The recently enacted federal civil trade secret legislation immediately impacts the way non-disclosure agreements should be drafted. The owner of confidential information may find himself without important remedies under the new statute if he has failed to include notice of the statute’s whistleblower immunity provisions in his employee agreements. Notice of those provisions must be provided in all agreements imposing a confidentiality obligation on employees, independent contractors and consultants.
What Activities Receive “Immunity”?
Amendments to the Economic Espionage Act, 18 U.S.C.A. §§. 1831 et seq. (EEA) contain new whistleblower protections. The amended EEA now provides that the following types of disclosures will enjoy at least some measure of immunity:
- Disclosure of a trade secret to a governmental official or an attorney solely for the purpose of reporting or investigating a suspected legal violation;
- Disclosure of a trade secret in a document that is filed under seal in a lawsuit or other proceeding;
- Disclosure or use of a trade secret in connection with retaliation lawsuits, so long as filings containing the secret are made under seal.
What Activities Do Not Receive “Immunity”?
Under the plain meaning of the statute’s immunity language, certain activities receive no protection. Disclosures to the media and the public, for example, are not covered. The only disclosures afforded immunity are to legal counsel, governmental authorities, and adjudicative tribunals. And the statute is clear that such disclosures to the authorities must be made “in confidence” and disclosures in lawsuits and other proceedings must be made “under seal.” Any whistleblower publicly disclosing confidential materials (e.g., by posting information on social media or by talking to the press) therefore will find no shelter under the EEA.
Nor do the EEA’s new immunity provisions extend to the unauthorized or otherwise improper acquisition of a trade secret. Indeed, the statute expressly states that it does not “authorize, or limit liability for, an act that is otherwise prohibited by law, such as the unlawful access of material by unauthorized means.”
Furthermore, the immunity provided in subsection (b)(1) is expressly limited to liability “under any Federal or State trade secret law.” This limitation is important because, as stated above, claims brought against whistleblowers frequently sound in contract (e.g., breach of a confidentiality agreement) or are brought under common law principles that do not require a trade secret (e.g., breach of fiduciary duty). Such claims apparently will not receive immunity under the EEA.