U.S. Senate passes bill to establish federal trade secrets law

On April 4, 2016, the U.S. Senate unanimously passed a bill that, if enacted, will allow trade secret owners to bring suit in federal court to prevent misappropriation of their trade secrets.

The new bill, S. 1890, is known as the “Defend Trade Secrets Act of 2016,” allows trade secret owners to ask federal courts to order seizure of property necessary to prevent further dissemination of the trade secret. The court may also grant an injunction, award damages for actual loss caused by the misappropriation, and award extra damages and/or attorneys’ fees in extreme cases (such as willful or bad faith misappropriation).

The bill defines “misappropriation” as requiring “improper means,” which includes “theft, bribery, misrepresentation, breach or inducement of breach of a duty to maintain secrecy, or espionage through electronic or other means.” Improper means specifically excludes reverse engineering, independent derivation, and other lawful means.

The bill also provides for protection of the trade secret from disclosure during the federal action, and it also requires protection of the accused infringer against publicity.

The Senate bill would not preempt the many state laws that currently protect trade secrets. Instead, it would provide an additional layer of protection for trade secret owners.

The Senate bill has strong White House support. The House version of the bill has over 120 sponsors, but no timetable has been set yet for its consideration.

UPDATE:  On April 27, the House passed the Senate’s version of the bill. The bill will now move to the President for signature.  On May 11, 2016, President Obama signed the bill into law.

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