Companies should take three steps now to ensure use of the Defend Trade Secrets Act.
In May, President Barack Obama signed into law the Defend Trade Secrets Act that creates a federal civil cause of action for the misappropriation of trade secrets. This new law amends the Economic Espionage Act, which makes it a federal crime to steal and use trade secrets. Title 18 U.S.C. 1831, et. seq. For companies that depend on confidential information to provide them a competitive edge, there are several proactive steps they should take to ensure their use and the full benefits of this statute if their trade secrets are stolen.
Most significantly, the Defend Trade Secrets Act, unlike the state trade secrets laws, provides for an ex parte “order for the seizure of property necessary to prevent the propagation or dissemination of the trade secret,” upon a showing of “exceptional circumstance.” Traditional state court equitable remedies are limited to a temporary restraining order and a preliminary injunction. The law also makes the theft, possession and use of trade secrets a predicate act for the Racketeer Influenced and Corrupt Organizations Statue, which can form the basis of a civil RICO action for treble damages and attorney fees. (In the past, federal courts have been reluctant under most circumstances to find a RICO “pattern” for trade secrets theft as part of a scheme to defraud based on the mail and wire fraud statutes. See, e.g., Bro-Tech Corp. v. Thermax (E.D. Pa. 2009).