California Uniform Trade Secrets Act Compared to the Federal Defend Trade Secrets Act

The Defend Trade Secrets Act was implemented in 2016 so that trade secrets are defined as a singular understandable item across the nation. However, there are variations of these regulations in different states such as the Uniform Trade Secrets Act in California that if taking precedence could cause issues for the owners of trade secrets.

Trade secrets are processes, procedures, methods, ingredients, recipes and similar items that provide a competitive edge to a company due to the secret being only available to a select few. When the information has been stolen or misappropriated, it is possible to ruin the company’s business if the matter is not corrected or remedied immediately. Sometimes this occurs with foreign agencies or individuals. A federally implemented regulation was applied to these situations to assist with increasing awareness, helping with foreign powers and introducing a nationally recognized trade secret definition. With this in use, it is possible to seek a remedy or compensation throughout the United States.

The Uniform Trade Secrets Act has been in place in California for years before the Defend Trade Secrets Act was implemented. However, this Act does not necessarily preempt the previous state law, and when someone has been wronged through trade secret theft or misappropriation, he or she may seek a remedy through either state or federal regulation, and in some circumstances, he or she may use both. This means that the individual may have a federal court path where one did not previously exist, and he or she may progress the claim from the state to the federal level. This permits him or her to use the Uniform Trade Secrets Act as the base of the trade secret violation and then the Defend Trade Secrets Act for a federal court judge and additional benefits.

Using the Federal Courts

For many plaintiffs, the federal courts appear the more attractive option. There are many factors that increase the possibility of a remedy or compensation. However, when utilizing this method in trade secret problems and misappropriation, there is a greater need for more precise factual support of the claims by the plaintiff. This may be due to the inclusion of foreign powers or the increased power of the subpoena, but this means the claims must be solid and have enough evidence that success is more than just slightly possible. While some plaintiffs may want to proceed with both the DTSA and the California UTSA claims, this does not mean that it is necessary to do so in the court room.

Specifying the Claim

Because the DTSA is implemented through the country, this means that the trade secret definition is known. A California UTSA claim may be enough to proceed if the person that stole or misappropriated the trade secret was not from a foreign power. However, the claim must be for the specific trade secret and not some different claim such as non-compete clauses with an employee. It must be the competitive edge provided to the company through a secret, process, procedure, method or similar item. However, the plaintiff needs to fully determine which route is the best option before proceeding when he or she does his or her primary business in California.

There are instances where the California proceedings are enough for the matter, but where the federal regulations require too much for the claim to proceed. This means that the DTSA claim does not have enough evidence or there are certain factors present that exclude these cases from moving forward. This could involve a former trade secret owner. Additionally, the DTSA is not retroactive, and this means that prior to May 2016, there must have been some misappropriation that existed to use the federal regulations. For former owners of trade secrets where the issue is no longer with the current owner, the Defend Trade Secrets Act may not apply.

Legal Understanding of the Comparison

For those that live in the state of California, it may be necessary to have a professional explain the comparison between the federal and state Act provisions. Without this understanding, someone may attempt to proceed with a federal claim when there is not enough evidence and requirements met, but the state Act could be satisfied. This means that a lawyer should be hired to make the distinction and assist with processing and pushing a claim forward. With the help of an intellectual property lawyer, it is possible to pursue the matter for a chance at success.

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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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