Key Things to Know About the Defend Trade Secrets Act of 2016

On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 (“DTSA”) into law. The DTSA creates a federal civil private right of action for trade secret misappropriation. The DTSA amends the Economic Espionage Act (“EEA”), which criminalizes the theft of trade secrets, to allow private civil actions, which currently must be filed under state law. While it may take some time and judicial interpretations before many questions surrounding the new law will be resolved, the new law imposes a new notice requirement, and as a result, we advise that employers work quickly to revise their standard employee trade secret and confidential information agreements.

Under the DTSA, a trade secret owner is authorized to bring a private civil action in federal court for misappropriation of a trade secret that is “related to a product or service used in, or intended for use in, interstate or foreign commerce.” Thus, plaintiffs who prefer to litigate in federal court may be able to bring their trade secret claims and related state claims (such as breach of contract, interference with prospective economic advantage and unfair competition) in federal district court. The statute of limitations under the DTSA is three years.