Authors

Patrick Ruelle

The Defend Trade Secrets Act: Why Interpreting the New Law On Its Own Terms Promotes Uniformity

Abstract

Trade secrets, a category of intellectual property recognized at state and federal law, are integral parts of many corporations’ intellectual property portfolios. A trade secret is a type of intellectual property that is not disclosed by its owner, and is therefore unlike patents, trademarks, or copyrights—all types of information that are disclosed to the public. As a result, trade secrets may represent a viable alternative to patents and copyrights since its value is derived from its secrecy.

In the United States, the laws governing trade secrets have typically been the offspring of the state common law. As each state developed its own understanding of trade secrets, this area of law became increasingly complex, leading the Uniform Law Commission to publish and promote the Uniform Trade Secret Act in 1979. Since then, the UTSA has been enacted by forty-eight states and the District of Columbia.

Despite this success, the enacted UTSAs across the country are not truly uniform, and state courts have also been unable to divorce themselves from preexisting, state-specific case law, which has led to conflicting results. Due to this disjointed implementation, a vocal segment of both the business and legal communities have pushed for federalization, which, proponents hope, will finally bring uniformity and predictability to a historically opaque law.

Congress was generally deaf to proponents’ pleas. However, the ascendency of China as the world’s second largest economy—compounded with widespread allegations that Chinese companies (and/or the Chinese government itself) hack into and steal American companies’ trade secrets— created a more receptive environment on Capitol Hill. In 2014, two bills were introduced in both houses of Congress. Both died.

Although both bills failed in 2014, on July 29, 2015, the Defend Trade Secrets Act was resurrected and reintroduced on the Senate floor. The DTSA purports to grant “[t]he district courts of the United States . . . original jurisdiction of civil actions brought under this section.” On May 11, 2016, the DTSA was signed into law. This Comment assesses the DTSA within the existing framework of the UTSA and suggests federal courts interpret the new law on its own terms without overtly relying on the UTSA.

To accomplish the aforementioned goal, this Comment first traces the development of trade secrets from a common-law concept to codification under the UTSA, highlighting the UTSA’s benefits and shortcomings. Next, this Comment will discuss the events that led to the push for congressional action. Finally, this Comment focuses on the newly enacted, non-preemptive DTSA, encouraging federal courts to rely on the DTSA’s language without giving controlling weight to pre-existing UTSA precedent. If federal courts interpret the DTSA independently, the new law will have the greatest chance of creating a uniform trade secrets regime in the United States.

Repository Citation

Patrick Ruelle, The Defend Trade Secrets Act: Why Interpreting the New Law On Its Own Terms Promotes Uniformity, 21 Marq. Intellectual Property L. Rev. 249 (2017).
Available at: https://scholarship.law.marquette.edu/iplr/vol21/iss2/8