President Obama Signs the Defend Trade Secrets Act of 2016 into Law

On May 11, 2016, President Obama signed into law the Defend Trade Secrets Act of 2016 (DTSA).  Among other things, the DTSA provides immunity to individuals who disclose trade secrets in the course of  a whistleblower retaliation lawsuit, provided the trade secrets are filed under seal, or who disclose trade secrets to the government and/or an attorney solely for the purpose of reporting or investigating a suspected violation of the law.

The DTSA also requires that employers provide notice to employees of this immunity in any contract or agreement concerning trade secrets or confidentiality that is entered into or updated after the effective date of the DTSA (which is May 11, 2016).  Employers that fail to provide notice of this immunity to employees may not recover exemplary damages and/or attorney’s fees under the DTSA in an action for misappropriation of trade secrets. 

The DTSA broadly defines “employee” in this context to “include any individual performing work as a contractor or consultant for an employer.”  Accordingly, employers should review their policies, manuals, contracts and other statements concerning trade secrets and confidential information, including non-disclosure agreements with vendors, to ensure that any new or updated documents contain DTSA-compliant provisions.

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