust Guidelines for the Licensing of Intellectual Property.