Defend Trade Secrets Act: Experienced Counsel to Stop Misappropriation and Recover Damages

Employee departures and confidential information transfers produce trade secret disputes under the DTSA most frequently when a departing employee takes customer lists, product formulas, manufacturing processes, or software code to a new employer in the same industry, and the company that discovers the transfer must act immediately because delay in seeking injunctive relief can defeat a claim for preliminary injunction. Trade-secret-misappropriation and employment-litigation counsel can evaluate whether the departing employee's or former partner's conduct constitutes misappropriation of trade secrets under the Defend Trade Secrets Act, assess the scope of the confidential information taken or disclosed and the harm caused to the company's competitive position, and advise on the full range of civil remedies available under 18 U.S.C. § 1836.

Competitive use of proprietary business data triggers DTSA liability when a competitor acquires and uses a company's trade secrets through improper means, including the hiring of key employees who bring confidential information to the new employer, unauthorized access to the company's information systems, or industrial espionage involving the solicitation of company insiders. Trade-secrets-litigation and cfaa counsel can evaluate whether the competitor's use of proprietary business data, customer lists, formulas, or technical processes constitutes misappropriation under the DTSA, assess whether the misappropriation was accomplished through unauthorized computer access that triggers additional liability under the Computer Fraud and Abuse Act, and advise on the remedies available in federal court.

Unauthorized use and disclosure of protected information creates federal liability under the DTSA when the responsible party acquired or used the trade secret through improper means or in breach of a duty to maintain secrecy, and the liability exposure is particularly significant because it extends to all categories of financial loss attributable to the misappropriation and includes exemplary damages for willful and malicious conduct. Injunctive-relief and civil-litigation counsel can advise the trade secret owner on the full range of liability that unauthorized use or disclosure of protected information creates under the Defend Trade Secrets Act, including the civil remedies available under 18 U.S.C. § 1836, the damages calculation methodologies that courts apply in trade secret cases, and the availability of exemplary damages in cases involving willful and malicious misappropriation.

Cross-border and digital data misuse risks arise under the DTSA when trade secrets are transferred electronically across national borders or accessed remotely from systems in foreign jurisdictions, and the DTSA provides federal court jurisdiction over misappropriation cases involving products or services used in interstate or foreign commerce. Cross-border-data-breach and cybersecurity counsel can advise the trade secret owner on the cross-border and digital data misuse risks that the DTSA is specifically designed to address, evaluate whether the misappropriation involved foreign actors or entities that trigger additional liability under the Economic Espionage Act, and assess the emergency remedies available when digital trade secrets are transferred across national borders.

Requirements for confidential business information to qualify as a trade secret under the DTSA include that the information be classifiable as financial, business, scientific, technical, economic, or engineering information, that it derive independent economic value from not being generally known, and that the owner have taken reasonable measures to keep the information secret. Intellectual-property and trade-secret-misappropriation counsel can advise the company on the legal requirements that must be satisfied for information to qualify as a trade secret under the DTSA, including the requirement that the information derive independent economic value from not being generally known and that the company have taken reasonable measures to maintain the secrecy of the information.

The importance of security measures and internal controls in DTSA cases cannot be overstated, because a trade secret owner who cannot demonstrate that it took reasonable measures to maintain secrecy will fail to establish that the information qualifies for DTSA protection regardless of its value, and courts evaluate the adequacy of protection measures by examining the company's non-disclosure agreements, access control policies, and physical and digital security measures. Injunction-requirements and preliminary-injunction counsel can advise the company on the specific security measures and internal controls that courts evaluate when determining whether a trade secret owner has satisfied the reasonable measures requirement under the DTSA, identify the policies, agreements, and access control protocols that most effectively demonstrate that the company treated the information as confidential.

Securing injunctive relief and immediate court intervention under the DTSA requires the trade secret owner to demonstrate that the misappropriation is causing ongoing or imminent irreparable harm that cannot be adequately remedied by damages alone, and in exceptional circumstances the DTSA provides for an ex parte seizure order under 18 U.S.C. § 1836(b)(2) that allows the court to authorize seizure without prior notice to the defendant. Injunctive-relief and awarding-damages counsel can advise the trade secret owner on the procedural requirements for obtaining injunctive relief under 18 U.S.C. § 1836(b)(3)(A), including the showing of likelihood of success on the merits, irreparable harm, balance of hardships, and the public interest that the court applies in evaluating a motion for preliminary injunction in a DTSA case.

Recovering financial losses and business damages in a DTSA case requires the trade secret owner to present evidence of the actual harm caused by the misappropriation, including the head start advantage the misappropriating competitor gained, the revenues the company lost as a result of the unauthorized use, and the royalty the company would have been entitled to receive if the trade secret had been licensed. Business-litigations and civil-damages-lawsuit counsel can advise the trade secret owner on the financial damages remedies available under the DTSA, including actual damages, unjust enrichment damages for the defendant's profits attributable to the misappropriation, exemplary damages of up to two times the actual damages award in cases involving willful and malicious misappropriation, and attorney's fees in cases involving bad faith conduct.