Trade secrets are a valuable type of intellectual property—and they’re now subject to a number of federal protections similar to patents, copyrights and trademarks. This development is thanks to the new Defend Trade Secrets Act, which was written and approved to help strengthen the protection of trade secrets in the United States and its territories.

Intellectual property experts are calling this the “most significant trade secret reform” in the past 20 years, and it received tremendous bipartisan support in Congress. No senators and only two House members voted against the bill, which was then signed into law by President Barack Obama in May.

Before this bill, trade secrets were protected only by state laws, which have different elements to consider from state to state and territory to territory. DTSA now sets a federal standard for the defense of a variety of information, such as software programs, manufacturing methods, formulas, client lists, business methods and sales techniques that companies would want to keep private.

Cases involving trade secrets typically involve business contracts with nondisclosure agreements, employees discussing business with outside sources or the public and unfair competition after terminating an employee’s contract.

The U.S. Virgin Islands had previously approved a piece of legislation known as the Uniform Trade Secrets Act, companion legislation to the new DTSA. Now, the Territory will be covered by DTSA as well as the Uniform Trade Secrets Act.


Effects of DTSA 

Thanks to the new law, the way trade secrets are protected will now be standardized throughout the country, meaning businesses will not have to navigate a variety of different state or territorial rules depending on where the issue originates. Potential remedies for claims involving misappropriation of trade secrets include injunctive relief, actual damages and payment of royalties. The law also includes a stipulation that allows for exemplary damages to be recovered of no more than twice the amount of damages that were or would otherwise be awarded for malicious misappropriation.

Trade secret owners may also now seek ex parte orders to seize any trade secrets that have been allegedly stolen from them. To obtain such an order, the trade secret holder must be able to demonstrate the information in question was a company trade secret that was misappropriated, and that the company either had or will suffer irreparable harm without the use of such a seizure.

There are also provisions in place in the law providing immunity for civil and criminal liability for disclosing trade secrets in the midst of whistleblower cases. Employers are required to notify contractors and employees of this immunity in contracts and agreements with them.

This is a significant step forward in the defense of trade secrets across the nation. For more information on how this could affect your business or organization, consult an experienced corporate planning attorney.


Tom Bolt is Managing Attorney for BoltNagi PC, a trusted and experienced corporate planning law firm assisting a diverse variety of clients in the U.S. Virgin Islands and is a Commissioner of the National Conference of Commissioners on Uniform State Laws.