The Defend Trade Secrets Act of 2016: A New Federal Civil Cause of Action for Trade Secret Theft

"It represents one of the most significant events in trade secret reform in years. The DTSA amends the Economic Espionage Act, which previously limited access to federal courts for trade secret theft to criminal prosecution."

Defend Trade Secrets Act
Randal J. Brotherhood

Randal J. Brotherhood

November 30, 2016 12:00 AM

The Defend Trade Secrets Act of 2016, which establishes a new federal civil cause of action for trade secret theft, represents one of the most significant events in trade secret reform in years. This new law toughens and modernizes trade secret law in numerous respects, and provides an additional tool for businesses and their legal counsel to protect trade secrets.

The Defend Trade Secrets Act of 2016 (Pub. L. No. 114-153) (DTSA), signed into law by President Barack Obama on May 11, 2016, establishes a new federal civil cause of action for trade secret theft.

It represents one of the most significant events in trade secret reform in years. The DTSA amends the Economic Espionage Act, which previously limited access to federal courts for trade secret theft to criminal prosecution.

The new law toughens and modernizes trade secret law in a number of ways:

1. Establishes Federal Jurisdiction

The DTSA establishes, among other things, federal jurisdiction for claims brought under its provisions – creating a federal private right of action for trade secret misappropriation, as well as corresponding access to federal courts to sue for injunctive relief, compensatory damages, and exemplary damages (including double damages and attorneys’ fees) for willful and malicious misappropriations.

Lawsuits for trade secret theft have traditionally been brought in state courts under state law. Although a substantial majority of states have adopted some form of the Uniform Trade Secrets Act — providing some uniformity among state trade secrets laws – there are nonetheless numerous differences among the states in the protection afforded trade secrets.

The DTSA, in establishing a federal private right of action, allows a trade secret plaintiff to obtain redress nationwide without having to encounter the various differences in state laws. This will likely give rise to more consistent and predictable outcomes in trade secret litigation. It should be noted, however, that it is nonetheless expected that certain situations will remain, where trade secret plaintiffs will decide for strategic purposes to still bring state law claims in state courts rather than utilizing the DTSA and federal courts.

2. Provides for Ex Parte Court Order for Seizure of Trade Secrets

Perhaps the most noteworthy, the DTSA provides a significant new tool for a plaintiff to obtain an ex parte court order to seize a trade secret by law enforcement officials and bring it within the custody of the court (a hearing being conducted within seven days with all parties present). This new remedy is available only in “extraordinary circumstances” where such seizure is “necessary to prevent the propagation or dissemination of the trade secret … ,” such as to prevent imminent disclosure or the risk of flight to another country. The court is required to balance various interests in determining whether to issue a seizure order; accordingly, a request for such an order must meet various specified requirements and be circumscribed so as to avoid “interrupting the legitimate interests of the party against whom the seizure is issued,” while addressing the need to “prevent or remedy” the misappropriation.

3. New Provisions for Trade Secret Misappropriation of Electronically Stored Information

The DTSA contains numerous new provisions that address trade secret misappropriation involving electronically stored information – thus modernizing the ways a court is to protect seized materials. In this regard, the DTSA requires a court that seizes trade secret material to secure it from physical and electronic access during the seizure and while it is the court’s custody. The court may appoint an independent technical expert to participate in the seizure if the court finds it would help minimize burdens created by the seizure. The court may also appoint a special master to locate and isolate stolen trade secret information. If a person whose assets have been seized suffers damage as a result of an excessive or wrongful seizure, the DTSA provides for a private cause of action against the person who sought the seizure.

4. New Whistleblower Provisions

The DTSA includes a whistleblower provision that establishes immunity for disclosure of trade secrets to government officials for the sole purpose of reporting violations of the law. In this regard, the DTSA has significant implications for employee agreements by requiring notice of these whistleblower immunity protections. If an employer does not receive proper notice, the employer may not be awarded exemplary damages or attorneys’ fees that would otherwise be available under the DTSA. Accordingly, employers should review existing employment, confidentiality and proprietary ownership agreements and consider including a standard notification clause to the effect that the employee will not be held criminally or civilly liable for disclosure of a trade secret that is either (a) made in confidence to a government official or an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (b) is made in a document filed under seal in a lawsuit or other proceeding. Employers will also want to consider establishing a trade secret policy with such a notification clause (which policy can be referenced in the above-described whistleblower/immunity notification provisions in its employment agreements.)

5. No Pre-emption of State Trade Secrets Act

The DSTA does not pre-empt state trade secret acts or any other state laws, so trade secret owners may, as stated above, choose to pursue relief in federal or state court, depending on the circumstances.


The DTSA represents the start of a new era in the development of trade secrets law by establishing a federal right of civil action for trade secret theft. Whether federal courts will in fact become the preferred forum for trade secret litigation is an issue which is sure to be closely watched; but in any event, the DTSA can be considered an additional tool for businesses and their legal counsel to protect trade secrets.

For further information, follow the source link below.

Related Articles

Effect of Anti-Suit Injunction in Cross Border Litigation

by Cariola, Díez, Pérez-Cotapos

What is the purpose of an anti-suit injunction, and how can it work with cases in different countries?

Anti-Suit Injunctions in Cross Border Cases

Protecting Small Business Owners: Trial Experts Connick Law LLC Notoriously Successful with Fire Litigation

by Justin Smulison

When small business owners become the target of insurance companies in fire-related lawsuits, hiring a firm with a reputation for understanding the science of fire suppression trials can save their livelihoods.

Gold Indoor Sprinkler Heads on Red Background

Will Recent Boeing Settlements Create Tailwinds In Corporate Law?

by Justin Smulison

Prominent litigation against Boeing is setting a precedent of accountability, professionalism and commitment among company boards as well as ushering ESG further into the courtroom to help monitor and prevent safety issues.

Recent Boeing Settlements and Corporate Law

Pennsylvania’s Best Lawyers 2022

by Best Lawyers

Our Pennsylvania’s Best Lawyers 2022 digital publication features top-ranked legal talent in Pennsylvania.

Pennsylvania’s Best Lawyers 2022

Colorado's Best Lawyers 2022

by Best Lawyers

Our 2022 Colorado's Best Lawyers publication features top-ranked legal talent in Boulder, Denver and Western Colorado.

Colorado's Best Lawyers 2022

Newly Launched COVID-19 Litigation Project Offers Open Access To Pandemic-Related Court Judgments From Over 70 Countries

by Sara Collin

A worldwide database of COVID-19 cases is uniting more than 70 countries as judges, lawmakers and lawyers continue to navigate pandemic related litigation and the ways in which it’s evolving amid year three.

COVID-19 Worldwide Litigation Project

Road to Somewhere

by Mark LeHocky

How can attorneys take steps to improve settlement efforts and avoid unpleasant surprises as they map out a dispute resolution? One litigator-turned-general counsel-turned mediator (with some help from a distinguished rock star) points the way forward.

Improved Dispute Resolution Settlement

The Best Lawyers in the Midwest

by Best Lawyers

Our 2022 Best Lawyers in the Midwest Digital publication features top-ranked legal talent, including Best Lawyers and Best Lawyers: Ones to Watch in America throughout six Midwest states.

The Best Lawyers in the Midwest

Look for the Zoom Label

by Anne R. Yuengert and Matthew C. Lonergan

Will the virtual platforms that got such a boost during the pandemic replace how you interact with your employees, unions, and lawyers?

Virtual Platforms Replacing Work Interactions

Discovery in the Time of COVID-19

by H. Barber Boone

The pandemic has affected the vital process of legal discovery in ways both good and bad. Which changes are likely to become widely accepted in the years ahead?

The Impact of COVID-19 on E-Discovery

Busting a Trust

by Joseph Marrs

The rules governing trusts and asset distribution are often much more flexible than many might assume. Here’s a primer.

Rules Governing Trusts and Asset Distribution

The Next Chapter

by Patrick M. Shelby

Among its uncountable other disruptions, the pandemic upended U.S. bankruptcy procedures. Congressional relief, legislative changes, amended legal provisions: What lies ahead for those looking to file?

COVID-19's Impacts on Bankruptcy Procedures

Phoning It In

by Alyson M. St. Pierre, Ashley C. Pack and Crystal S. Wildeman

It’s not easy for employers to weigh requests from employees to work from afar, even in the wake of the pandemic. Considerations include COVID-19, vaccinations, the Americans with Disabilities Act and the nature of the job itself.

Employer Considerations for Teleworking

Washington, D.C. In the Law

by Gregory Sirico

We explore three legal cases in Washington, D.C.

Washington, D.C. In the Law

Compelled to Compete

by Ashish Mahendru

Courts and legislatures—and now the White House—are taking an increasingly dim view of noncompete employment agreements, a development the pandemic has quickened. What can employers do to protect their confidential information?

Protection for Employers Beyond Noncompetes

Meeting Halfway

by Julia B. Meister

To resolve family and business disputes including wills, trusts, estates and more, mediation is often a more effective, gentler and cheaper option than litigation.

Mediation to Resolve Wills, Trusts, Estates

Trending Articles

Best Lawyers: Ones to Watch in America for 2023

by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

The Best Lawyers in New Zealand™ 2024 Awards

by Best Lawyers

The Best Lawyers in New Zealand 2024 awards include an elite field of top lawyers and law firms.

Auckland, New Zealand Skyline at twilight

Presenting The Best Lawyers in Singapore™ 2024

by Best Lawyers

Best Lawyers offers the most prestigious awards for lawyers and law firms in Singapore for 2024.

Singapore skyline at night

Announcing the 2023 The Best Lawyers in America Honorees

by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

The Best Lawyers in Australia™ 2024 Launch

by Best Lawyers

Best Lawyers is excited to announce The Best Lawyers in Australia™ for 2023, including the top lawyers and law firms from Australia.

Australian Parliament beside water at sunset

Announcing The Best Lawyers in Japan™ 2024

by Best Lawyers

We are proud to present the 2024 edition of Best Lawyers awards for Japan which include the top lawyers and law firms in the country.

Mt. Fuji in the background with fall leaves and structure in front


Salvi & Maher, LLP: Illinois and Wisconsin's Personal Injury Firm

by Justin Smulison

For more than 35 years, Salvi & Maher LLP has defended their clients throughout Illinois and Wisconsin in various areas of personal injury law, including medical malpractice, motor vehicle accidents, premises liability and trucking litigation.

Skyline of Chicago with green river and blue background


Athea Trial Lawyers

by Justin Smulison

Athea Trial Lawyers is a nationally recognized firm who has received record-breaking victories throughout the country on behalf of personal injury victims.

women with shades of blue in mass arrangement


Rash Mueller Knows What it Means to Help

by Jeffrey Beasley

David Rash of Rash Mueller draws from first-hand experience on the affects of tragic personal injury and loss. His Florida law firm has spent years dedicated to helping the injured find justice.

Doctor with scope reviewing brain scan on screen

The Best Lawyers in South Africa™ 2023

by Best Lawyers

Best Lawyers proudly announces lawyers recognized in South Africa for 2023.

South African flag


Mastering the Art of Trial Practice

by John Fields

With its billion-dollar track record, Morelli Law Firm has earned a reputation as one of the country's most successful trial firms.

Morelli and team at table in office with windows

Announcing The Best Lawyers in Germany™ 2023

by Best Lawyers

The results include an elite field of top lawyers and firms from Germany.

Black, red and yellow stripes

Choosing a Title Company: What a Seller Should Expect

by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

Famous Songs Unprotected by Copyright Could Mean Royalties for Some

by Michael B. Fein

A guide to navigating copyright claims on famous songs.

Can I Sing "Happy Birthday" in Public?

The Role of a Lawyer in the Slip-and-Fall Settlement Process

by Best Lawyers

Let’s examine the role of a lawyer in the slip-and-fall settlement process and how they can help you achieve a fair and just outcome for your case.

Unseen man with wrap on wrist sits across from woman in suit


Paulson & Nace, PLLC: A Pioneer in Personal Injury Law

by Best Lawyers

Since its inception more than 40 years ago, Paulson & Nace, PLLC, a Washington D.C., Maryland and West Virginia-based personal injury firm, has always led with compassion first. Here are some key insights from the firm on how to go about filing a personal injury claim.

Group of lawyers meet around a conference table