NEWSLETTER ARCHIVE
Volume 47, Issue 4
The Defend Trade Secrets Act: Examining the DTSA’s Language, Use, and Future
American corporations face an increasing threat of misappropriation of valuable trade secrets through corporate espionage. Indeed, former Attorney General Eric Holder stated that “
[t]here are only two categories of companies affected by trade-secret theft: those that know they’ve been compromised and those that don’t know yet
.” The newly enacted
Defend Trade Secrets Act
(DTSA) provides a robust new tool to combat trade secret theft in an age of ubiquitous connectivity that allows for easy transfer of digital information. This article explains the salient provisions of the DTSA, examines the implications of early judicial decisions applying the DTSA, and discusses the possible future impact the DTSA will have on trade secret litigation in United States district courts and at the International Trade Commission.
Provisions of the DTSA
The DTSA creates a federal private civil cause of action for trade secret misappropriation that allows an owner of a stolen trade secret to bring a civil action “if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” Civil remedies for trade secret misappropriation previously were exclusively a matter of state law. With the passage of the DTSA, United States district courts have original jurisdiction over civil actions for trade secret theft for the first time. Importantly, the DTSA does not preempt existing state trade secret laws, but exists in parallel with state trade secret law regimes, giving corporations affected by trade secret misappropriation options with which to address trade secret theft. The DTSA defines “trade secret” broadly, as follows: The DTSA creates a federal private civil cause of action for trade secret misappropriation that allows an owner of a stolen trade secret to bring a civil action “if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” Civil remedies for trade secret misappropriation previously were exclusively a matter of state law. With the passage of the DTSA, United States district courts have original jurisdiction over civil actions for trade secret theft for the first time. Importantly, the DTSA does not preempt existing state trade secret laws, but exists in parallel with state trade secret law regimes, giving corporations affected by trade secret misappropriation options with which to address trade secret theft. The DTSA defines “trade secret” broadly, as follows:
all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—
(A) the owner thereof has taken reasonable measures to keep such information secret; and

(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.
This definition does not differ significantly from the definition for trade secret in the
Uniform Trade Secrets Act
(UTSA), a model act created by the Uniform Law Commission, and adopted by the vast majority of U.S. states (Massachusetts and New York being the only exceptions). Misappropriation is also defined specifically as follows:
(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(B) disclosure or use of a trade secret of another without express or implied consent by a person who—
(i) used improper means to acquire knowledge of the trade secret;
(ii) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was—
(I) derived from or through a person who had used improper means to acquire the trade secret;
(II) acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or
(III) derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret; or
(iii) before a material change of the position of the person, knew or had reason to know that—
(I) the trade secret was a trade secret; and
(II) knowledge of the trade secret had been acquired by accident or mistake.
Interestingly, the terms of the
Economic Espionage Act
(EEA), which the DTSA modifies, suggest that the DTSA could be used to remedy misappropriation of trade secrets even where the theft occurs outside of the United States. Specifically, the EEA includes a provision relating to its applicability to conduct outside the United States, indicating that the law
applies to conduct occurring outside the United States if the offender (1) is a citizen or permanent resident of the United States, (2) United States corporation, or (3) if “an act in furtherance of the offense was committed in the United States
.” This provision was not changed by the DTSA’s amendment of the EEA, suggesting that the DTSA may be applicable to trade secret misappropriation that takes place overseas. Such overseas application may be especially useful given the increase in economic and corporate espionage originating in China. “
Chinese actors are the world’s most active and persistent perpetrators of economic espionage
.” Compounding this threat is the reality that “
[s]ignificant structural and institutional impediments undermine effective IPR enforcement in China[, including] a lack of coordination among government agencies, insufficient resources for enforcement, local protectionism, and a lack of judicial independence
.” Given the difficulties of enforcing IP rights in China, the EEA’s applicability to overseas conduct may prove very valuable to victims of trade secret theft.
< Previous Article
Table of Contents
Next Article >
2016 Ⓒ Boston Patent Law Association
Index
Community Calendar
Read more >
Table of Contents
President's Message by Erik Belt
Read more >
BPLA Submitted
Amicus
Brief in Design Case of the Century
Read more >
< Back
Message from the Editor-in-Chief
Read more >
The Defend Trade Secrets Act: Examining the DTSA’s Language, Use, and Future
Read more >
BPLA's ANNUAL MEETNG AND LUNCHEON
Read more >
RESTORING THE PATENT SYSTEM: Countering Supreme Court Attacks on What Can Be Patented
Read more >
IPR Motions to Amend: Rays of Hope for Patent Owners Despite Gloomy Statistics
Read more >
Nominations for the BPLA Officers and Board of Governors for 2016-2017
Read more >
In re Aqua Products
: Claim Amendments During
Inter Partes
Review
Read more >
Proposed Membership By-Law Change
Read more >
The 2016
Invented Here!
Event
Read more >
2015 BPLA Annual Meeting Minutes
Read more >
Ex Parte
Reexamination as a Valuable Option for Challenging Patent Claims
Read more >
PTAB Bar Asssociation
Read more >
McRO v. Bandai
: Latest Federal Circuit § 101 Decision Breathes New Life into Software Patents
Read more >
Members on the Move
Read more >