One may often wonder, what separates a huge multinational firm from a local company which manufactures similar 
product(s), yet makes a much smaller profit, and seemingly never appears to grow beyond a size? Most of the times people will consider little-known facts about the multinational company’s product, business model or algorithm as the driving force behind this gap. These ‘best-kept trade secrets’ mostly never get to see the light of the day, and continue to help the company scale up the success chart year after year. However, once in a while, such secrets are unknowingly exposed to the world, thereby impacting the operations, productivity as well as the profitability of the company big time.
Trade secrets are indeed the intellectual property of the company which owns these, and so any espionage related to these valuable bits can harm the global reputation of the brand as a whole. This is turn also gives the company legal right to restrict misuse of its product and technology, and also get compensated for the damages it incurred in the process. However, until recently, no proper mechanism was in place to oversee this process undergo the transition smoothly.
The Defend Trade Secrets Act of 2016 (DTSA – S. 1890) was passed by the U.S. Congress in April, and was signed by President Obama on May 11, 2016 to create a legal act for it. As per it, a federal remedy is now in place which presents a synchronized legal framework to facilitate avoiding any injury or loss of employment in the instance of loss of certain trade secrets. This Act will also act as a shield for all those business owners which do not have ‘patentable’ intellectual property put their faith on the system for safeguarded their highly-critical and best-kept trade secrets and practices.
A quick overview of how this act affects different people and businesses:
- Certain trade secret misappropriations will now be treated as criminal activity
- Legal immunity will be provided to corporate whistleblowers
- Economic espionage and trade secret theft will now be part of the list of predicate offenses which constitute racketeering activity
- The court can take custody and seize materials pending seizure hearing within 7 days to give interested party time to file a motion to encrypt seized material
- Any party harmed by wrongful seizure may move to dissolve or modify order to get respite from it
- Maximum penalty for trade secret theft modified from existing $5million to even more, going as far as up to 3 times of the stolen trade secret’s actual value
What can be recovered in case of trade secrets theft?
Monetary Relief
- Compensatory damages
- Royalties
- Punitive Damages
Equitable Relief
- Preliminary Injunctions: This includes court orders made during lawsuit’s early days to create a law which prohibits parties from getting into some further dispute.
- Permanent Injunctions: This document is about taking orders from a court while discontinuing certain activities and eliminating similar loopholes.
To gain more insight of this Act, you can join expert speaker Michele Nash-Hoff in a live webinar on September 28, 2016, titled ‘How the Trade Secrets Act Will Benefit Inventors, Licensees, and Manufacturers’. Michele will give an overview of the different types of trade secrets, their relevance, provisions of DTSA (Defend Trade Secrets Act), associated precautions and remedies, and also the provision added to the Economic Espionage Act (EEA).
