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Despite being just a few months old, the US Defend Trade Secrets Act has already been used to address some unique issues, and it’s likely that courts will soon begin setting out the metes and bounds of the legislation, as Kevin O’Shea and Michael Hopkins of Ice Miller explain.
The Defend Trade Secrets Act (DTSA) was enacted on May 11, 2016 in the hope of smoothing differences in the US states’ separate implementation of trade secret laws under the Uniform Trade Secrets Act (UTSA), particularly in view of the ever-broadening scope of national and global commerce. Owing to the lack of retroactive effect of the DTSA, US district courts have so far issued only a handful of rulings addressing the law, and there have not yet been any decisions from the US appellate courts.
Many of these early judgments have come in the context of a request for a temporary restraining order and/or a preliminary injunction seeking to enjoin a former employee from taking trade secrets to their new employer—requests which tend to incorporate state law issues relating to employee mobility—as well as interpretation and modification of non-disclosure and non-compete agreements. Despite the relatively small sample size, some trends appear to be developing.
The DTSA explicitly does not preempt state trade secret laws, and plaintiffs have consistently included claims under the DTSA and the relevant state law in their complaints. This strategy allows plaintiffs to rely on well-developed case law addressing state trade secret laws, and then to argue that conclusions based on state law are applicable to the undeveloped DTSA due to the similarities between the DTSA and state trade secret laws in important areas such as the definitions of a “trade secret” and “misappropriation”.
Kevin O’Shea, Michael Hopkins, Ice Miller, US Defend Trade Secrets Act, trade secret,