January 12, 2021 Articles

The Defend Trade Secrets Act and Extraterritoriality

The question of whether misappropriation that occurred outside the United States is subject to the DTSA will likely be litigated with increased frequency.

By Kurt A. Kappes and Lupe R. Laguna

We are rapidly approaching the fifth anniversary of the Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1831 et seq. (effective May 2016). As many know, the statute amended sections of the previously enacted Economic Espionage Act of 1996 (EEA), Pub. L. No. 104-294, which had criminalized the theft of trade secrets in certain contexts.

Specifically, the DTSA amended the EEA in creating a private right of action, codified in 18 U.S.C. § 1836(b). The purpose of the DTSA was to complement the EEA’s existing criminal penalties for trade secret theft with a civil enforcement mechanism. It was also enacted to federalize such claims, even though nearly every state in the country has adopted some version of the Uniform Trade Secrets Act.

Congress enacted the DTSA against the backdrop of an economy that is becoming increasingly globalized and decentralized. In passing the DTSA, Congress underscored the threat that trade secret theft poses to the American economy, observing that “[i]n a recent report, the Commission on the Theft of American Intellectual Property estimated that annual losses to the American economy caused by trade secret theft are over $300 billion, comparable to the current annual level of U.S. exports to Asia.” Sen. Rep. No. 114-220 (Mar. 7, 2016). Although the global economy presents unique business opportunities for both foreign and domestic companies, it also presents challenges for the protection of intellectual property. Indeed, in passing the DTSA, Congress noted that “[p]rotecting trade secrets has become increasingly difficult given ever-evolving technological advancements. Thieves are using increasingly sophisticated methods to steal trade secrets and the growing use of technology and cyberspace has made trade secret theft detection particularly difficult.” Id.

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