Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Can the Defend Trade Secrets Act Protect Your Business?

Author: Scarinci Hollenbeck, LLC

Date: May 15, 2016

Key Contacts

Back

Will the Defend Trade Secrets Act Protect Your Business?

Earlier this week, the President signed into law the Defend Trade Secret Acts (DTSA). The federal legislation is good news for Monmouth County businesses because it will give them one more tool to combat intellectual property theft.

Federal Trade Secrets Law

According to the Director of the U.S. Patent and Trade office, the theft of trade secrets may be the biggest transfer of wealth in history that costs U.S. innovators an estimated $300 billion a year.

The Value of Trade Secrets

Many businesses overlook the value of protecting trade secrets such as customer lists, marketing strategies, computer algorithms, non-patented inventions, and other confidential, proprietary information. According to the latest statistics, U.S. businesses lose billions of dollars every year due to trade secret theft at the hands of employees, competitors, and even foreign governments.

Trade secrets are currently protected under individual state laws, many of which are based on the Uniform Trade Secret Act, including New Jersey’s, which defines a “trade secret” as:

Information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Once proprietary business data is no longer secret, it is no longer protected under trade secret law. Moreover, it generally does not matter whether the disclosure was intentional or accidental. In addition, businesses that fail to take reasonable steps to protect trade secrets do not get the benefit of intellectual property protection. For example, if your trade secrets are stored electronically, you should have robust cyber security and data privacy measures in place, including use of secure passwords that change periodically, limits on employees who are given authorized access to the sensitive information, etc.

Proposed Federal Trade Secrets Act 

The Defend Trade Secrets Act is intended to provide uniform remedies for misappropriation of trade secrets.

While victims of trade secret misappropriation can bring civil suits under state law and the federal government can pursue criminal sanctions under the Economic Espionage Act (EEA), there was previously no federal private right of action.

The Defend Trade Secrets Act is intended to provide uniform remedies for misappropriation of trade secrets. The statute allows civil claims for trade secret misappropriation to be filed in federal court and also provides for injunctive relief to prevent any actual or threatened misappropriation of trade secrets. The statute of limitations would be five years, and treble damages and/or attorneys’ fees would be available in cases of willful and malicious misappropriation.

With broad bi-partisan support, the DTSA gained momentum and passed. In recent weeks, the Obama administration rallied behind the proposed trade secret law, stating that the DTSA would “provide businesses with a more uniform, reliable, and predictable way to protect their valuable trade secrets anywhere in the country.”

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business post image

The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business

Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]

Author: Dan Brecher

Link to post with title - "The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business"
Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies post image

Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies

The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]

Author: Brian D. Spector

Link to post with title - "Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies"
How Understanding Bankruptcy Trends Can Benefit Your Business post image

How Understanding Bankruptcy Trends Can Benefit Your Business

The bankruptcy legal landscape presents both challenges and opportunities for businesses navigating financial distress. Understanding current bankruptcy trends can help businesses make more informed and strategic decisions. Corporate Bankruptcy Filings Trending Upwards Bankruptcy filings continued to trend upwards in 2024. According to statistics released by the Administrative Office of the U.S. Courts, personal and business […]

Author: Brian D. Spector

Link to post with title - "How Understanding Bankruptcy Trends Can Benefit Your Business"
SEC Takes Actions Against Issuers for Failure to File Form D post image

SEC Takes Actions Against Issuers for Failure to File Form D

In December, the U.S. Securities and Exchange Commission (SEC) announced charges against two privately held companies for failing to file a Form D notice, which is generally utilized for exempt securities offerings. Here, the SEC’s enforcement sends a strong message: compliance with regulatory requirements is not optional and failure to comply can have significant consequences. […]

Author: Kenneth C. Oh

Link to post with title - "SEC Takes Actions Against Issuers for Failure to File Form D"
Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda post image

Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda

On February 14, 2025, the Office of General Counsel (OGC) of the National Labor Relations Board (NLRB) under Acting General Counsel William B. Cowen issued Memorandum 25-05, “New Process for More Efficient, Effective, Accessible and Transparent Case handling.” The Memorandum rescinds nearly all of the Memoranda issued by his direct predecessor, Jennifer Abruzzo, setting the […]

Author: Matthew F. Mimnaugh

Link to post with title - "Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda"
What Are FIRPTA Withholding Requirements? post image

What Are FIRPTA Withholding Requirements?

If you purchase real property from a foreign person or entity, you may be required to withhold taxes from your payment to the seller under the Foreign Investment in Real Property Tax Act (FIRPTA). The federal tax law is designed to ensure that foreign sellers pay any applicable capital gains tax on profits realized from […]

Author: Jesse M. Dimitro

Link to post with title - "What Are FIRPTA Withholding Requirements?"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!

Please select a category(s) below: