The US and the EU passed new trade secret laws within 30 days of each other. If you are engaged in cross-border business you are now subject to dual enforcement -- but also common protections in both jurisdictions. What can you do to benefit from, rather than be impacted by these new laws?
First Nationwide Trade Secrets Protection – for both the US and EU
In an unprecedented bipartisan effort, the US enacted the Defend Trade Secrets Act (DTSA) on May 11, 2016. The EU passed European Union Directive (EU) 2016/943, on the Protection of Trade Secrets (EU 943) on June 8, 2016. Significantly, the two new trade secrets laws are substantively the same, and appear to be a concerted effort to further harmonize international intellectual property rights. They will undoubtedly change IP protection, practices and enforcement going forward.
DTSA created the first private federal trade secret civil action in U.S. history, and provides nationwide and extraterritorial enforcement for trade secret violations. EU 943 likewise created the first private trade secret action applicable in all EU member states. DTSA and EU943 both created several unique requirements and remedies from existing state/member country laws.
Both laws have significant implications for technology, contracting and employment practices. If prepared for such – you can take advantage of more robust protections with lower costs to enforce. If unprepared – you may find yourself the target of injunctions, seizure and damage awards in multiple jurisdictions.
Whose Agenda and Who Benefits?
DTSA and EU 943 trace their roots to Article 39 of the 1984 World Trade Organization, TRIPs Agreement, which was the first international effort to protect trade secrets. No change for 30 years? So what prompted the new U.S. and EU laws?
The pace and nature of international trade changed dramatically since the WTO, with technology being both the product and driver instigating such change. More recently, cloud-based systems have significantly increased the virtualization of import/exports. In response and because of the resulting globalization of IP theft, the International Chamber of Commerce successfully advocated for better protection of trade secrets in both the U.S. and EU. The lack of federal trade secrets law was also raised in both the TPP and TTIP trade agreement negotiations, which apparently helped advance bipartisan support for DTSA.
DTSA and EU 943 are substantially similar, including the definition of a trade secret, prohibited uses, confidential proceedings and award of damages. They also both have several very unique remedies including:
- ex parte seizures
- injunctive relief
- unjust enrichment
- reasonable royalty
- exemplary damages for bad faith, willful or malicious misappropriation
DTSA and EU 943 also share common exclusions for
- reverse engineering
- independent creation
- employment injunctions
- regulatory and whistleblower disclosures
- no pre-emption of other laws
The Saga Continues…
Interestingly, the one current difference between DTSA and EU943 is EU labor/employment protections – which the White house apparently attempted to address in its October 25 directive calling for U.S. reform of the overuse of non-competes and restrictions on the mobility of employees.
International Harmonization - Coincidence or Collaboration?
Either way, the new U.S. and EU trade secrets laws provide for more robust IP protections and require anyone engaged in cross-border business to prepare accordingly.
To benefit from, rather than be impacted by, the two new trade secrets laws, you should assess your operational practices and prepare for global IP threats. With the right operational practices, policies and procedures, you will not only be ready for dual enforcement, but also be prepared to take advantage of common trade secret protections across multiple jurisdictions.