May 12th, 2016
New Federal Law Expands Trade Secrets Protections
There's good news for companies that rely on trade secrets. A brand new federal law - the Defend Trade Secrets Act - provides a raft of expanded remedies for theft of trade secrets. Signed by President Obama on May 11th, the Act gives all federal courts jurisdiction to grant injunctions, seizure orders and awards of doubled damages at the request of any trade secret owner claiming another party has accessed their trade secret without authorization. Importantly, the Act empowers courts to issue injunctions and seizure orders on an "ex parte" basis, meaning without prior notice to the party from whom business records are seized or whose further use of the trade secret would be prohibited. The Act takes effect immediately.
Prior to this Act, trade secrets were protected only by state laws, requiring those seeking to protect their trade secrets to litigate in state courts. But the remedies and litigation discovery procedures vary widely by state. The new Act eliminates those differences by opening federal courthouses' doors to these claims. We expect the double damages provision in particular to make federal courts the preferred venue for trade secret claims from now onwards.
How federal courts will interpret their newly expanded authority under the Act remains to be seen. The Act seemingly does not disturb the state laws governing what you must do to secure protection for a trade secret, or how to establish a claim for damages for its unauthorized use. And there remain many practical steps you must take to protect your rights in confidential information - including properly identifying and labelling trade secrets as confidential, and ensuring employees take certain required steps to secure their confidentiality. Failure to take certain precautions risks losing trade secret protection altogether.
If you have questions about how to properly protect your confidential information, how to take advantage of the Defend Trade Secrets Act, or how to defend against unfounded trade secret claims, please contact Craig Whitney at (212) 826 5583 or firstname.lastname@example.org or any other member of the Frankfurt Kurnit Litigation Group.
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