The new law, which overwhelmingly passed both the House and the Senate last month, will allow companies for the first time to file federal civil lawsuits for trade secrets theft. Until now, companies could either sue under various state laws or, in rare circumstances, lobby federal prosecutors to bring criminal charges.
The president has long publicly supported the legislation, which proponents say will bring greater predictability to trade secrets law than the current state-by-state system affords.
"What these members of Congress have done is to, on a bipartisan basis, pass a strong enforcement bill that allows us not only to go after folks who are stealing trade secrets through criminal actions, but also through civil actions, and hurt them where it counts in their pocketbook," Obama said at a White House ceremony before signing the bill.
Unlike patents, copyrights and trademarks, trade secrets have until now been exclusively handled at the state level. Though each state's approach follows a blueprint laid out by the so-called Uniform Trade Secrets Act, many have complained for years that there are still major state-to-state differences in application of the law.
DTSA is aimed at harmonizing that system through a single federal statute, allowing for the development of more predictable, nationwide case law. It would also give litigants easier access to federal courts, which supporters say are better-equipped than state courts to handle cross-state and international cases, as well as complex technological issues.
Technically, DTSA isn’t a new statute. It’s an amendment to the existing Economic Espionage Act, which previously only allowed for criminal cases filed by the Department of Justice.
Since the earliest iteration of DTSA was introduced in 2012, its most controversial aspect has been a provision allowing courts to issue ex parte seizure orders to prevent the dissemination of a trade secret — a harsh remedy that's unavailable under state law.
Facing concerns about abuse of such one-sided orders, lawmakers added limiting language to the final version that Obama signed Wednesday, including an express proviso that it should only be used in "extraordinary circumstances." The new statute also allows targets of such orders can also seek damages if they feel the seizure provision has been abused.
DTSA also contains other limiting provisions, like one aimed at preventing injunctions that unfairly limit employee mobility and another that protects whistleblowers who disclose trade secrets in the course of reporting unlawful behavior.
Notably, the new law will not preempt the state laws already on the books. Unlike copyrights and patents that are explicitly mentioned in the U.S. Constitution, federal trade secret law draws its authority from the Commerce Clause; like trademark law's federal Lanham Act, the DTSA will co-exist with state-level trade secrets law.
--Editing by Patricia K. Cole.