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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 Part II of our brand new, multipart series on the “Enforcement of the Protection of Employers’ Confidential Information & Trade Secrets.”

In Part I of this series, we took a deeper exploration of the available legal recourse and guidance and provided the definition of trade secrets as given under both the DTSA (Federal Defend Trade Secrets Act) and the Uniform Trade Secret Acts (Unif. Trade Secrets Act § 1(4), (UTSA)). We also mentioned that irrespective of the provisions on a new federal cause of action provided by state trade secret laws, no existing state trade secret law regimes are preempted by the DTSA, which 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.

To move this discussion forward and ensure that you are enlightened, this blog is Part II of the series and an overview of the definition of the term “misappropriation,” as defined under both the DTSA and UTSA.

Misappropriation, as Defined under the DTSA

Just as it is with the definition of “trade secret,” the DTSA and UTSA do not differ significantly in their description of the term “misappropriation.” However, we cautioned that due to differences in how the DTSA & UTSA are enforced in different states, employers and employees and their defense attorneys should not overlook the slight variation in both definitions. Nonetheless, pursuant to 18 USC § 1839(5) & Unif. Trade Secrets Act § 1(2), “misappropriation” is defined as follows:

1. Acquisition of a person’s trade secret by another individual who has reason to know or who knows that improper means were used to acquire such trade secret-or-

2. Use of disclosure of an individual’s trade secret without implied or express consent by an individual who:

  • Acquired knowledge of the trade secret through improper means
  • At the time of use or disclosure, had reason to know or knew that the knowledge of the trade secret was:

a. Derived through or from an individual who owed a duty to the individual seeking relief to limit the trade secret’s use or maintain the trade secret’s secrecy

b. Acquired under circumstances giving rise to a duty to limit the trade secret’s use or maintain the trade secret’s secrecy-or-

c. Derived through or from an individual who had acquired the trade secrets through improper means.

  • Prior to a material change of the position, the individual had reason to know or knew that:

a. The trade secret’s knowledge had been acquired by mistake or accident-and-

b. The trade secret was a trade secret.

We hope you have been educated and enlightened on what a court would consider as “misappropriation” in line with both statutes (the DTSA & UTSA), which are concerned with providing the legal recourse and enforcement to trade secret misappropriation. It is crucial to emphasize that employers and their counsel should be aware of these definitions so that they can manage to convince a court that their trade secret was misappropriated and, as such, they are seeking relief to limit the trade secret’s use or maintain the trade secret’s secrecy.

In Part III of this series, we will provide you with a hands-on guide regarding “How To Draft a DTSA (Federal Defend Trade Secrets Act) Complaint.”

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.