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What are the three things you must know about the recently passed Defend Trade Secrets Act of 2016?
And how the Act can hurt your business if you are not up to speed . . .
Companies looking to protect their intellectual property received welcomed news this year when President Obama signed the bipartisan Defend Trade Secrets Act of 2016 (also referred to as the “DTSA”). The Act provides employers and companies with remedies not previously available to protect the confidential assets of their business. To benefit from the protections of the Act, however, employers must ensure that they fully understand the Act’s requirements. If the provisions of the Act are not met, remedies otherwise available may be lost.
1) Confidentiality Provisions Must Be Updated or May No Longer Be Enforceable
The Defend Trade Secrets Act requires all employment contracts, policies and other documents governing the use of confidential information to contain a special notice of immunity for whistleblowers. See 18 U.S.C. § 1833(b)(3)(A). This means that the reach of the Act extends beyond employment agreements, and applies much more broadly to other documents as well, including, without limitation, employment handbooks and policies, non-disclosure agreements, non-competes, restrictive covenants, contracts with vendors, contractors and consultants, and more. Employers who do not comply with the notice requirement will not be able to recover certain types of damages or attorneys’ fees in an action against an employee to whom notice was not provided. It is therefore vital for companies to seek legal counsel to update all business documents containing confidentiality provisions to continue receiving the bargained-for protections of such clauses.
2) The Legal Options & Remedies Available to Businesses Have Expanded
While not pre-empting state law, the DTSA does, for the first time, allow companies to seek civil remedies, including injunctive relief and monetary damages, in federal court over trade secret theft and misappropriation. See 18 U.S.C. § 1836(b). If certain criteria are met, the Act also provides businesses with the right to seize their stolen trade secrets from the employee who took such proprietary information, a significant remedy not previously available to employers. See 18 U.S.C. § 1836(b)(2)(A)(i).
3) Companies Can Use National Consistency to Create Effective Policies
Because state laws governing trade secrets can greatly vary, the federal law uniformly applicable in all states under the Defend Trade Secrets Act provides a more consistent platform for settling intellectual property disputes. Applicable nationwide, as the Act is applied and interpreted, employers will be able to craft more effective policies to best conform to nationwide standards and protect the proprietary assets of their business.
In sum, the recognition that trade secret theft is a rapidly evolving problem throughout the U.S. economy has provided employers with new tools to combat potentially disastrous situations. Dean Mead’s Employment Law Team helps employers and companies effectively use such tools to best protect the intellectual property of the business by revising employment agreements, non-competes, nondisclosure agreements and other company documents to include the notice provisions required by the Act, instituting actions involving misappropriation of trade secrets in state and federal court, and advising businesses regarding additional steps to be taken to best protect the company’s intellectual property. Indeed, proprietary information is one business asset no company or employer can afford to lose.
About the Authors:
Melanie S. Griffin is a Shareholder in Dean Mead’s Litigation Department, heading the firm’s Tampa office as well as representing clients locally in Orlando, statewide throughout Florida, throughout the Southeast, and beyond. She advises and represents businesses of all sizes and types in commercial disputes and litigation, including matters involving labor and employment. She may be reached at email@example.com, (813) 606-4598 (Tampa office), and (407) 428-5106 (Orlando office).
Nichole M. Mooney is a member of the firm’s Executive Board and a Shareholder in Dean Mead’s Orlando office where she provides litigation advice and counseling to businesses, both for profit and not for profit, with an emphasis on commercial litigation and issues affecting employment. She assists clients with drafting employment and severance contracts, drafting handbooks and policies, and counseling and representing employers in litigation regarding all types of employee actions, rights and obligations, including, but not limited to, wage and hour questions and disputes, FMLA issues, claims of discrimination, retaliation, theft of trade secrets, and all other manner of employment related litigation under Florida and federal law. Ms. Mooney also addresses claims regarding restrictive covenants including non-compete agreements, trade secrets litigation and protection of confidential information. She may be reached at firstname.lastname@example.org and (407) 428-5110.