The recently introduced Defend Trade Secrets Act of 2015 (H.R. 3326 and S. 1890) seems no more likely to become law than the handful of previous bills that attempted to federalize civil trade secret law. The identical bills H.R. 3326 and S. 1890 were introduced and referred to committee on July 29, 2015. H.R. 3326 is sponsored by Rep. Collins (R-GA) and co-sponsored by 12 Republican and six Democratic representatives. S. 1890 is sponsored by Sen. Hatch (R-UT) and co-sponsored by two Republican and three Democratic senators. The website govtrack.us gives H.R. 3326 a 4 percent chance of enactment and S. 1890 a mere 1 percent chance.
In the event the Defend Trade Secrets Act (DTSA) does become law, it would create a private right of action to bring trade secret misappropriation claims in federal court. It would also provide for specific procedures for obtaining an ex parte seizure order, including a requirement that seized materials be held by the court. The DTSA's remedies provision mostly tracks the Uniform Trade Secrets Act (UTSA). But there are several ways in which the proposed federal legislation departs from the UTSA (and from the statutes in place in the 48 states that have adopted the UTSA).
One difference is the proposed standing requirement, which also acts to make the DSTA authorized under the Constitution's Commerce Clause. The DSTA is limited to a trade secret "that is related to a product or service used, or intended for use in, interstate or foreign commerce." It is not clear how attenuated a relationship may be between a trade secret and a particular product or service before the jurisdictional hook fails. Trade secrets concerning human resources, accounting practices, or other administrative areas of corporate life that do not relate directly to any one particular product or service may be left out of the federal right of action.
Another difference is the civil seizure provision in the proposed bills. The provision would authorize a court to issue an ex parte order seizing property if the seizure was necessary to prevent the propagation or dissemination of a trade secret. This provision borrows heavily from 15 U.S.C. § 1116(d), concerning seizure of counterfeit goods. It is not clear why the sponsors of the bills believe that the perpetrators of trade secret misappropriation share significant similarities with counterfeiters. Most trade secret misappropriation is done by insiders—former employees, whose names and identifying information are known to the trade secret owner and are, as a result, lower flight risks than counterfeiters. Critics of the bills argue that this provision is ripe for abuse, allowing companies to disrupt competitor's operations by seizing company computers and servers. If the DTSA passes, companies in highly competitive markets should consider implementing response plans in the event that a court orders seizure of company computers or servers. Such response plans would include ways to isolate and remove specific data from particular systems without disrupting the company's entire IT infrastructure.
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