In a previous post on additional remedies provided by the DTSA, we mentioned that attorney’s fees and punitive damages include some remedies for employers who bring trade secret misappropriation claims against former employees. The question is – how can an employer take full advantage of such remedies? Employers should, pursuant to 18 U.S.C. § 1833(b)(3), ensure that their employees are aware that the DTSA provides for whistleblower immunity in any employment agreement, covenant, or contract entered into after the Act was enacted and took effect. This implies that employers should, soon after engaging an employee and as part of best practice, make sure that their employment agreements and policies are updated to include either a cross-reference to a policy document or the mandatory notice, including a statement concerning the whistleblower immunity provided under the DTSA.
Sometimes, a whistleblower may have to disclose, in confidence, a trade secret to a government official or attorney in filing a lawsuit made under seal or for the sole purpose of investigating or reporting an alleged law violation. In such a scenario, such an individual can take advantage of the DTSA’s “safe harbor” provision for immunity from civil or criminal liability under any state or federal trade secret law.
What about the “Secret Disclosure Notice” required to be provided under the statute?
Employers must also be conversant with the notice provision embedded within the statute’s section on whistleblower immunity since claims on certain remedies provided under the DTSA may be affected by whether an individual employer has complied with such a provision on notice. This knowledge also includes how to draft such notice in line and compliance with the guidelines of the DTSA. In this regard, let us provide you with a sample notice language that you, as an employer, may consider embedding within employment contracts and covenants entered into after the DTSA took effect.
Sample Secret Disclosure Notice
NOTICE is hereby given that no immunity provided pursuant to 18 U.S.C. § 1833(b)(1) or 18 U.S.C. § 1833(b)(2) will be affected by this agreement. With regard to these subsections and as elaborated below, the term “employees” also includes persons working as consultants or contractors.
A. As long as one does not reveal the trade secret except in pursuance of a court order and files any document containing the trade secret under seal, a person may, after bringing a retaliation claim against an employer suspected of violating the law, disclose a trade secret to an appointed government official or their attorney and use the information in a court proceeding.
B. If one discloses a trade secret that (1) is brought in a complaint or other document filed in a proceeding or lawsuit made under seal or (2) is made (a) with the sole purpose of investigating or reporting a law violation and (b) in confidence and either directly or indirectly to an attorney or a local, state, or federal government official, then they will not be held civilly or criminally liable under any State or Federal trade secret law.
In a nutshell, employers should always consider the DTSA’s provisions in whistleblowing and making notice before filing lawsuits against former employees who may have misappropriated trade secrets, accessed and used confidential information against the former employers’ interests, and/or breached restrictive contractual agreements entered into after the statute took effect.
In Part VII of this series, we will move the discussion forward by providing you with an overview of “The Economic Espionage Act & the Application of the DTSA Overseas.”
As usual, while you should strive to be #UnusuallyMotivated, stay tuned for more education, training, and legal guidance. In the interim, reach out to us with questions and/or comments on our website at the Contact Us page!
Always rising above the bar,
Isaac T.,
Legal Writer, Author, & Publisher.