What do Coca-Cola Classic®, Big Mac® sauce, and KFC Original Recipe® chicken all have in common? Leaving aside obvious questions about nutritional value, the answer is that each product derives economic value from secret formulas that qualify as industry “trade secrets.” In essence, a trade secret is any information that derives value from not being generally known and for which reasonable efforts are undertaken to maintain its secrecy.
Individuals and businesses whose trade secrets have been misappropriated (i.e., stolen) have long been entitled to bring claims in state court for violation of state trade secrets laws. (Forty states, including Michigan, adhere to some version of the Uniform Trade Secrets Act, a model law setting forth civil remedies for the misappropriation of trade secrets.)
Signed into law on May 11, 2016, the Defend Trade Secrets Act of 2016 (“DTSA”) significantly expands trade secrets protections beyond the traditional confines of state law. Most notably, the DTSA creates a new federal cause of action for misappropriation of trade secrets related to products or services used in interstate or foreign commerce. Accordingly, an individual or business whose trade secrets have been misappropriated can now sue in federal court for damages and injunctive relief.
What follows is a summary of the DTSA’s more notable provisions:
Finally, it is important to note that the DTSA does not pre-empt state trade secrets laws; in other words, owners of trade secrets remain free to assert trade secrets claims in state court pursuant to applicable state statutes.
Because the DTSA is so new, it remains to be seen how the courts will interpret and apply this new law. What is certain, however, is that the federal courts will soon be faced with the task of interpreting the DTSA to determine its “real world” application.
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