On April 27, the full House of Representatives passed the federal Defend Trade Secrets Act (“the Act”) by an overwhelming vote of 410-2. As we have previously blogged, the Act is likely to be signed by the president and become law for any trade secret misappropriation that occurs after the Act is passed. In the coming weeks, we will provide in-depth analysis of the Act’s provisions and the changes that will need to be made to written employment policies, nondisclosure policies, and litigation strategy. Here are some of the key points:
- The Act provides a federal civil remedy for misappropriation of trade secrets. There is no amount in controversy threshold.
- The Act allows ex parte seizure in “extraordinary circumstances,” which are undefined. These are carried out by federal law enforcement under strict parameters that must be contained in the seizure order, and without the physical presence of the applicant, or of state or local authorities, unless allowed by the seizure order.
- The Act preserves state laws restricting restraints on employment by expressly stating that an injunction under the Act cannot conflict with applicable state laws prohibiting restraints on the practice of a lawful trade, profession, or business.
- The Act contains whistleblower protections for reporting trade secret misappropriation. However, if an employer does not provide notice of the immunity provisions in its written policies, it may not be awarded exemplary damages or attorney fees for willful misappropriation.
Stay tuned for more in-depth analysis on this important tool for employers and businesses to protect their intellectual property.