The Defend Trade Secrets Act (DTSA) celebrates its one-year anniversary on May 11, 2017. The DTSA is the most significant expansion of intellectual property law since the Lanham Act was passed in the 1940s. Approximately 70 cases were filed in California federal courts asserting DTSA claims in the past year; but, after one year of litigation, it is still too early to tell how much impact the DTSA has made on trade secret law in California. Nevertheless, even a one year anniversary is worth marking.
The Differences Between the California Uniform Trade Secret Act and the DTSA
The DTSA automatically bestows federal jurisdiction on trade secret claims, allowing DTSA claims to be brought exclusively in federal court. Although trade secret theft has been a federal crime since 1996, prior to the passage of the DTSA, civil claims for trade secret misappropriation were typically governed by state law. The California Uniform Trade Secret Law (CUTSA) cannot be brought in federal court, absent a showing of diversity or concurrent jurisdiction under another claim arising from the same transaction or occurrence as the CUTSA claim. CUTSA also broadly preempts common law claims based on the same nucleus of facts as the trade secrets claim, however the claim is characterized, such as breach of fiduciary duty, breach of loyalty, conversion, fraud, interference with contract, or unfair competition. In contrast, the DTSA does not preempt any provisions of law, including state trade secret laws, such that a plaintiff filing suit in California can bring both a DTSA and CUTSA claim in federal court. The plaintiff must weigh, in bringing both, whether it wants to allege a CUTSA violation and thereby bar the assertion of related state law tort and restitution claims. Notably, a DTSA claim cannot be brought in state court. Finally, because there are many parallels between the CUTSA and DTSA, federal courts can be expected to consider CUTSA precedent and, longer-term, California courts will likewise consider DTSA decisions.