NSBA Supports Trade Secrets Bill

March 2, 2016

pic-patent-licenseOn March 1, NSBA sent a letter to Senate leadership supporting the Defend Trade Secrets Act of 2015 (S.1890/H.R. 3326/DTSA) and asking them to bring it to the Senate floor for immediate consideration. The DTSA was introduced into both the House and the Senate in 2015 by Rep. Doug Collins (R-Ga.) and Sen. Orrin Hatch (R-Utah), respectively. However, the House version has moved at a slower pace as the Senate version has already progressed out of the Senate Judiciary Committee and awaits consideration by the full upper chamber.

Trade secret misappropriation is largely governed by state law. However, the DTSA creates a federal right of action for trade secret misappropriation, essentially creating an unobstructed path into federal court for trade secret misappropriation cases. This is especially important because it allows plaintiffs to move quickly to prevent the dissemination of their trade secrets, even if the misappropriating party is operating across state lines. In creating this right of action at the federal level, the legislation also brings penalties and remedies available inline with those generally available at state courts.

Despite its broad support, their has been some criticism—including concerns by members of NSBA—regarding a provision which codifies an ex-parte seizure remedy for those claiming trade secret misappropriation. This provision allows a court to order the property of another party temporarily seized in order to prevent dissemination upon successfully demonstrating to the court that the party is in actual possession of the trade secrets and would not likely comply with a court order to return them. An amendment was added during the markup in the Senate Judiciary Committee to add additional levels of protection and requirements to the legislation to ensure that it is only used in the most extraordinary circumstances and minimizes the potential for abuse. NSBA supports this amendment and is hopeful the House will incorporate the provision into their version of the bill.

The legislation currently enjoys enormous bipartisan support and is expect to pass if it ultimately comes to the Senate floor for consideration. The House is expected to act on the legislation during the spring, where it likewise enjoys significant bipartisan support.

NSBA supports the strengthening of intellectual property rights for small businesses. With the U.S. patent system being increasingly unworkable for small businesses, many are turning instead to trade secrets law to protect their intellectual property. Trade secrets are becoming ever-more important to small businesses and are the most often used form of intellectual property. It is essential to the small-business community that these rights be strengthened to ensure that small businesses are able to act quickly to protect the sensitive information that allows them to compete with larger companies.