Legal Protections For U.S. Trade Secrets

• Published date: 24 August 2020
• Law Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
• Author: Mr Eric Fues and Brandon T. Andersen

U.S. companies rely on trade secrets for a competitive advantage. These companies invest heavily in research and development in the U.S., and they need to protect their inventions to recoup their investments. While U.S. patent law offers some protection, it largely stops at the U.S. border, relying on different patent regimes for enforcement overseas.

For this and other reasons, many companies choose trade secret protection, with its potentially unlimited term, for their most valuable inventions. Fortunately for them, recent developments have extended the reach of U.S. trade secret law to overseas misappropriation by foreign nationals, so long as there is some connection with activities in the U.S.

This article examines how the federal district courts have recently enhanced the relief afforded U.S. trade secret holders under the Defend Trade Secrets Act (DTSA) for the overseas misappropriation of trade secrets, and includes practice tips for those considering trade secret litigation in federal court.

The second article of this two-part series will explain how the U.S. International Trade Commission allows IP rights holders to address unfair methods of competition caused by the overseas misappropriation of trade secrets. Together, these bodies of law provide extensive protection against overseas misappropriation of trade secrets and establish an effective framework for protecting U.S. trade secret holders.

A Federal Cause of Action

Trade secrets can be found in a variety of areas, including formulas, processes, methods and techniques (know-how), machines, products, plans, designs, patterns, customer lists, and business information. In general, a trade secret is information that the owner has taken reasonable measures to keep secret and that has commercial value by virtue of its secrecy. Under these circumstances, trade secret protection attaches automatically to the information.

But protection lasts only as long as the conditions of value to the owner and secrecy continue to be met. Stated another way, a trade secret owner forfeits protection by failing to take reasonable steps to keep the information secret. Thus, trade secret owners have an ongoing responsibility to safeguard this information, because once it is disclosed or no longer remains secret, both the value and the legal protection of the trade secret are lost.

At common law and for many years, trade secret disputes were adjudicated in the state courts. But limitations to state-level enforcement became apparent. Even though virtually all states have enacted some form of the Uniform Trade Secrets Act, differences exist in the state statutes and in the application of those statutes. Proponents of a...