January 17, 2017 Practice Points

It Concerns You: A Quick Comparison of Illinois Trade Secret Act and Defend Trade Secret Act of 2016

By Xiaoyin Cao

On May 11, 2016, President Obama signed the Defend Trade Secrets Act (DTSA) into law. In the bigger picture, the enactment of DTSA is a response to the increased trade secret theft as well as espionage perpetrated by foreign countries. But there is so much more to DTSA that actually concerns you—it created a federal private civil action for the misappropriation of trade secrets. While DTSA does not preempt state law, it provides trade secret owners with an additional forum for relief.

While both Illinois Trade Secret Act (ITSA) and DTSA derived parts from the Uniform Trade Secrets Act (UTSA), the below table analyzes some of the differences and similarities between the ITSA and DTSA. 

 

ITSA

DTSA

Comments

Trade Secret Definition

Information that:
(1) is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the circumstances to maintain
its secrecy.

Information that:
(1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by another person who can obtain economic value from the disclosure or use of the information; and
(2) the owner has taken reasonable measures to keep such information secret.

Substantively the same, except for that DTSA provides that it is the owner of the information who is required to take reasonable measures to keep the information secret.

Misappropriation

without permission (A) obtaining a trade secret that was knowingly obtained through improper means or (B) disclosing or using a trade secret without knowing either (1) that it is a trade secret or (2) that it was obtained through improper means.

Same

Lawful Conduct

Reverse engineering
Independent derivation
Other lawful means of acquisition

Same

Statute of Limitation

5 years

3 years

DTSA's statute of limitation is shorter

Types of Remedies

Injunction;
Temporary Restraining Order;
Damages.

Injunction;
Civil seizure;
Damages.

Civil seizure in DTSA is similar to Temporary Restraining Order in ITSA;

Compensatory Damages

 (i): (I) "actual loss of the trade secret" and, in addition (II) "any unjust enrichment" not compensated in (I); or (ii) a reasonable royalty for the use.

Same

Punitive damages

If willful and malicious misappropriate – may grant up to two times of the compensatory damages / unjust enrichment

Same

Whistleblower 
Protection

Silent

Provides immunity for whistleblower who discloses trade secrets to government officials for the sole purpose of reporting violations of the law

Under DTSA, employers must give notice of the immunity in relevant agreement with employees, otherwise they may not recover punitive damages or attorneys' fees

Attorney fees

If willful and malicious misappropriate - may grant reasonable attorney fee

Same

Preemption

Preempted all Common Law on theft of trade secret

Does not preempt state law

Enable the choice to sue in Federal or State court

Apart from creating a new and powerful remedy for trade secret holders and bring federal trade secret law in line with other federal IP laws, the DTSA preserves many important elements of state laws. It is important to be aware of the differences and similarities between the ILSA and DTSA when assessing a case and decide the litigation strategy.

Xiaoyin Cao is an associate at Carmen D. Caruson Law Firm in Chicago, Illinois.


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