On May 11, 2016, President Barack Obama signed the Defend Trade Secrets Act (“DTSA”) into law. The DTSA was the result of a yearlong bipartisan effort and provides a federal civil cause of action for misappropriation of trade secrets. Before the DTSA became law, trade secret misappropriation had been purely a matter of state law.
One important aspects of the DTSA is that now, an owner of a trade secret that is misappropriated through improper means may bring a civil action under the DTSA if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce. The term ‘improper means” includes (a) theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means; and (b) does not include reverse engineering, independent derivation, or any other lawful means of acquisition.
The DTSA defines the term “trade secret” to mean “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—(A) the owner has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means” by another person.
Some of the remedies that will be available are that a court may, upon ex parte application, issue 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. In addition, the court may grant an injunction to prevent any actual or threatened misappropriation on such terms as the court deems reasonable. Furthermore, the court may award damages for actual loss caused by the misappropriation of the trade secret; and damages for any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in computing damages for actual loss; or in lieu of damages measured by any other methods, the damages caused by the misappropriation measured by imposition of liability for a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret.
If the trade secret is willfully and maliciously misappropriated, the court may award exemplary damages in an amount not more than 2 times the amount of the damages originally awarded.
Finally, a civil action under the DTSA may not be commenced later than 3 years after the date on which the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered.
The DTSA constitutes an additional tool to protect against the misappropriation of trade secrets in Puerto Rico, where the Industrial and Trade Secret Protection Act of Puerto Rico presently provides a civil cause of action in state courts against any person who misappropriates a trade secret. As such, trade secret owners in Puerto Rico can now seek recourse for trade secrets misappropriation in both state court and federal court.