In business, to set yourself apart from your competition, there must be something unique that your company offers that is unlike anywhere else. Once you have discovered what those elements are, it is important to keep them within the enterprise to prevent others from replicating your ideas. These particular ideas are known in the business industry as “trade secrets.” Until recently, the laws surrounding intellectual property were not entirely beneficial should these secrets be stolen.

The Defend Trade Secrets Act Begins

The Defend Trade Secrets Act became law on May 11th, 2016 when it was enacted by the Senate and House of Representatives of the United States. This bill established federal jurisdiction over stolen trade secrets. Previously, it was up to individual states to govern and punish the stealing of intellectual property, which led to an ambiguity of the law. Now, should someone be accused of thieving trade secrets, the plaintiff in the case can decide whether to bring the matter before a state or federal judge.

General Ramifications

If you believe that someone has violated a trade secrets agreement, it is up to you as a business owner how you should pursue it. You may choose to retaliate at either a state or federal level, using the regulations and punishments in your favor. The new Defend Trade Secrets Acts (DTSA) provides:

  • Up to three years for a statute of limitations,
  • Seizure procedure in circumstances that may lead to evidence being destroyed so as not to be used in a court of law,
  • Whistleblower protection for employees who go directly to the government,
  • Provision of written whistleblower protection must be given to all new hires, and
  • Anyone convicted of violating trade secret agreements may be fined the greater of $5 million or up to three times the value of the stolen secret.

Preparing Your Business

There are advisable steps to update your business to align it with the new federal regulations. These steps are:

  • Update employment and confidentiality agreements, disclosing the provisions for whistleblower immunity. Failure to do so can cancel eligibility for triple restitution,
  • Second, revisit the company policy for bringing forth trade secret claims as federal pursuits can be more streamlined,
  • Reevaluate company trade secret agreements to make sure they are up-to-date and are protecting your secrets in the best possible manner, and
  • Lastly, create a response protocol for suspected misappropriation and for receiving a seizure order.

If you believe that someone has taken intellectual property and therefore violated an existing contract, it is imperative that you seek legal counsel. Doing so can create a large difference in the future of your business. If you are interested in discussing your options between state and federal restoration and would like to speak with an experienced and proven San Jose, CA business attorney, contact The Law Offices of Steven E. Springer today for your free 20-minute initial consultation. With offices in San Jose, Morgan Hill, and Fremont, we are conveniently located to serve you. Call today at 408-779-4700 or 510-791-7137.


Posted in Business Law

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