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