The New Federal Defense of Trade Secrets Act-Employers Take Note

Earlier this year, I wrote about the federal Defense of Trade Secrets Act passed by the senate.  This month, President Obama signed the act into law.  The law (“DTSA”) creates a federal cause of action for theft of trade secrets.  This means that the owner of a trade secret that has been stolen or disclosed can sue in federal court. 

There is a whistleblower provision that grants immunity from a theft of trade secret claim to anyone who makes a disclosure in confidence to either (1) a federal, state, or local government official, or (2) an attorney, as long as the reason for disclosure is for the sole purpose of reporting or investigating a violation of the law. 

The whistleblower provision requires employers to provide notice to all employees.  Failure to do so will void an employer’s ability to take advantage of the DTSA’s provisions regarding exemplary damage awards (up to twice the damage award) and attorneys’ fees in cases of willful violations.

What’s the take away here?  It is in every employer’s best interest to include the new notification in any employee agreement relating to trade secrets, confidentiality and/or nondisclosure obligations.  This would include

·      Non-compete agreements

·      Consulting agreements

·      Employment agreements

·      Separation agreements

·      Retention agreements, and

·      Independent contractor agreements.

It would be wise to also include a notice in any employee handbook or new employee orientation materials.

Protecting your innovative developments is critical to any organization.  Having the right person to help you make those decisions is important.  The Law Office of Kathleen Lynch PLLC is designed to help businesses such as yours keep ahead of the game.   The first telephone consultation is free.  Email us at klynch@kliplaw.com.

Patent Purchase Program to Begin Soon

Want to sell your patent?  Several multinational firms including IBM, Facebook, and Ford are participating in a program called the Industry Patent Purchase Program (IP3).  It is being run by a non-profit organization called Allied Security Trust. 

It is essentially a take it or leave it proposition where the patent owner offers for sale their patent and any of the participating companies have the option of purchasing it.  The participating companies are primarily focused in the technology and automotive sectors.  The areas innovation in which they are most interested include:  

• computers and software;
• consumer electronics;
• communications;
• semiconductor & components;
• healthcare & medical;
• automotive;
• lighting; and
• financial services.

The range of value of any one patent is not certain.  However, Google ran a similar program last year and spent between $3,000 and 250,000 on patents with the average price being about $48,000.

The window of opportunity for submitting an offer is between May 25, 2016 through June 8, 2016.  The submission form and further details can be found here. 

So for any patent owner out there who has had difficulty trying to get the attention of the corporate world, now is your chance.

Capitalizing on innovative developments is critical to any organization.  Having the right person to help you make those decisions is important.  The Law Office of Kathleen Lynch PLLC is designed to help businesses such as yours keep ahead of the game.   The first telephone consultation is free.  Email us at klynch@kliplaw.com.

An Epic Tale of Trade Secrets

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I wrote earlier this year in my blog about a pending trade secret bill approved by the judiciary committee in the senate.  Recently the senate passed the Defend Trade Secrets Act.  The act essentially provides for a federal cause of action for trade secret cases.  The bill is now in the house and is expected to pass.  President Obama has shown his support for the bill.

While the federal law is pending, state trade secret laws are the only remedy currently available.  Recently Epic Systems brought a trade secret case against Tate Group, an Indian company, for theft of trade secrets, computer fraud, breach of contract and unfair competition in the western district of Wisconsin (case 14-cv-748-wmc).  The jury awarded Epic $240 million in compensatory damages and $700 million in punitive damages.  The jury found Tata guilty of downloading documents from hospital software and providing those documents to one of its subsidiaries, Med Mantra.  If Epic ends up collecting the award, it will be more than double Epic’s expected annual profits this year.

What’s the take away here?  If you are the owner of trade secrets-protect them.  Ensure that you have implemented systems and educated your people on best practices to keep your trade secrets confidential.  If someone takes your trade secrets without authorization, go after them.   Hopefully you will be able to do that in federal court in the near future.  If you are working with companies that have trade secrets, make sure you abide by the terms of the confidentiality agreement and treat the trade secret information in the same manner as you would treat your own proprietary information.

Protecting your innovative developments is critical to any organization.  Having the right person to help you make that decision is important.  The Law Office of Kathleen Lynch PLLC is designed to help businesses such as yours keep ahead of the game.   The first telephone consultation is free.  Email us at klynch@kliplaw.com.