The Defend Trade Secrets Act (DTSA) of 2016 created a federal cause of action for trade secret misappropriation with the goal of allowing companies to protect their trade secrets across the US in Federal Courts. Because a trade secret under the DTSA is broadly defined to include all forms and types of financial, business, scientific, technical, economic, or engineering information, many companies have seen the DTSA as providing a new protection for their intellectual property that is automatic. Since most companies already have a confidentiality policy or trade secret policy, these companies may now have protection across the US for their secrets.
However, establishing trade secret protection is not that easy. The DTSA requires that reasonable measures be taken to keep the information that is a trade secret actually secret. Those reasonable efforts require more than having a policy, stamping some documents, or having a general intention to keep information secret. As such, many companies are operating under a false sense of security because they are not taking the required steps to protect their trade secrets.
Call One, Inc. recently found that out the hard way in Federal Court. Call One sued a former employee for allegedly stealing a customer list and other information, but lost the case of trade secret misappropriation because they did not identify the information at issue as confidential as required in Call One’s own policy. Thus, even though Call One had put a trade secret policy in place, because Call One didn’t follow their own process, they couldn’t enforce the trade secret misappropriation claim in court, resulting in significant and preventable losses for the company.
The take-away from Call One’s experience is that companies need to be vigilant about their trade secrets and adhere to their trade secret related policies. Annual trade secret audits and trainings are great ways to ensure a company is complying with its own policies and that the DTSA will actually be an avenue for protection down the line. If trade secret audits and trainings aren’t part of your company’s intellectual property protection strategy, Marbury can help you add them to your strategy.
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