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DTSA (Defend Trade Secrets Act) Requires Notice to Employees

Photo of Obama signing a bill, symbolizing enactment of DTSAUntil recently, trade secrets were solely a matter of state law.  However, on May 11, 2016, President Obama signed the DTSA, the Defend Trade Secrets Act of 2016.

Because of the DTSA, trade secret misappropriation suits with an interstate component now can be filed in federal court. For more information about civil and criminal enforcement, please see Trade Secrets Receive Federal Protection.

DTSA Protection of Whistleblowers

The purpose of this post, however, is to explain how the DTSA protects employee and independent contractor whistleblowers who want to disclose companies’ trade secrets!

The DTSA specifies that employees, contractors and consultants have immunity from liability for trade secret disclosure under any of the following circumstances.

  • In confidence to government officials or attorneys solely for the purpose of reporting or investigating a suspected violation of law.
  • In a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
  • Subject to certain limitations, in a lawsuit alleging company retaliation, to an attorney and in court proceedings.
Obligation to Provide Notice

Furthermore, companies are obligated to notify employees, contractors and consultants concerning that immunity in new or amended agreements that govern the use of trade secrets. A company that fails to provide such notice will not be able to recover exemplary damages or attorney fees in a suit against such individual.

Implication: If your company enters into a new agreement or amends any agreement with an employee, contractor or consultant, you should ensure that the contract provides notice of the immunity discussed above.

Photo credit: Wikipedia

Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
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