President Obama recently signed the Defend Trade Secrets Act into law. The bill raises trade secret protection to a federal cause of action and attempts to create more consistent protection for this important form of intellectual property.
Previously, trade secret protection was entirely defined by state law. Despite the widespread acceptance and enactment of the Uniform Trade Secrets Act by many states, significant disparities have grown up between the trade secret jurisprudence of the states.
Trade secret protection has always been an important component of the intellectual property protection spectrum. In many cases, patent protection is limited because of disclosure, eligibility and time requirements. Moreover, recent changes and volatility in the patent laws (and their interpretation) have caused a high degree of uncertainty about the enforceability of patent rights. These factors have created a growing interest in the use of trade secrets as a primary method of protection for key business and technological information. In many cases, especially biochemical and computer-implemented inventions, trade secret provides the best opportunity for maintaining long term proprietary rights.
In light of this increasing emphasis on trade secret protection, the disparity in the definition and protection of trade secrets between the various states has created uncertainty as well as a forum shopping environment for both rights holders and their competitors.
The new federal law is intended to provide a broad and consistent definition of trade secrets, a more uniform jurisprudence across the states and an option for litigants to utilize the federal court system without meeting other jurisdictional requirements, such as a threshold monetary claim value. Finally, it also provides for certain federal criminal enforcement for misappropriation of trade secrets. Under the new federal law, remedies for the owner of a trade secret include:
- Seizure of property necessary to prevent the propagation or dissemination of trade secrets.
- The entry of reasonable injunctive relief.
- Award of reasonable royalties if injunctive relief is not appropriate.
- Award of damages for actual monetary losses.
- Double damages in cases of willful misappropriation.
Obviously, it will take some time for the interpretation of this law to mature and the boundaries of interaction with state trade secret, employment restriction and non-competition laws to be established. However, the ability of an owner of a trade secret to obtain relief from a federal court in a remote jurisdiction, based upon a uniform, national standard is an important new weapon for intellectual property owners.
