Defend Trade Secrets Act 2016: What Human Resource Departments Need to Know

The enactment of Defend Trade Secrets Act (the DTSA), brings a potential new changes to Florida contract law. According to this recently enacted Federal Law, it is now incumbent upon an employer to provide a notice-of- immunity to all their employees and contractors. This is true for all contracts or agreements with an employee or an independent contractor in relation to the use of trade secrets and other confidential information.

The Act has amended 18 U.S.C. § 1832 to provide some limited whistleblower immunity. The provision, as currently stated, only provides immunity from liability for confidential disclosure of a trade secret to, for instance, a government entity or attorney in relation to the reporting or investigating of a suspected violation of law. If the alleged whistleblower assists in the disclosure of the information in “confidence” through a Florida business lawyer in a court action, the documents containing the trade secrets need to be filed under seal only to be disclosed in court. In light of the Defend Trade Secrets Act 2016, disclosing a trade secret is allowed in court under the judge’s permission. The disclosure is allowed only if it serves to highlight the importance of the trade secret in the particular case.

On the flip side, the statute appears devoid on a number of critical aspects. Here are but a few examples to the same respect:

• The provisions of the Act do not appear to provide for small business exceptions.

Under the notice requirement, the employer needs to provide a notice of immunity that governs the usage of trade secrets and related confidential information. According to the same law, the notification may be done in reference to a policy document instead of stating the whole immunity provisions in each agreement. Small businesses may be unaware or not have the necessary documents or agreements in which they may provide the notice requirement. A Florida contract lawyer or Florida business lawyer would be able to assist small businesses with the preparation of necessary agreements and documents to protect the business assets, including its trade secrets.

• Noncompliance with the notice requirements may attract a fairly small penalty.

In the likely event of an employer suing an employee of trade secret misappropriation under the provisions of the Act, the employer would not be able to recover exemplary double- damages or its attorney fees if said notice requirement was not provided to the employee or contractor. Therefore, the employer’s remedies and potential damage recovery may be limited.

• Misunderstanding in the event of late notice requirement.

Under the Defend Trade Secrets Act 2016, timely provision of the notice requirement is of the essence. For all contracts involving trade secrets or confidential information, the employer should provide the notice requirement in due course.

ABOUT THE AUTHOR: Nico Apfelbaum
Nico Apfelbaum, Esq. is the managing attorney of Apfelbaum Law, a Florida law firm serving Port St. Lucie, Stuart, the Treasure Coast and assisting clients with matters throughout Florida. Apfelbaum Law provides a wide variety of legal services, including, family law, divorces, business and contract transactions and litigation, immigration, wills and estate planning, probate law, and real estate law. The attorneys of Apfelbaum Law will answer your questions, explain your options, and provide you with the tools and resources you need to make an informed decision.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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