Federal Defend Trade Secrets Act of 2016 Signed into Law

Federal Defend Trade Secrets Act of 2016 Signed into Law

By: Kristen E. O’Neill

On May 11, 2016, President Obama signed the Federal Defend Trade Secrets Act of 2016 (the “FDTSA”) that establishes a federal private cause of action for misappropriation of trade secrets. The FDTSA does not preempt state laws and a plaintiff may bring both federal and state law claims in federal court. For the FDTSA to apply, the trade secret must be related to a product or service used in, or intended for use in, interstate or foreign commerce.

Before passage of the FDTSA, companies seeking civil equitable or monetary remedies for misappropriation of trade secrets were generally limited to state law claims. Plaintiffs were also limited to litigating in state court, unless federal diversity jurisdiction existed. Moreover, while forty-eight (48) of the states, including Illinois, have adopted the Uniform Trade Secrets Act (“UTSA”), there are certain differences in how states have applied the UTSA, leading to inconsistent trade secret protection among the states.

The FDTSA includes similar definitions to the UTSA, but provides for several additional remedies and protections not included in the UTSA.  An important remedy provided for in the FDTSA is the ex parte seizure of property by law enforcement officials where it is necessary to prevent the propagation of dissemination of the trade secret. A seizure order may only be granted in extraordinary circumstances and only after the movant has established specific facts to support the seizure and detailed descriptions of property to be seized. Some other significant provisions include the ability to recover double damages if the trade secret was willfully and maliciously misappropriated, and whistleblower protection for whistleblowers who disclose trade secrets in confidence to a federal, state or local government official for the purpose of reporting or investigating a suspected violation of law.

If you have questions regarding the new Federal Defend Trade Secrets Act, please contact:

Kristen E. O’Neill at:

(312)368-0100 or koneill@lgattorneys.com.

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