Late last month, Senators Chris Coons (D-Del.) and Orrin Hatch (R-Utah) filed the Defend Trade Secrets Act, a bill that would create a federal trade secrets cause of action for civil litigants. Currently, trade secrets litigation is a state law matter, meaning that most trade secrets litigation takes place in state courts, with their different statutes and court procedures. But if this new Act passed, trade secrets protections would be enforced by a uniform law in the federal court system, which has less variations from district to district than the various state courts do. Federal courts make obtaining discovery easier across state lines and often provide the same judge for the entire case, though they sometimes can be slower to act than state courts when a plaintiff files for emergency injunctive relief.
Yet most of the states base their respective laws on the Uniform Trade Secret Act, which I previously wrote about here, eliminating most major variations in trade secrets law from state-to-state. Even Massachusetts (as one of the last holdouts) is seriously considering adopting the Uniform Trade Secrets Act in combination with eliminating noncompetes, something Michael Rosen wrote about here. Further, given that the vast majority of trade secrets claims involve the defendant's use of a computer in some way, many plaintiffs have used the controversial Computer Fraud and Abuse Act, which I also have written about, to get their trade secrets claims in federal court anyway.
So will this bill, or another federal trade secrets bill, pass? It's hard to say for sure. The continuing discussion on Capitol Hill about cybersecurity and foreign espionage in industry (including the defense industry) probably makes it more likely that something will pass this time than on previous unsuccessful occasions. Only time will tell.
To view Foley Hoag's Massachusetts Noncompete Law Blog please click here.
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