Ins and Outs of the Defend Trade Secrets Acts

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The Defend Trade Secrets Act was initially implemented as law in 2016. It provides for a federal, private, civil cause of action for any trade-secret misuse or theft where someone that owns a the trade secret may bring civil action through a lawsuit if the trade secret information that is connected to a product or service that has been put into use for interstate or oversees business.

This means if someone were to steal, reproduce or use someone else’s trade secret between states or with a foreign entity, a claim may be brought forth for a remedy such as compensation, a cease and desist or similar concerns. Because the sale or theft of a trade secret may ruin a company’s competitive edge, resolutions to these cases may be more severe than similar intellectual property.

This Act have given companies in the United States the opportunity in protecting trade secrets from theft, misappropriation and reproduction of trade secrets for the first time so that a remedy may be accomplished through a federal court. Before this ability, the business had to seek civil action through a state court with possible differences in laws based on the state. This also affected what is considered a trade secret, as the definition is not the same throughout the country. That means there are different statutes of limitations in order to bring a lawsuit and dissimilar remedies available because of these differences. The federal regulations through this Act have provided a basis through federal courts.

What are Trade Secrets and Misappropriation?

While trade secrets have been classified as different things in the past based on the state, there is a new definition for the federal regulations in place. This explanation may be broad, but it includes a wide variety of proprietary data that may be protected under the statute. A trade secret may be any form or type of financial, company, science-related, technical, economic or trade information. This would include plans, processes, formulas, designs and many different methods used by a company or individual. There must be a reasonable measure taken in keeping the secret, and because the item remains secret, the company is provided a competitive edge which accrues revenue or it may be attributed an economic value.

Misappropriation occurs when the trade secret has been stolen, reproduced or sold to another person or company. While states may have protections against this when it occurs within the state borders, federal statutes exist for any situations where this occurs across state and country borders. The theft or sale of the trade secret to foreign powers is now under the federal jurisdiction with potential compensation and charges being issued and obtained for the owner of the trade secret. With the definition in place for a trade secret nationally, there are fewer complications with understanding why a trade secret violation should be remedied.

Acts of Misappropriation

There are many acts of misappropriation, and these are illegal when certain factors are in place. When the person that bought or acquired the secret did so knowing that it was taken, stolen or bought through an illegal or improper fashion, he or she may be subject to penalties. It is against the law to disclose or use a trade secret without the implicit permission of the owner. It is not permitted to gain knowledge of these methods or processes unless consent is granted. Accidental or mistaken theft or acquiring the secret may not be used by the individual unless the owner is asked first. Any similar matters are covered under the Defend Trade Secrets Act.

Remedies to Misappropriation

There are penalties in place that permit the owner of the trade secret or his or her lawyer to seize property of the person that stole or obtained the secret to ensure it is not disclosed to another. After this is initiated, it must be proven in court that the trade secret was misappropriated. Through a lawsuit, it is possible to claim compensation if the secret has been revealed or stolen. Even if the contents of a trade secret document or file have not been opened and explained to anyone else, it is possible to receive compensatory payouts, issue penalties to the individual or company or similar consequences depending on the severity of the crime.

It is important to contact and hire a lawyer to assist in the case, and he or she may need to issue an injunction or similar legal motion to stop foreign powers from disseminating the trade secrets to others.


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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.

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