New Federal Law Protecting Company Information
Phone: 314.863.8484

New Federal Law Protecting Company Information

On May 11, 2016, a new federal law protecting company trade secrets (the "Defend Trade Secrets Act") went into effect.  This law may dramatically change corporate law as there is now a universal, federal law regarding company trade secrets.  Prior to this federal law, remedies for trade secret theft were governed by the laws of the various states resulting in a lack of uniformity in enforcing trade secret protections. The new federal law has many aspects to it, but a significant change afforded under this new law is that companies now have the option of suing under the federal statute, which allows for federal court jurisdiction and should provide for more uniformity in trade secret protection.

Another provisions of the new law is the ability to recover attorneys’ fees and multiple damages in cases of willful and malicious misappropriation. However, in the case of employees (which includes a consultant or an independent contractor), the law provides immunity from civil or criminal claims under any federal or state law for the confidential disclosure of trade secrets to a government official or an attorney for the purpose of reporting or investigating a suspected violation of law. This is commonly known as "whistle blower protection".   To take advantage of the provision allowing attorneys’ fees and enhanced damages, the employer must provide its employee with written notice of the whistleblower immunity afforded by the law in any contract or agreement with the employee that governs the use of trade secrets or confidential information. If the employer fails to provide this notice, the employer cannot receive attorneys’ fees or the enhanced damages in a suit against the employee under the statute.

There are many more provisions and nuances related to this new federal law and will certainly be tested in court.  If you are interested in learning more about this law or how our experience business law attorneys can help you, contact our firm today to speak directly with a lawyer.

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