President Signs Trade Secrets Bill

May 2, 2016

pic-contract-patentIn a victory for small businesses that rely heavily on trade secrets, on May 11, President Barack Obama signed into law the NSBA-supported Defend Trade Secrets Act of 2016 (DTSA/S. 1890). The bipartisan legislation had nearly unanimous support in both the House and Senate. On April 28, 2016 the House approved S. 1890 by a vote of 410-2. Only Rep. Thomas Massie (R-Ky.) and Rep. Justin Amash (R-Mich.) voted against the legislation. The Senate unanimously approved the legislation on April 4, 2016.

Senator Orrin Hatch (R-Utah) introduced the legislation in the Senate, while a House companion bill (H.R. 3326) was introduced by Rep. Doug Collins (R-Ga.). By House leadership deciding to proceed with the Senate version of the bill, S. 1890, rather than H.R. 3326, the measure went directly to President Barack Obama for his signature rather going to a conference. The Obama Administration had previously voiced strong support for this bill and the president was expected to sign it.

NSBA sent letters to both the House and Senate Judiciary Committees urging them to approve the legislation. The overwhelmingly bipartisan legislation will create a federal remedy for trade secret misappropriation and perhaps most importantly give small businesses a way to quickly and easily protect their trade secrets from misappropriators in other jurisdictions. There had initially been concerns that a provision in the legislation codifying ex parte proceedings to recover and protect misappropriated trade secrets could be used inappropriately. However, the Senate adopted amendments narrowly tailor the use of the provision and reduce the potential gain from inappropriate use. The House essentially adopted these amendments as well by taking up the S. 1890 rather than H.R. 3326.

Trade secrets are becoming increasingly important to small businesses because other forms of intellectual property protection like patents are becoming unworkable for small businesses. In contrast, trade secrets are less formal and more readily available to the average small business. They are also incredibly broad, encompassing almost anything that gives the trade secret holder an economic advantage from not being known by competitors.

NSBA has strongly supported this legislation as it expands the intellectual property rights for small businesses across the country. In an increasingly digital age, small businesses are constantly at risk of their secrets being stolen though data breaches and cyber-attacks. Simple devices can instantly copy and store thousands of pages of documents and sensitive information from trade secret holders. This legislation will allow those small-business trade secret holders to act quickly to protect their trade secrets. The DTSA is a strong step towards ensuring that small businesses that may not necessarily be able to navigate a complicated intellectual property landscape, can still protect the sensitive information that gives them the edge to compete in our economy.