The Defend Trade Secrets Act One Year Later

Despite the creation of a new federal cause of action in the Defend Trade Secrets Act (DTSA), the number of misappropriation cases filed in federal court has not increased. DTSA’s new ex parte seizure process has been invoked sparingly. Temporary restraining orders and “expedited discovery” remain the most common forms of pre-trial relief.

Questions remain as to the scope of the DTSA, especially with regard to extraterritorial application and whistleblower protection.

Plaintiffs continue to file state court actions in large numbers, but counsel contemplating that move should proceed carefully. Factors to consider include whether certain aspects of the relevant state act are more favorable than the DTSA in specific cases, and whether there is actually a basis to pursue an ex parte seizure. In the hundreds of DTSA cases to date, parties have filed less than a dozen ex parte applications for seizure, and most have been denied.

Whether, and to what extent, the DTSA applies to foreign conduct remains an open question. This portion of the DTSA is ripe for interpretation.

Whether the DTSA whistleblower protections extend to non-natural persons also remains an open question. The DTSA provides whistleblower protection to any “individual” who discloses a trade secret in confidence to a government official or attorney for the purpose of reporting a suspected violation, but whether that term applies to “natural persons” only, or may extend to company consultant entities, remains an open question. No case has addressed this issue.