The New Federal Defend Trade Secrets Act Requires Employers to Add Language in New or Revised Employment Contracts
Wednesday May 25, 2016
On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016, codified at 18 U.S.C. § 1836(b). It took effect immediately. The DTSA does not preempt other existing state or federal statutes that protect trade secrets. However, it provides additional remedies to persons and companies seeking to protect trade secrets from misappropriation in interstate or foreign commerce. Those remedies include nationwide service of process, an ex parte seizure process in certain extraordinary circumstances, as well as exemplary damages and attorneys’ fees.
However, in order to avail themselves of all the advantages and remedies of this Act, including the recovery of exemplary damages and attorney’s fees, employers must pay close attention to employment contracts with existing or prospective employees. As of May 11, 2016, if an employer does not add explicit notices of specified employee rights to any new employment contract, or to any existing employment contract that is revised on or after that date, the employer cannot recover exemplary damages or attorneys fees.
This statute may be of particular use to employers faced with imminent harm and particularly where the issue extends across state lines. SKV has prepared a template for clients who may wish to incorporate “magic language” complying with the DTSA into their employment contracts. Please contact any SKV Partner for more information.