The Defend Trade Secrets Act (DTSA) was established in 2016 to provide a way for trade secret owners to seek legal action in federal court if their trade secrets are misappropriated. Though applicable to federal law and international commerce, it does not supersede New Jersey laws related to the process.
A key provision within the DTSA is the Whistleblower Protection provision. It protects whistleblowers from any type of legal liability if such a trade secret is divulged for the purpose of reporting or investing as a violation of law. In short, an employee’s right to disclose such information is possible when it is necessary to navigate unlawful conduct within the workplace. Let’s break down what this law means to employees in New Jersey.
What is the Defend Trade Secrets Act?
The Federal Defend Trade Secrets Act of 2016 provides American companies with the right to protect against and take action against misappropriations of important trade secrets or proprietary information within the realm of federal court. Its goal is to prevent unauthorized disclosure of sensitive information that could put a company at risk.
The law provides a broad definition of what a trade secret is, and it provides a wide range of potential remedies, including immediate and irreparable injury that can lead to the seizure of information. However, this law does provide for whistleblower immunity, protecting employees who make statements related to unsafe workplace practices.
What Is the New Jersey Trade Secrets Act?
New Jersey’s Trade Secrets Act provides for similar protections, including willful and malicious misappropriation and claims made in bad faith. This could include information, design, formulas, programs, techniques, patterns, and numerous other core elements considered a protected classification of information.
How Can Employees Navigate the DTSA?
While the DTSA is in place to protect against outright malicious acts, employees remain protected when they are taking steps to protect themselves within workplace environments. Consider these factors:
- Courts will not grant trade secret protections under this law if the employer has not taken basic precautions to create and maintain the secrecy of that information.
- Employers cannot protect information that creates workplace safety risks and cannot force an employee not to report workplace risks because of trade secrets.
- To file a claim, the employee must have committed a misappropriation, improper disclosure, or use after the law was put into place.
What Protections Does the New Jersey Trade Secrets Act and DTSA Provide to Employees?
For employees, there are several core components to protect from trade secret violation claims. First, employers bear the initial burden of proof, including demonstrating that the information was protected and that the violation occurred.
Second, general skills and knowledge, even those obtained on the job, are not considered trade secrets, and those skills can be transferred to a new employer without risk. Employers cannot stop an employee from taking a new job in a related field because of their access to such information.
Note that the whistleblower component of this process provides a much higher level of protection than many expect. Confidential information revealed that exposes workplace safety or other violations is protected.
Employers must have a clear and effective information management scheme in place. Without one, they are unlikely to be able to pursue legal action against an employee.
What Actions Constitute Misappropriation of Trade Secrets?
The broad definition of these laws opens the door to numerous potential levels of confusion about what constitutes misappropriation of trade secrets. Typically, this applies to providing information that has independent economic value to the company in a malicious way, or with intent to harm.. This may include breaching the duty to keep information confidential, misrepresenting information, or outright theft of that information.
What Are the Potential Consequences for Misappropriation?
The potential consequences of the misappropriation of trade secrets can be extensive. For the company, it could mean financial loss or damage to the company’s reputation. An employee who is proven to have engaged in such acts under either of these laws can face significant fines and up to 10 years in prison. In some situations, organizations can be fined three times the value of the loss.
Note that proving misappropriations is complex but not impossible. Employees who are accused of such matters should seek legal guidance immediately to minimize the risk of these difficult outcomes.
Legal Guidance Related to the NJ and Federal Defense Trade Secrets Act from an NJ Employment Lawyer
Senior employees and executives concerned about their rights and potential violations of these laws should seek legal guidance. NJ employment lawyer Ayesha Hamilton and the team at Hamilton Law Firm LLC provides guidance to senior-level employees and C-suite executives trying to handle the most complex of legal matters. Schedule a consultation with a misappropriation of trade secrets lawyer to learn more.