On May 11, 2016 the federal Defend Trade Secrets Act of 2016 went into effect.4 The DTSA is supportive of both the federal Economic Espionage Act of 19965 and the Uniform Trade Secrets Act6 adopted by many states including Florida.7 The “DTSA” affords owners of trade secrets access to the federal court system to protect their interests against misappropriation (that is…theft and misuse). And also protects whistleblowers.8
One stark example of trade secret misappropriation (as mentioned above) is the use of a company’s client list by a former employee to solicit the business of those customers. In the Henry Schein, Inc. v. Cook9 California DTSA case, the Court granted the employer a temporary restraining order. [Here is a practical non-secret – Consider including confidentiality, non-disclosure, non-pilfering, and appropriately limited non-competition provisions in employment agreements and handbooks. That can afford a degree of contractual protection above statutory protection.]
Money damages can also be available, as in Dalmatia Import Group, Inc. v. Foodmatch, Inc., a Pennsylvania DTSA case.10 In that case the Court awarded $2.5 million in damages based upon a jam recipe misappropriation. (Again, trade secret intellectual property can have real financial value.)
The “DTSA” Affords Owners of Trade Secrets Access to the Federal Court System to Protect their Interests Against Misappropriation (that is…Theft and Misuse). And also Protects Whistleblowers.
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In an interesting 2018 New Jersey DTSA case, Camick v. Holladay, et al.11 (reported in Orrick Trade Secrets Watch12), the federal 10th Circuit Court of Appeals noted that simply holding a trade secret misappropriated prior to the adoption of the DTSA, but not actually using or disclosing that trade secret, does not give rise to a DTSA claim. Like any statutory interpretation, that sentiment could evolve over time, of course.
In the same ‘vein’, this writer had the pleasure of overseeing a University of Florida Warrington College of Business undergraduate honors thesis, where the Student analyzed the extremely rapid transmittal of runway fashion designs to overseas ‘knock-off’ plants, using ship hull design protection as the protection basis. Needless to say, it was a standout project.
A remark regarding intellectual property generally: Please note that this writer makes frequent use of URL-based footnotes in this series. Why? (1) It is a best practice to show direct sources. (2) If nothing else, it is proper to attribute those sources to their creators. (3) It shows respect for and compliance with the copyright ‘Fair Use Doctrine’.13 Reciprocally, this writer expects nothing less from others who sources to this series of articles.
Now, let ‘us’ go out there and not violate others’ intellectual property rights, including trade secrets.
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1 The topic of this article is limited to trade secrets. It will not address other areas of intellectual property such as patents, trademarks, copyrights, and related rights.
2 https://www.worldofcoca-cola.com/explore/explore-inside/explore-vault-secret-formula/, https://www.snopes.com/fact-check/coca-cola-fomula/
3 https://www.nytimes.com/2016/08/26/dining/is-this-the-top-secret-kfc-recipe.html, http://chickenchattin.kfc.com/11-herbs-and-spices-in-kfc-original-recipe/
4 https://www.law.cornell.edu/uscode/text/18/1836, https://www.congress.gov/bill/114th-congress/senate-bill/1890
5 https://www.law.cornell.edu/uscode/text/18/1831
6 https://www.law.cornell.edu/wex/trade_secret
7 Florida Statutes Chapter 688 (“Uniform Trade Secrets Act”)
8 https://www.forbes.com/sites/ericgoldman/2016/04/28/the-new-defend-trade-secrets-act-is-the-biggest-ip-development-in-years/#4e0afd7b4261
9 https://www.leagle.com/decision/infdco20160613a96
10 https://www.courtlistener.com/docket/4610917/dalmatia-import-group-inc-v-foodmatch-inc/
11 https://www.ca10.uscourts.gov/opinions/18/18-3065.pdf, https://law.justia.com/cases/federal/district-courts/new-jersey/njdce/1:2016cv09013/342253/6/
12 https://blogs.orrick.com/trade-secrets-watch/2018/12/21/possession-is-not-9-10ths-of-the-law-in-continuing-use-misappropriation-under-dtsa/
13 https://www.copyright.gov/fair-use/more-info.html
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– For more information, call Philip N. Kabler of the Gainesville, FL office of Bogin, Munns & Munns at 352.332.7688, where he practices in the areas of business, banking, real estate, and equine law. He has taught business and real estate law courses at the University of Florida Levin College of Law and Warrington College of Business Administration. And is now the President-Elect of the Eighth Judicial Circuit Bar Association.
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