Toward a Federal Jurisprudence of Trade Secret Law
57 Pages Posted: 25 Apr 2017 Last revised: 15 May 2017
Date Written: April 25, 2017
The enactment of the Defend Trade Secrets Act of 2016 (“DTSA”), which created a new federal civil cause of action for trade secret misappropriation, raises a host of issues that federal courts will have to consider under their original subject matter jurisdiction, rather than applying state law through the courts’ diversity jurisdiction. This means that for the first time, an extensive body of federal jurisprudence will need to be developed to govern the civil protection and enforcement of trade secrets in the United States. In addition, due to the DTSA’s changes to the existing federal criminal law governing trade secrets, the Economic Espionage Act of 1996 (“EEA”), federal courts will be required to further develop their EEA jurisprudence.
Because the DTSA is modeled after and includes many provisions taken directly from the Uniform Trade Secrets Act (“UTSA”), it is widely anticipated that federal courts will consult and rely upon existing case law regarding the UTSA to decide how to apply the DTSA. However, nothing in the language of the DTSA mandates such an approach, and federal courts may elect to depart from existing state law precedent in some situations. Moreover, there are unique aspects of the DTSA, such as the ex parte seizure provision and protection for whistleblowers, which will raise questions of first impression for the federal courts. Additionally, because pre-existing provisions of the EEA will be subject to greater scrutiny due to the number of civil cases that are likely to be filed under the DTSA, unresolved issues under the EEA are also likely to be extensively litigated.
While it is premature to catalogue all of the issues that litigants raise in trade secret cases brought under the DTSA, this paper seeks to identify and analyze several major areas of anticipated dispute and to provide a framework for analyzing and resolving them. Part I begins with a brief introduction to U.S. trade secret law. Part II details the origins and legislative history of the DTSA. Part III discusses the interpretive rules and methodologies that are likely to govern federal courts’ development of a federal jurisprudence of trade secrecy, including the circumstances under which they might rely upon existing state trade secret case law or instead develop a “federal common law” of trade secrecy. Finally, Part IV examines how key provisions of the UTSA should be interpreted in light of these rules and methodologies, organized into four sub-categories:
(1) “new” language in the DTSA that does not appear in state trade secrets law;
(2) language “borrowed” from the UTSA that is defined by statute;
(3) language “borrowed” from the UTSA that is not defined by statute; and
(4) issues not addressed in either the DTSA or the UTSA.
In so doing, it provides a framework for the future analysis of other provisions of the DTSA.
Keywords: intellectual property, IP, trade secrets, Defend Trade Secrets Act, Uniform Trade Secrets Act, statutory interpretation, Erie doctrine, federal common law, federal courts
JEL Classification: K00, K19, K41
Suggested Citation: Suggested Citation