CHICAGO — With overwhelming bipartisan support, the Defend Trade Secrets Act is now law, giving manufacturers and others the ability to bring a civil case in federal court against those they accuse of improperly sharing their trade secrets.
Studies have shown the theft of trade secrets cost American businesses between $300 billion and $500 billion each year, said Matthew Walch, an attorney with Latham & Watkins in Chicago.
The bill passed the Senate without opposition, and then passed the House of Representatives 410-2. President Obama signed the bill into law in May.
“Protecting trade secrets makes good business sense,” Walch said. “There have also been high profile and egregious instances of trade secret misappropriation in recent years. It’s logical from the perspective of both politicians and businesses to provide greater protection from such improper conduct, particularly by foreign actors against American companies.”
DTSA allows trade secret owners to seek remedies that go beyond state and common law, Walch said. For one, businesses have the ability to obtain orders to seize property to stop the dissemination of stolen trade secrets.
“Federal courts also offer broader discovery tools to help companies investigate theft of trade secrets, particularly with respect to international conduct,” he said. “Such conduct is often implicated in trade secret cases. For example, a defendant could abscond company trade secrets and move to China to make it easier to conceal his or her conduct and exploit those trade secrets.”
The act also creates a legal framework that looks the same in every state.
Litigants in Illinois could benefit from the ability to file a trade secrets suit in federal court. The act’s damage provisions are more favorable to trade secret owners than the state’s Trade Secrets Act, Walch said.
“In many instances, such courts are better suited to handle the complex technical issues and international implications raised by trade secret cases,” Walch said.
The new legislation doesn’t beat preventing information from being stolen in the first place, though.
Walch recommends companies take steps to protect confidential information, using locks, guards, access control, confidentiality agreements and document labeling. He said keeping a “trade secret inventor” that’s organized and documented “will help prepare a company to enforce its rights when necessary.”
Confidentiality, hiring and consulting agreements should include protections for trade secrets, he said.
Additionally, when an employee leaves the company, employers should monitor the employee’s behavior and activity, including any emails sent to personal addresses or files saved to external devices to make sure they don’t take trade secrets with them when they go, Walch said.