US Senate Introduces Bill To Create Federal Civil Cause Of Action For Trade Secret Theft

In 1996 Congress passed the Economic Espionage Act (“EEA”).  The EEA created a criminal statue to combat trade secret theft.  Although the EEA provided restitution for injured parties, it did not create a private right of action.  Thus, aggrieved parties had to rely on the Uniform Trade Secrets Act (“UTSA”) on a state-by-state basis to fully avail themselves of civil remedies.  However, despite the name, the act was not entirely uniform across jurisdictions, and each state’s version of the Uniform Trade Secrets Act varied.  On April 29, 2014,bi-partisan bill S. 2267 for the Defense of Trades Secrets Act (“DTSA”) was introduced to give trade secrets federal court footing equal to patents, trademarks and copyrights.  The bill’s sponsors, Senators Orrin Hatch and Chris Coons estimated the annual loss to US companies of trade secret theft to be in the range of $160 to $480 billion annually.  They also pointed to the increasing problem of theft at the direction of a foreign government, or for the benefit of a foreign competitor.  In sum, the DTSA is a federal version of the UTSA which is anticipated to impose more uniformity than the UTSA.  It includes remedies such as injunctive relief, money damages or restitution, royalties, treble damages, and attorneys’ fees.  Although the aforementioned remedies are typical throughout the various state UTSA provisions, the DTSA contains a more generous five year statute of limitations and allows for ex parte orders for the preservation and/or seizure of evidence.  In light of the proliferation of electronic trade secret theft, the ex parte preservation/seizure order is a handy and timely update reflecting the state of technology in the workplace.  Of note, the bill expressly provides that it will not preempt state law causes of action.  Resultantly, one can assume state UTSA actions can continue to be asserted in federal court and depending on the particular state’s interpretation of the UTSA, plaintiffs should analyze the case law in the appropriate jurisdiction to determine which venue will afford the best forum for the plaintiff.

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