On May 11, 2016, President Obama signed the Defend Trade Secrets Act (DTSA), creating a federal civil remedy for trade secrets theft, in addition to preexisting criminal penalties. This Act amends the Economic Espionage Act of 1996, which was later amended in 2012. Under these older statutes, even though both criminal and civil causes of action were available, only the U.S. Attorney General’s Office could bring those actions. The new law allows the injured party to bring a civil cause of action.
Preemption of State Law for Whistleblower Protection
Until now, trade secrets theft has largely been handled at the state level through lawsuits filed under the Uniform Trade Secrets Act that many states had passed. The DTSA does not preempt state laws in this area but rather is intended to supplement existing state law. However, employers should be aware that the DTSA does create a whistleblower immunity that does preempt any conflicting state laws. This provision protects a whistleblower from any criminal or civil liability “for the disclosure of a trade secret that (A)(i) is made in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” This provision also allows for disclosure of trade secrets in an anti-retaliation lawsuit against an employer so long as the employee makes the disclosure only to the employee’s attorney and so long as any court filing keeps the trade secrets under seal .