The House and Senate passed the Defend Trade Secrets Act of 2016, effective April 27, 2016. (S. 1890)

The bill will now go to President Obama for approval – which is expected. Trade secrets have previously been protected by stat laws in the U.S. This bill would amend the Economic Espionage Act of 1996 to permit a private federal civil action for misappropriation of a trade secret that is “related to a product or service used in, or intended for use in, interstate or foreign commerce.” The bill allows for seizure of property as necessary to prevent “propagation or dissemination” of the trade secret.

In a hearing, the Court may:

  • Grant an injunction as appropriate to prevent misappropriation
  • Award damages for actual losses
  • Award damages for unjust enrichment caused by the misappropriation (no duplicative recovery)
  • Grant a reasonable royalty in lieu of damages

In addition, if the trade secret it “willfully and maliciously misappropriated,” the Court may award exemplary damages –  not more than 2x the amount of damages awarded.

Finally, if a claimant makes a claim of misappropriation in bad faith or in cases of willful misappropriation, the court may award reasonable attorney’s fees to the prevailing party. Additional provisions exist. This federal right of action would not supersede state actions, but gives claimants an additional venue.