Agriculture businesses rely more than ever on the secrecy of their data, financial information, special techniques, and their business opportunities to differentiate themselves in the marketplace. Can the new benefits of the Defend Trade Secrets Act help Hoosier agribusinesses gain a competitive advantage?
If business information is treated properly, it can be considered a valuable trade secret of a business and add intangible value to the bottom line. The problem with trade secrets as a form of intellectual property in the past has been how to treat that information appropriately so that all 50 states in the U.S. will agree that the information is a trade secret and enforce the trade secret against thieves.
Unlike patent, trademark or copyright protection, there is no set time period for trade secret protection. A trade secret is protected as long as it is kept secret. However, once a trade secret is lost, it is lost forever. Fortunately, Congress and President Obama agree that this multi-state approach is difficult for businesses and have enacted the Defend Trade Secrets Act.
The Act amends the Economic Espionage Act of 1996 to create a federal right of action for trade secret theft. The legislation authorizes a private civil suit in federal court for the theft or unlawful public disclosure of a trade secret that is related to a product or service used in, or intended for use in, interstate or foreign commerce. The legislation allows for the following: (1) create a uniform standard for trade secret misappropriation by expanding the 1996 Act; (2) provide parties with opportunities to stop the theft from continuing and obtain enhanced money damages (double damages) to account for the significant economic harm to the trade secret owners caused by the disclosure or theft; and (3) create remedies for trade secret misappropriation similar to those in place for other forms of intellectual property. The Defend Trade Secrets Act does not preempt state laws except for the ability to proceed in state court if the trade secret owner has not complied with the whistleblower requirements (see below), so trade secret owners can choose whether to proceed under state law in state court or to use the new Defend Trade Secrets Act in federal court.
The Defend Trade Secrets Act imposes new duties on employers to inform their employees of the ability to disclose trade secrets to an attorney or a court or other government official if a violation of the law is suspected (whistleblower actions). Failure to include this information in employee agreements or otherwise notify employees will, if the employer later sues the employee for misappropriating a trade secret, prevent the recovery of enhanced damages and attorneys’ fees.
Interestingly, the Defend Trade Secrets Act provides for the use of ex parte seizure orders to allow for seizure of the trade secret from a defendant without notice to that defendant. This option can be very helpful in the case of foreign actors, who otherwise could leave the country and abscond with the trade secret before court action under the traditional system would authorize a seizure. This proposed seizure protection goes well beyond what a court is typically willing to order under existing state law.
The Defend Trade Secrets Act is expected to support innovation by giving trade secret owners stronger protection. As Indiana agribusinesses continue to grow through innovation, these protections will help them build a competitive advantage.
By Holiday W. Banta, Elizabeth Bechdol, Jana E. Harris, Melissa Proffitt, Ryan P. Hiler and Katie M. Glick, Ice Miller LLP
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.