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New federal legislation to assist employers in protecting trade secrets

May 4, 2016

On April 27, 2016, Congress passed the Defend Trade Secrets Act (the DTSA). President Obama is anticipated to sign the DTSA into law in the coming days. The DTSA will allow plaintiffs to bring federal civil lawsuits against individuals who misappropriate trade secrets.

The DTSA also contains a whistleblower immunity provision. Under this provision, employees will not be found liable for trade secret misappropriation if they disclose trade secrets when reporting legal violations to the government. Employers are required to notify their employees about the immunity provision, "in any contract or agreement with an employee that governs the use of a trade secret or other confidential information." If an employer does not comply with the DTSA's immunity provision, the employer may be prevented from recovering exemplary damages or attorneys' fees in an action brought under the DTSA.

Once the DTSA becomes law, employers should ensure that their contracts include the notice provision about the DTSA protections.

More information on the DTSA to follow, stay tuned.

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