Recently enacted federal “Defend Trade Secrets Act “ includes whistleblower protection not previously afforded by state law.
On May 11, 2016 the Defend Trade Secrets Act (DTSA) was signed into law and became immediately effective to protect misappropriation of trade secrets. This new federal law was designed to supplement, not preempt, state trade secret law. The DSTA provides whistleblower protection to employees, independent contractors, and consultants which grants “immunity from liability for confidential disclosure of a trade secret to the government or in a court filing” so long as the disclosure:
(A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
Employers must provide notice of the whistleblower immunity in any contract or amendment entered into with employees, independent contracts, or consultant on or after May 12, 2016. If such notice is not provided, the employer will be unable to recover enhanced damages or attorneys’ fees in a DTSA suit against an employee for misappropriation of trade secrets.
What does these mean if you are an employer? Now is the time to review any contracts that contain provisions regarding confidential information and trade secrets –employment contracts, non-compete agreements, non-disclosure agreements, severance agreements, invention rights agreements, etc. Notice needs to be added to each and every agreement and amendment going forward. A written policy that is cross-referenced in the agreements is considered sufficient notice under the DTSA.