The authors would like to thank Thomas Fogarty and Anya Bharat Ram for their contributions to this post.
Section 1832 of the Economic Espionage Act of 1996 (the “Act”) criminalizes the theft of trade secrets “intended for use in interstate or foreign commerce, to the economic benefit of anyone other than the owner.” 18 U.S.C. § 1832(a). The Defend Trade Secrets Act of 2016 (the “DTSA”) amends the Act to include a civil cause of action for the misappropriation of trade secrets. 18 U.S.C. § 1836(b)(1). Thus, victimized individuals or corporations whose trade secrets were stolen may seek an injunction, monetary damages, or attorneys’ fees. In extreme cases, parties may seek an ex parte seizure to prevent the misuse of stolen trade secrets.
Industrial espionage refers to various activities performed to gain an unfair competitive advantage, including the theft of trade secrets. In previous articles (here and here), we discussed how companies can legally and practically protect themselves from industrial espionage. However, where these protections fail, remedies are available.
A court may grant an injunction “to prevent any actual or threatened misappropriation [of a trade secret] . . . on such terms as the court deems reasonable.” § 1836(b)(3)(A)(i). Such an injunction requires the defendant to take affirmative action to protect the secret. § 1836(b)(3)(A)(ii). Yet the court may deny the injunction, but allow the defendant to use the trade secret if they pay a “reasonable royalty” for a specified period of time. § 1836(b)(3)(A)(iii). Any injunction may not prevent the defendant from “entering into an employment relationship with another,” nor may it contradict any state laws “prohibiting restraints on the practice of a lawful profession, trade, or business.” §§ 1836(b)(3)(A)(i)(I)–(II).