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House passes bill allowing employers to combat trade-secret theft in federal court
By Katherine Fechte on April 29, 2016

On  April 27, 2016, the House of Representatives passed a bill that would allow companies to go straight to federal court to fight trade-secret theft by their employees. Currently, when a company’s trade secrets are stolen, the only available remedies are to file a private civil action in state court or to convince the Justice Department to bring a criminal case.

The goal of the new Defend Trade Secrets Act is to create stronger tools for combating trade-secret theft through federal court resolutions, as well as build uniform law through the federal statute. Supporters believe the legislation will help protect against the growing threats of trade-secret theft, especially as federal courts are likely better equipped than state courts to handle the complex technological and international cases.

In addition to putting trade secrets on the same ground as patents, copyrights and trademarks in terms of available protections, the new statute would allow courts to issue ex parte seizure orders to prevent the dissemination of a trade secret. Although courts are cautioned in the statute to only issue orders in extraordinary circumstances, this severe remedy is not otherwise available under state law. While there are some concerns about overreaching and unfairly preventing employee mobility with the DTSA, it ultimately has widespread support from both the House and the Senate, as well as indicated backing from the Obama administration. It is clear the business world is anxious to see it go into effect both to prevent the passage of trade secrets out of the country, and in its defense of the processes that support billions in revenue and millions of jobs.

If you have questions about the Defend Trade Secrets Act or want to know more about protecting your company’s trade secrets, please contact our Employment & Labor Group

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