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New Trade Secret Law Impacting Employees and Employers

President Obama signed the Defend Trade Secrets Act of 2016 into law. It creates federal court jurisdiction for trade secret violations involving interstate commerce. As most things impact interstate commerce, this will allow jurisdiction in federal court for most employer and employee disputes overtrade secrets.

There are some key points that are interesting:

1. There is a whistleblower immunity that is granted if an employee takes trade secrets for reporting a violation of a law. (“An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—“(A) is made—“(i) 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.”
2. If there is an anti-retaliation lawsuit, the employee can disclose the trade secret if it is filed under seal. (“An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual—(A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.”)
3. Employers are required to give notice of the immunity in trade secret agreements or they are barred from recovering certain damages against employees.

Overall, this law gives employers some additional remedies against employees who take trade secrets. It also provides employees with some important protections such as with regard to whistleblowing.

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