Metz Lewis Brodman Must O'Keefe

Metz Lewis Brodman Must O'Keefe

Posted on September 25, 2018

The Defend Trade Secrets Act of 2016 (the “DTSA”), which created, for the first time, a federal cause of action for trade secret misappropriation, is a little over two years old now.  One of the most noteworthy aspects of the DTSA is the inclusion of a provision that permits a party, ex parte, to seek the issuance of an order providing for the seizure of property “necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.”[1]  At the time of the passage of the DTSA, it was difficult to predict how and when courts would allow the use of this powerful tool in the contentious world of trade secret litigation.  Recent decisions have finally provided some guidance.

Under the statute, ex parte seizure orders were designed to be difficult to obtain.  Such orders are expressly limited to “extraordinary circumstances” and can only be issued if the “court finds that it clearly appears from specific facts” that eight separate statutory requirements are satisfied.”[2]  Although it is difficult to obtain a seizure order, it is not impossible.  And, over the last two years, a distinct pattern has emerged as to when a court will go the extra step of authorizing a seizure.

The following four factors appear to be significant:

  1. The defendants have a high level of computer and technical proficiency and there have been attempts in the past by the defendants to delete data and information from relevant computers or databases;[3]
  2. The defendants have shown a willingness to hide information rather than comply with requests to cease use of proprietary materials;[4]
  3. An ability to minimize disruption to the defendants by seizing digital or virtual copies rather than physical equipment[5] or targeting the seizure order to a single device[6]; and
  4. An ability to describe the information or property to be seized in great detail—e.g., identifying serial numbers or file names.[7]

Business owners should not let the difficulty of obtaining a seizure order dissuade them from even trying.  These orders send a strong message to a former employee or a competitor that you are taking the theft of your information very seriously.  If you have any questions about how to best protect your business in the aftermath of the theft of your confidential information, please contact a member of the Complex and Commercial Business Litigation Group.

[1]  18 U.S.C. § 1836(b)(2)(A)(i).

[2]  18 U.S.C. § 1836(b)(2)(A)(iii).

[3]  Solar Connect, LLC v. Endicott, No. 2:17-cv-1235, 2018 WL 2386066, at * (D. Utah Apr. 6, 2018)

[4]  Thoroughbred Ventures, LLC v. Disman, No. 4:18-cv-318, Order (Dkt. #6) at 5 (E.D. Tex. May 1, 2018); Blue Star Land Servs. v. Coleman, No. 5:17-cv-931, Order (Dkt. #10) at 3 (W.D. Okla. Aug. 31, 2017).

[5]  Axis Steel Drilling, Inc. v. Prilex Detailing LLC, No. 2:17-cv-428, 2017 WL 8947964, at *2 (D. Utah June 29. 2017)

[6]  Thoroughbred, Order at 5.

[7]  Id.

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