Federal Court

House Passes Federal Trade Secret Bill

April 28, 2016

The House on Wednesday passed the Defend Trade Secrets Act of 2016 which would allow individuals and companies to fight trade-secret theft in federal court. The Senate already voted to approve the bill earlier this month, and President Obama is expected to sign it into law.

Trade secrets include customer lists, recipes, procedures, blueprints, and other accumulated proprietary knowledge that provides businesses with a competitive advantage in the marketplace. Such proprietary information provides hundreds of billions of dollars in annual revenue and millions of jobs.

Currently, federal trade secret protection is only available by requesting the Justice Department to intervene. Companies or individuals cannot file a federal lawsuit and must therefore address the issue in state courts. This can mean added complexity and expense when dealing with various state courts with differing laws, particularly when a trade secret case involves multiple states.

The Defend Trade Secrets Act would authorize individuals and companies to file a civil lawsuit in federal court for the misappropriation of a trade secret that is related to products or services involved in interstate or foreign commerce. Besides the potential for reduced cost and complexity, the law provides options for enforcement that are beyond what state courts are typically willing to do. For example, a seizure provision allows a company to ask for the government to seize its trade secrets prior to giving any notice of the lawsuit to a potential defendant.

The Obama Administration has thus far supported the Defense of Trade Secrets Act. In a statement released earlier this month, the President said he “strongly supports” the legislation and its effort to make trade secret protection “more uniform, reliable, and predictable.”

Contact us if you have any questions on this or any other aspect of intellectual property protection.