On July 31, 2015, TSW continued our reporting of the continuing saga of Congress’ attempts to establish a federal right of civil action for trade secrets misappropriation by covering the introduction of the “Defend Trade Secrets Act of 2015” (“2015 DTSA”). The 2015 DTSA was introduced in identical form in the House (H.R. 3326) by Rep. Doug Collins (R-GA) and in the Senate (S. 1890) by Sen. Orrin Hatch (R-UT). In prior posts, we covered the introduction of the Defend Trade Secrets Act of 2014 in both the House (the “2014 House Bill”) and the Senate and outlined the differences between the two, noting that the 2014 House Bill was much more protective of defendants facing ex parte seizure orders.

The 2015 DTSA follows in the footsteps of the 2014 House Bill, not only maintaining these protections, but augmenting them, particularly with adding new and improved security features for a party’s trade secrets and confidential information. Here’s a summary of the new protections and restrictions added to the 2015 DTSA as compared to the 2014 House Bill:

• Basis for Application for Civil Seizure Order: The 2015 DTSA removes the provision that gave a Court the power to issue a civil seizure order solely for the purpose of preserving evidence. Now, the order can only be for the purpose of preventing the “propagation or dissemination of the trade secret that is the subject of the action.”
• Requirements for Civil Seizure Order: The 2015 DTSA clarifies that a Court may not grant a seizure application unless it finds that the applicant is likely to succeed in showing, among other things, that the information allegedly misappropriated is actually a trade secret. While this likely was an implicit requirement of 2014 House Bill, this latest iteration made the requirement explicit.
• Narrow Civil Seizure Order: Under the 2015 DTSA, if a seizure order is issued, it must now provide for the “narrowest” seizure “necessary to achieve the purpose of this paragraph.”
• Access to Seized Material: Now, if seized material includes or is stored on an “electronic storage medium,” the court “shall prohibit” that medium from being connected to a network or the Internet without the consent of both parties prior to the seizure hearing. In addition, a party may move to encrypt any seized material that is stored on an electronic storage medium. Providing an electronic lockbox gives parties additional reassurances about the security of their confidential information.
• Seizure Hearing: The 2015 DTSA adds a requirement that a hearing be held in the event of issuance of a civil seizure order, placing the burden on the party obtaining the order to prove that the facts and law supporting the order are still in effect.
• Remedies: Responding to employment-related concerns about prior versions of the Bill, the 2015 DTSA still provides for injunctive relief, but on the condition that any order “does not prevent a person from accepting an offer of employment under conditions that avoid actual or threatened misappropriation.”
• “Sense of Congress”: Finally, in the 2015 version, Congress added a provision letting us know just how seriously it considers trade secret theft, stating that it “harms the companies that own the trade secrets and the employees of the companies.” Does this leave the door open to federal claims for harm other than ones for trade secret misappropriation, such as intentional interference? Only time will tell. In the same paragraph, Congress clarified that the Economic Espionage Act of 1996 also applies to protect trade secrets from theft.

It remains to be seen how the Congressional Committee will respond to the 2015 DTSA. Certainly, Congress remains interested in trying to establish a federal right to trade secret misappropriation claims, but whether that interest can be converted into a law remains to be seen. We will keep an eye on the progress (if any) and keep you posted.