The human brain develops the fastest during the first six years of one’s life—can the same be said of legislation? President Barack Obama signed the US Defend Trade Secrets Act (“DTSA”) on May 11, 2016; thus, it seems the time to ask, has the DTSA developed fast enough?

What do the statistics say?

In the first year after the DTSA was introduced, the number of trade secret case filings in federal courts increased by 30 percent. Since then, the courts have dealt with around 1,400 cases per year. This number has not been affected by the pandemic. What is more, nearly three quarters of the trade secret cases brought before federal courts in the last two years included a claim under the DTSA. The statistics thus clearly show that the DTSA has led to a noticeable rise in attempts by trade secret holders to protect their rights.

Achieving uniformity

One of the biggest concerns since the DTSA’s creation has been the potential lack of uniform interpretation and application of provisions governing trade secret protection at federal and state levels. The matter has gained attention in view of the Uniform Trade Secrets Act, which has been adopted, with some modifications, by 48 states.

The judgments issued in the last several years, however, indicate that courts would rather have legal harmonization than fragmentation. Judges have namely used the UTSA and existing case law in this regard as a guidance to interpret the DTSA. This has provided for a coherent application of the existing laws.

Against the backdrop of amended wordings and implementation of the UTSA in different states, however, it is still likely that some differences arise at the federal level as well, especially between the notions of the various federal courts. Without more guidance in this respect, questions such as the acceptance of the inevitable disclosure doctrine, the identifying of trade secrets by plaintiffs, or the presumption of irreparable harm for trade secret injunctions may cause confusion among judges, trade secret owners and alleged infringers.

Utilizing to the fullest?

The developments between 2016 and 2022 prove that the DTSA was a step in the right direction towards stronger protection for trade secret holders. However, it cannot be said that the DTSA has been used to its fullest capacity yet.

It is remarkable that the DTSA has allowed legal action against misappropriations that occurred outside the US (e.g. in the case Motorola Sols., Inc. v. Hytera Commun. Corp. Ltd., 436 F. Supp. 3d 1150 (N.D. Ill. 2020)). Nonetheless, other tools provided by the DTSA also need to be utilized. This can be argued especially with regard to the ex parte seizure provision, which allows the seizure of potentially stolen trade secrets without prior notice to the alleged infringer. This legal instrument has been used by trade secret owners and courts in only a few instances so far.

Conclusion

The DTSA has efficiently enabled trade secret holders to undertake legal action against potential infringers before federal courts. Nevertheless, its interpretation and application can still be described as a work in progress. Therefore, federal courts might soon be confronted with the task of setting a precedent regarding particular issues arising from the current legal regime(s). That way, it can provide for legal certainty and safeguard the interests of trade secret owners and potential infringers.