Last month, President Obama signed S. 1890, the Defend Trade Secrets Act of 2016 (DTSA), into law. The DTSA gives trade secret owners, such as agency owners, a new option to bring civil lawsuits for breach of confidential information, such as client lists, using federal law.

Previously, trade secret owners could only bring such lawsuits under state law. The new law does not preempt state law, but rather allows trade secret owners to rely on state law as well as the DTSA.

For any contract or agreement with an employee, contractor or consultant that governs the use of a trade secret or other confidential information, agencies may wish to include a whistleblower immunity provision—such as an explanation of certain employee rights—in said agreements to avail themselves of certain rights under the DTSA. Specifically, if a DTSA claim is based on an agreement or contract entered into or updated after May 11, 2016, exemplary damages and attorney’s fees are available to the trade secret owner only if the agreement or contract contains a whistleblower immunity provision.

Any relevant contracts or agreements entered into on or before May 11, 2016 do not need the whistleblower immunity provision in order for the trade secret owner to recover exemplary damages and attorney’s fees. No matter when the agreement was entered into, failure to provide the notice does not impact one’s ability to pursue remedies under state law.

In order to receive exemplary damages—which are limited to twice the amount of compensatory damages—and recover attorneys’ fees, the trade secret owner would also need to prove the misappropriation of the trade secret was willful and malicious. Even if the whistleblower immunity provision is not included, trade secret owners may still seek damages for actual losses and unjust enrichment.

To assist member agencies, the Big “I” has provided a sample whistleblower immunity provision to use as a template when notifying employees, contractors and consultants of the immunity provisions in the DTSA. The sample whistleblower immunity provision is posted on the association’s Legal Advocacy webpage. The sample, “DTSA Sample Whistleblower Provision,” is listed under Memoranda and FAQs. Members must log in to view the document. 

Jennifer Webb is Big “I” federal government affairs counsel. Joseph Doherty is Big “I” senior counsel.