New Federal Law Requires Most Employers Take Action

On May 11, 2016, President Obama signed the federal Defend Trade Secrets Act (“DTSA”) into law, which became immediately effective.  This law expands protections for trade secrets and gives trade secret owners access to federal court in cases involving misappropriation. It also requires inclusion of notice about whistleblower immunity in any employment agreement and also in restrictive covenants (such as non-disclosure agreements, confidentiality agreements, or non-compete agreements) with provisions governing confidential information in order to obtain the maximum benefits of the DTSA.

Whether they realize it or not, most businesses have and use trade secrets. These trade secrets may be critically important to the value of the business by providing competitive advantage.  The DTSA offers companies a new, powerful mechanism for protecting this form of intellectual property BUT the benefits of the DTSA are greatly reduced if the owner of the trade secret neglects to provide adequate notice of whistleblower immunity.

Under the DTSA, the consequences of not providing the whistle blower immunity notice may be dire. Without the notice, a trade secret owner will be prevented from recovering punitive damages or attorney fees against its employee or contractor who misappropriates the trade secret. If you have questions about this new law or would like help updating your restrictive covenant provisions, please contact Megan Moritz, Camille Urban, or another member of our Employment and Labor Law Practice Group or Intellectual Property Practice Group for more information.