As we have noted over the past several months, trade secrets will finally obtain additional protection under federal law. Yesterday, April 27, 2016, the House of Representatives passed the Defend Trade Secrets Act of 2016, S. 1890, without amendment. The bipartisan bill passed with a vote of 410-2, sending the bill to the White House for President Barack Obama’s promised signature.
As the White House stated on April 4th of this year:
“The Administration has placed high priority on mitigating and combating the theft of trade secrets, as exemplified in the Administration’s Joint Strategic Plan on Intellectual Property Enforcement, the Administration’s Strategy on Mitigating the Theft of U.S. Trade Secrets, and Executive Order 13694 authorizing sanctions on those who perpetrate cyber-enabled trade secret theft. S. 1890 would provide important protection to the Nation’s businesses and industries, including through the establishment of a Federal civil cause of action for trade secret misappropriation which would effectively build upon current Federal law and various State laws that have largely adopted the Uniform Trade Secrets Act. As such, the Administration strongly supports the Defend Trade Secrets Act of 2016 ….” See Statement of Administration Policy (4/4/16).
As we have explained, the bill would not preempt the state laws, such as the Uniform Trade Secrets Act, which has been adopted with modifications by 48 states and the District of Columbia. Like the federal Lanham Act, the Defend Trade Secrets Act will co-exist with state-level trade secrets law.
Notably, one of the new features of the federal trade secrets law will be the “Civil Seizure” mechanism by providing federal judges with, among other things, the ability to “appoint a special master to locate and isolate the misappropriated trade secret information and to facilitate the return of unrelated property and data to the person from whom the property was seized.” Additionally, in addition to other unique hallmarks of this federal legislation, the maximum criminal fines for misappropriating a trade secret will now be increased from $5,000,000, to “the greater of $5,000,000 or 3 times the value of the stolen trade secret to the organization.”