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May 1, 2018

Recourse for Trade Secret Misappropriation under the Federal Defend Trade Secrets Act

By Bret A. Cohen, Amanda Carozza

The Lexis Practice Advisor Journal

Reprinted with permission from the Lexis Practice Advisor Journal

The Defend Trade Secrets Act of 2016 (DTSA), 130 STAT. 376, allows U.S. employers to protect against and remedy misappropriation of trade secret information in federal court. Before the enactment of the DTSA, in the absence of diversity jurisdiction, employers seeking redress had no choice but to sue in state court. While most states have adopted and codified some version of the Uniform Trade Secrets Act (UTSA), which provides uniform definitions and remedies for trade secret misappropriation, these laws nevertheless tend to differ from state to state both in the text of the laws themselves and in their application. Bringing suit under the DTSA allows a party to avail itself of the federal courts, which can be advantageous since federal courts often are more adept at addressing highly complex technical issues arising in trade secret cases.

Bringing a claim under the DTSA can be a double-edged sword, however, as it can make a case that an employer wishes to keep in state court (for any number of strategic reasons, including taking advantage of more employer-friendly laws or procedures) removable to federal court by the defendant. As a result, employers should think strategically before including a claim under the DTSA, particularly where the employer may prefer to remain in state court.