On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 into law, effective immediately (DTSA; Amending 18 U.S.C. §§ 1832–1839).
The DTSA creates a federal cause of action for trade secret misappropriation whereby aggrieved employers may now seek injunctive relief (including civil seizure orders), compensatory damages, exemplary damages, and attorneys’ fees arising from a party’s willful and malicious misappropriation of trade secrets in federal court.
The DTSA also carves out an exception to its application for whistleblowers. Specifically, immunity is provided to a worker for any confidential disclosures of an employer’s trade secrets that were made to the government or in a court filing made under seal. The workers covered by the foregoing immunity include both employees and independent contractors. In order to ensure that workers are properly notified of the foregoing exception, the government is requiring employers do so in any agreement or policy entered into with their workers that governs the use of a trade secret or other confidential information. An employer’s failure to comply with the foregoing notice requirement will result in a forfeiture of certain remedies afforded to the employer under the DTSA and a potential complete forfeiture of any contractual rights the employer may have arising from any agreement or policy which fails to contain the requisite notice.
In light of the foregoing notice requirements and in order to ensure compliance with the DTSA, employers should incorporate the immunity notice into their relevant employment agreements, services agreements, and policies, and/or implement a new “Reporting Policy” that specifically sets forth the immunity notice and references any agreement or policy affected by the same.