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As the authoritative force in Employment Law, we are committed to providing you with authoritative, up-to-date, and trustworthy content through which you can draw enlightening information to stay ahead of the game in your business. In our blog titled “Statutory Definitions & Types of Info Considered Trade Secrets” and published under the series “Cybersecurity Measures to Protect Employers,” we highlighted that restrictive covenants are enforced under two statutes: Defend Trade Secrets Act of 2016 (DTSA) and Uniform Trade Secret Acts (Unif. Trade Secrets Act § 1(4), (UTSA)) (including additional local trade secret statutes). With regard to these statutes, this blog is an introduction to yet another brand new, multipart series on the “Enforcement of the Protection of Employers’ Confidential Information & Trade Secrets.” Among other objectives, we aim to provide an overview of the legal recourse and guidance that employers can utilize in enforcing the protection of their trade secrets and other proprietary and/or confidential information, particularly after an incident of misappropriation. In line with that, we have taken a deeper exploration of the available legal recourse and guidance in this blog and Part I of the new series.

The DTSA (Federal Defend Trade Secrets Act), the Uniform Trade Secret Acts (Unif. Trade Secrets Act § 1(4), (UTSA)) and Recourse for the Misappropriation of Trade Secrets

For starters, it is warranting for employers to understand what constitutes “trade secrets” in line with the DTSA’s & definition. As mentioned in the blog mentioned above, which is accessible at https://milettilaw.com/blog/f/statutory-definitions-types-of-info-considered-trade-secrets, all types and forms of engineering, economic, technical, scientific, business, or financial information (such as codes, programs, procedures, processes, techniques, methods, prototypes, designs, formulas, program devices, compilations, plans, or patterns), whether or how memorialized, compiled, or stored (such as in the written form, photographically, graphically, electronically, or physically), and whether tangible or intangible constitute “trade secret” if –

· Reasonable measures have been taken by the owner thereof to ensure the secrecy of such information –and-

· The information derives potential or actual independent economic value from not being readily ascertainable through proper means and not being generally known to another individual who can obtain economic value from the use or disclosure of such information.

Under this context, the protection against and remedy to trade secret misappropriation are enforced pursuant to Section 130 Stat. 376 of the DTSA. Accordingly, a growing count of employers has proceeded to federal courts to file lawsuits against the misappropriation of their trade secrets or related confidential information, particularly following the enactment of the statute.

Does the DTSA Preempt Existing State Trade Secret Law?

The answer to this question is no! Any existing state trade secret law regimes are not preempted by the DTSA, irrespective of the provisions on new federal cause of action provided by the former. This implies that, practically, an employer whose trade secrets have been misappropriated can proceed to any federal court and make parallel federal and state trade secret misappropriation claims. It also means that to have all potential causes of action, an employer should also consider bringing concurrent federal and state claims since the DTSA and the state trade secret laws do not provide the same relief.

Similarly, the Uniform Trade Secret Acts (Unif. Trade Secrets Act § 1(4), (UTSA)) also provides a channel through which employers can enforce the protection of their trade secrets against misappropriation. Under the UTSA and as mentioned in the blog provided above, “trade secret” implies all information, including a process, technique, method, device, program, compilation, pattern, or formula, that:

  • Derives potential or actual independent economic value from not being readily ascertainable through proper means by and not being generally known to another individual who can obtain economic value from the use or disclosure of such information.
  • It is the subject of reasonable efforts under the circumstances to ensure its secrecy is maintained.

While litigants will always attempt to exploit the differences, careful scrutiny of both definitions indicates that although minor, the variation in the DTSA’s and UTSA’s definitions is significant to a certain extent and may have implications for litigation outcomes. Thus, it goes without saying that a litigating employer must ascertain the argument regarding the alignment between the trade secret’s definition under all applicable statutes and the specific trade secrets in question.

In Part II of this series, we will provide you with an overview of the “Misappropriation, as Defined under the DTSA.”

As usual, 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.