New Federal Trade Secrets Law Features “Civil Seizure” Remedy
The “Defend Trade Secrets Act” has passed through Congress and is awaiting signature by President Obama, which is expected any day now. Up to now, trade secrets have been the exclusive province of state law. Although the new law will not displace state laws, it will provide an overlapping set of procedures to protect trade secrets and allow for enforcement of misappropriation claims in federal court.
One key feature of the statute is a “civil seizure” remedy, which under some circumstances would allow a trade secret’s owner to obtain a court order to seize a defendant’s property (such as computers or files) without providing advance notice to the defendant. This remedy would be only temporary and would be appropriate only to the extent the owner can show it is necessary to prevent “propagation or dissemination” of the trade secret leading to irreparable harm. Such an order would require a hearing within seven days after the order (unless otherwise agreed between the parties). The defendant can challenge an improper seizure and potentially recover attorneys’ fees, but the civil seizure remedy still constitutes a powerful tool for protecting trade secrets.
The new law cannot be used simply to prevent a person from entering into an employment relationship, but it gives courts substantial discretion to enjoin acts that could result in use or disclosure of trade secrets. Further, the law provides for immunity and whistleblower protection for an employee who reports a suspected violation of the law to a government agency or officer or an attorney, and employers are required to provide notice of such immunity in contracts governing the use of trade secrets or confidential information.
We would be glad to discuss how this new federal law may affect your business and how you can best comply and make use of its protections.