What the New Defend Trade Secrets Act Means for You

May 24, 2016

President Barack Obama recently signed into law the Defend Trade Secrets Act (DTSA), which went into effect at signing. With the passage of this law, trade secrets, which have historically been protected only at the state level, will have some more federal protections.

Defining Trade Secrets

What a trade secret is, is partly determined by state law. However, there are a few generic definitions we can discuss, as well as the definition used by the new federal law.

For starters, trade secrets are generally defined by the World Intellectual Property Organization (WIPO) as “any confidential business information which provides an enterprise a competitive edge.”

This might include sales lists, consumer profiles, company methodologies, or advertising strategies. However, that is just a short list. What constitutes a trade secret can actually be quite broad.

The Uniform Trade Secrets Act (UTSA), which I will talk more about in the next section, defines the term as “information, including a formula, pattern, compilation, program, device, method, technique, or process,” that derives economic value from being kept secret and which the company actually does try to take reasonable steps to keep secret.

Finally, the new federal law – the DTSA – uses the definition from section 18 U.S. Code § 1839, which defines trade secrets as, “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—

(A) the owner thereof has taken reasonable measures to keep such information secret; and

(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.”

Basically, no matter how you define it, if you use it to conduct your business, its financial benefit is in part due to your competition not knowing it, and you take steps to keep it a secret, then it will likely be constituted as a trade secret.

The Past State of Protections

As mentioned above, there is a Uniform Trade Secrets Act (UTSA). However, this is not an actual law – only a suggested way to handle the law. Despite this, in one way or another, the UTSA is applicable in a wide amount of companies throughout the country.

This is because almost every state has adopted the uniform law in some form or the other. While some changes may have been made to the basics of the law, there is a good chance that the UTSA should be the guiding light for your trade secrets policy.

Determining if a Trade Secret Exists

One of the most important factors listed in the UTSA might be where they suggest six factors courts can use to determine if a trade secret exists.

If you think you have a trade secret – especially if you think that trade secret is being misappropriated – then ask yourself the following:

  1. How well is the information known outside of your business?
  2. How widely known is the information within your business? (E.g., does everyone use it or is it only given to employees with NDAs, etc.)
  3. What have you been doing to protect the information?
  4. If your competitors were to get the information, would it be valuable to them?
  5. How much would it cost your competitors to get the information on their own?
  6. How hard would it be for your competition to get this information?

The answers to these questions will help a court determine whether what you have is protected under trade secret laws that might be in place in your state. For example, if you have a customer list that is not widely known to anyone else (and would be of great value to your competition if they could get it) nor would it be easy to get, plus, you keep it pretty well locked with only those employees with a need-to-know given access to it, then it is likely a trade secret will be found.

However, if a detailed internet search could get that same list – or a substantially similar one – or you have, up to now, been pretty lax with your protection of the list, then it is a lot less likely to be protected.

How a Trade Secret Is Protected

When a trade secret is found under state law – when such a law exists – then there are lots of ways it might be protected if it is wrongfully acquired by anyone else or is used by someone in an unauthorized manner (i.e., there was a breach of confidence).

For example, an injunction against the person using the trade secret is likely, as well as any monetary damages gained by the one unlawfully using the trade secret or lost by the company whose trade secret is illegally being used.

What the New Law Says

As I said, most states – though admittedly not all – had adopted the UTSA in some variation or the other. While what specially constituted a trade secret might have varied slightly or what constituted a violation of the act or how the trade secret was protected might have depended on the state, you probably already had some type of protection in place.

So what is new?

For starters, creating a federal law makes the process more standard – which is especially helpful if you were in one of those few places (most notably New York) that has not adopted the UTSA. However, it is also useful when the violation is more widespread.

For example, let’s say you have a trade secret you are trying to protect that you use in your businesses across the country. It is subsequently taken by a former employee – who had signed an NDA – when they leave you to work for your biggest competitor, who operates in several of the states in which you do business plus several more in which you have not yet expanded.

A federal law makes handling this situation a lot easier.

So what exactly does the new law do, though?

Well, for starters, it is not meant to preempt state law. Instead, it is meant to supplement state law. That means you have more freedom to choose the law that is most beneficial to you when you are making a claim.

The big thing the federal law provides (other than a whistleblower provision, which I will talk more about in the next section) is several different remedies you can have enforced to protect your trade secret should it be unlawfully misappropriated.

  • You will probably be able to get an injunction. It should be noted, though, that an injunction against a former employee working for the competition will not be given under federal law just because the employee knows the trade secret information. However, if the employee threatened to or did use the information, an injunction may be granted.
  • In very detailed and limited circumstances, you could potentially have a court seize any property needed to fully protect your trade secret. This is not a common remedy and will only be used in the most extreme situations – such as if there is a flight risk.
  • As is the case in most trade secret laws, you can recover your damages from the other party.
  • In some cases, you might be able to receive royalties in lieu of damages.
  • If the trade secret use was willful or malicious, you might be able to receive exemplary damages and recover your attorney’s fees.

What the New Law Means for You

For starters, the creation of this new federal law is a good time for you to review your current trade secrets.

  • How are they being protected?
  • Are you monitoring to make sure they are not being improperly used?
  • If you do suspect that they are being improperly used, are you taking the proper steps to shut down that misappropriation as soon as possible?

Use this new law as a way to evaluate any policies that might be effected.

Whistleblower Protections

In addition to double checking the current state of trade secret protection within your company, you might want to take an additional step to make sure you are fully protected by the federal law.

Under its whistleblower provision, the federal law requires that the employer provide notice to employees about a specific immunity from this law. If, while reporting a potential violation of another law, a trade secret is revealed, the employee, consultant, or independent contractor has immunity from the remedies listed in the last section.

Employers must actively give notice of this immunity, or at least cross-reference it to another section discussing the immunity, anywhere they discuss trade secrets or confidential information. Otherwise, they could lose their right to sue for exemplary damages or attorney’s fees.

That being said, while you are looking at all of your policies just as a double check, make sure you are also actively adding information about this immunity to any employment agreement, handbook, or contract.

Also, as you should do anytime you change any of these documents, make sure you communicate this change with your employees in the manner you usually make such announcements.

Final Thoughts

As usual, it is always a good idea to review your policies both periodically and any time an applicable law is created or revised that could affect you. You should also take some time to update your policies with the new information on whistleblower immunities. If you have any questions or want to verify that you are in compliance, make sure you seek help from an experienced employment law team.


Ashley Shaw is an experienced Legal Writer with years of experience. After receiving her JD, she worked for years in a corporate environment writing on business and employment law topics

Get Business Legal Updates

Please provide your full name.
Please provide a valid email address.
We respect your privacy, and we will never share your information. Unsubscribe at any time.

Related Publications

When it comes to Restrictive Covenants, employers are fighting to keep their company safe while employees may use them to their advantage. Keep listening to find out if the Employer or the Employee wins this battle. Round 1: Trade Secrets A company’s trade secrets encompass a whole range of information and are one of the…

May 12, 2022

In a $1.4 billion lawsuit, a whistleblower accuses Cigna of falsely classifying diagnoses of its Medicare Advantage program members in order to receive billions of dollars in overpayments from CMS. Cigna’s response is that they will defend themselves against all “unjustified allegations.”

August 19, 2020

Coca-Cola’s recipe for its soda is supposed to be one of the best kept secrets ever. The original recipe is said to be kept in a vault in the company’s Atlanta home where visitors to the World of Coca-Cola can see it (the vault – not the recipe). Coca-Cola goes above and beyond to protect…

January 26, 2016

Nasir and Mattenter Groundhog’s Day by discussing the importance of trade secrets and how to best protect your intellectual property.

February 2, 2015

Competing for Great Employees Bad news for employers. The economy is getting better. Affordable and talented employees are becoming harder to find. Employees are quitting more now than they have in the last six years. Minimum wage increases have been peppered throughout the United States. Welcome to the competition for great employees. Poaching has a huge…

November 25, 2014
Legally Sound Smart Business cover art

Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
Apple Podcast badge
Google Podcast badge
Spotify Podcast badge

Latest Episodes

November 21, 2023

In this episode, Nasir Pasha and Matt Staub explore the legal implications of Artificial Intelligence in the business world. They delve into the most talked-about issue of 2023: AI and its impact on the legal landscape. Although AI isn’t necessarily a new topic, it has many unanswered questions in the legal world. Nasir and Matt…

July 12, 2023

In this episode, Attorney Nasir Pasha and Attorney Matt Staub delve deep into the complexities of mass layoffs and offer valuable insights, real-life examples, and practical advice to employers grappling with the aftermath of such challenging situations. Nasir and Matt emphasize the critical importance of effective communication when executing mass layoffs. They stress the need…

January 9, 2023

As the COVID-19 pandemic swept across the globe, businesses scrambled to adapt to the new reality it presented. In this blog post, we dive into the case of Goldman Sachs, a financial services giant, to examine their response to the crisis and the lessons other businesses can learn from their return-to-office strategy. From prioritizing employee…

October 28, 2022

Full Podcast Transcript NASIR: Finally, my two favorite worlds have collided – both the law and the chess – right here at Memorial Park in Houston, Texas. Windy day. We have some background noise – ambient noise. What are the two worlds that collided? Well, Hans Neimann has sued Magnus Carlsen for defamation in one…

September 26, 2022

Through a five-round championship bout, Matt travels to Texas from California to determine which state is better for business. Will it be a knockout with a clear winner or will it go to the scorecards?

July 7, 2022

Whether you are buying or selling a business, the transaction goes through the same steps. However, they are viewed from different perspectives. Sellers may not want to fully disclose all the blind spots while Buyers will want otherwise. Nasir and Matt battle it out in this Buyer vs. Seller to determine who has the advantage!…

May 12, 2022

When it comes to Restrictive Covenants, employers are fighting to keep their company safe while employees may use them to their advantage. Keep listening to find out if the Employer or the Employee wins this battle. Round 1: Trade Secrets A company’s trade secrets encompass a whole range of information and are one of the…

February 14, 2022

The Supreme Court rejected the nation’s vaccine mandate. Businesses with 100 or more employees are NOT required to have their employees vaccinated or go through weekly testings. However, this policy remains in effect for health care facilities. In this episode of Legally Sound | Smart Business, the team sat down to discuss their thoughts on this ruling.

December 1, 2021

In this episode of Legally Sound | Smart Business by Pasha Law PC, Nasir and Matt cover the Business of Healthcare. There is more to the healthcare industry than just doctors and nurses. Many Americans have health insurance to cover their yearly needs, but most Americans are not aware of what really goes on behind…

October 12, 2021

In our latest episode, Nasir and Matt are covering the legal issues on Social Media. The average person spends most of their day on social media, whether they are scrolling for hours or publishing their own content. However, just because you publish your own content on Instagram does not equate to you owning that image….

September 28, 2021

What is a Non-Disclosure Agreement, and when do I need one? In this episode, Nasir and Matt shares why you need to use Non-Disclosure Agreements, basic facts about NDA’s, and discuss about the infamous Jenner-Woods story. Having the right Non-Disclosure Agreement in place not only protects you and your business, but it also makes the…

June 16, 2021

Covered in this episode of Legally Sound Smart Business are some typical business mistakes blunders small businesses often make and how to avoid them. Blunder #1: Copying and pasting agreements It may sound like a good idea at the time, but this blunder comes with hidden pitfalls. Having an attorney draft terms that are specific…

February 4, 2021

How you terminate an employee can make the difference between a graceful transition to avoidable negative outcomes like a dramatic exit or even a lawsuit. We gathered a panel of experts and asked them – is there a “right way” to fire an employee? We would like to thank our guests for this episode: Amr…

December 2, 2020

The COVID-19 pandemic has turned nearly every aspect of life on its head, and that certainly holds true for the business world. In this episode, Matt and Nasir explain how the early days of the pandemic felt like the Wild West and how the shifting legal playing field left a lot open to interpretation and…

November 16, 2020

After plenty of ups and downs, our buyer has finally closed on the purchase of their business. While we’re marking this down in the ‘wins’ column, it never hurts to review the game tape. In this final episode, our hosts, Matt Staub and Nasir Pasha, return to the deal almost a year later to reflect…

September 15, 2020

The ink is drying on the signature line and things are looking great for our buyer. After so much hard work, the finish line is in sight and the cheering within ear shot.   Though the landlord is still serving friction, things seem safe to move forward and for now, our buyer will be keeping…

July 31, 2020

Though things are coming along well, the journey would not be interesting if it was purely smooth sailing. After our buyer opens escrow, they are forced to push the closing date back when suddenly a letter from an attorney was received claiming the business, we are buying has a trade mark on the name!  Now…

June 12, 2020

With frustration at an all-time high and professionalism at an all-time low, our friend the Buyer has “had it” with the Seller and quite frankly their lack of knowledge. At present our Buyer is rightfully concerned that the latest misstep from our loose-lipped Seller will threaten not only the entire operation of the businesses but…

May 11, 2020

As we go deeper into the buying process, we start to uncover more challenges from our seller and encounter some of the wrenches they are tossing our way. When we last left off in episode three our team was knee deep in due diligence for our buyer, had already penned and signed the Letter of…

April 4, 2020

One word–interloper! When a new mysterious broker enters the transaction and starts to kick up dust, Nasir and Matt take the reins. The seller signed off on the letter of intent (see episode 2), yet this “business broker” serves only friction and challenges by refusing to send financials, whilst demanding more of a firm commitment…

April 4, 2020

Just as most stories and deals start out, everyone is optimistic, idealistic and full of hope for clear skies. It’s a perfect outlook with a perfect setup for the ups and downs yet to come. Peek further behind the curtain and into the first steps of buying a business: the letter of intent. After the…

April 4, 2020

When a savvy buyer hears opportunity knocking to purchase a prime positioned business, she decides not to go it alone and taps in the professionals to help navigate what could potentially be a fruitful acquisition. “Behind the Buy” is a truly rare and exclusive peak into the actual process, dangers, pitfalls and achievements, that can…

August 7, 2019

GrubHub is subject to two “matters of controversy” that have likely become common knowledge to business owners: “fake” orders and unfriendly microsites.

May 28, 2019

In this podcast episode, Matt and Nasir breakdown the legal issues of the subscription industry’s business on the internet. Resources A good 50-state survey for data breach notifications as of July 2018. California Auto-Renewal Law (July 2018) Privacy Policies Law by State Why Users of Ashley Madison May Not Sue for Data Breach [e210] Ultimate…

March 12, 2019

In recording this episode’s topic on the business buying process, Matt’s metaphor, in comparing the process to getting married probably went too far, but they do resemble one another. Listen to the episode for legal advice on buying a business.

December 3, 2018

Nasir and Matt return to discuss the different options available to companies looking to raise funds through general solicitation and crowdfunding. They discuss the rules associated with the various offerings under SEC regulations and state laws, as well as more informal arrangements. The two also discuss the intriguing story about a couple who raised over…

July 24, 2018

Flight Sim Labs, a software add-on creator for flight simulators, stepped into a PR disaster and possibly some substantial legal issues when it allegedly included a Trojan horse of sorts as malware to combat pirating of its $100 Airbus A320 software. The hidden test.exe file triggered anti-virus software for good reason as it was actually…

April 17, 2018

Attorneys Matt Staub and Nasir Pasha examine Mark Zuckerberg’s congressional hearings about the state of Facebook. The two also discuss Cambridge Analytica and the series of events that led to the congressional hearings, the former and current versions of Facebook’s Terms of Service, and how businesses should be handling data privacy. Full Podcast Transcript NASIR:…

March 10, 2018

The Trump presidency has led to a major increase in ICE immigration enforcement. It’s critical for business owners to both comply with and know their rights when it comes to an ICE audit or raid. Nasir, Matt, and Pasha Law attorney Karen McConville discuss how businesses can prepare for potential ICE action and how to…

February 5, 2018

New years always bring new laws. Effective January 1, 2018, California has made general contractors jointly liable for the unpaid wages, fringe benefits, and other benefit payments of a subcontractor. Nasir and Matt discuss who the new law applies to and how this affects all tiers in the general contractor-subcontractor relationship. Click here to learn…

January 2, 2018

With a seemingly endless amount of new mattress options becoming available, it is unsurprising that the market has become increasingly aggressive. As companies invest in more innovative solutions to get in front of customers, review sites, blogs and YouTube videos have moved to the forefront of how customers are deciding on their mattresses and how…

December 7, 2017

In recent months explosive amounts of high profile allegations of sexual harassment, assault, and varying acts of inappropriate behavior have transcended every sector of our professional world. With a deluge from Hollywood and politics, and the private workforce, accusations have inundated our feeds and mass media. This harassment watershed has not only been felt within…

November 16, 2017

If you are not familiar with the EB-5 program started in 1990 to give green cards to certain qualified investors in the United States, then you may not have been alone a few years ago. Currently, the EB-5 program has since exploded since its inception and now hits its quotas consistently each year. The program…

October 10, 2017

Government requests come in multiple forms. They can come in as requests for client information or even in the form of investigating your company or your employees. Requests for Client Information General Rule to Follow Without understanding the nuances of criminal and constitutional law and having to cite Supreme Court cases, any government requests for…

August 24, 2017

Nasir and Matt suit up to talk about everything pertaining to employee dress codes. They discuss the Federal laws that govern many rules for employers, as well as state specific nuances in California and other states. The two also emphasize the difficulty in identifyingreligious expression in dress and appearance, how gender-related dress codes have evolved…

June 28, 2017

Nasir and Matt discuss the life cycle of a negative online review. They talk about how businesses should properly respond, how to determine if the review is defamatory, the options available to seek removal of the review, how to identify anonymous reviewers, whether businesses can require clients to agree not to write negative reviews, and…

June 7, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Mattbreak down social media marketing withguests Tyler Sickmeyer and Kyle Weberof Fidelitas Development. They first discuss contests and promotionsand talk about where social media promotions can go wrong,when businesses are actually running an illegal lottery, and the importance of a soundterms and conditions. Next, they…

April 3, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Matt go in depth with the subscription box business. They discuss where subscription box companies have gone wrong(4:30), the importance of a specifically tailored terms and conditions(6:30), how to structure return policies (11:45), product liability concerns (14:45),the offensive and defensive side of intellectual property (19:00),…

February 1, 2017

Nasir and Matt discuss the suit against Apple that resultedfrom a car crashed caused by the use of FaceTime while driving. They also discuss howforeseeable use of apps can increase liability for companies. Full Podcast Transcript NASIR: Hi and welcome to Legally Sound Smart Business! I’m Nasir Pasha. MATT: And I’m Matt Staub. Two attorneys…

January 5, 2017

The guys kick in the new year by first discussing Cinnabon’s portrayal of Carrie Fisher as Princess Leia soon after her death, as well as other gaffes involving Prince and David Bowie. They alsotalk about right of publicity claims companies could be held liable for based on using someone’s name or likeness for commercial gain.

December 22, 2016

Nasir and Matt discuss the recent incidentat a Victoria’s Secret store where the store manager kicked out all black women after one black woman was caught shoplifting. They then each present dueling steps businesses should take when employees are accused of harassment.

December 8, 2016

Nasir and Matt return to talk about the different types of clients that may have outstanding invoices and how businesses can convert unpaid bills to getting paid.

November 10, 2016

After a long break, Nasir and Matt are back to discuss a Milwaukee frozen custard stand that is now revising it’s English only policy for employees. The guys also discuss how similar policies could be grounds for discrimination and what employers can do to revise their policies.

October 6, 2016

The guys discuss the new California law that allows actors to request the removal of their date of birth and birthdays on their IMDB page and why they think the law won’t last. They also discuss how age discrimination claims arise for business owner.

September 29, 2016

Nasir and Matt discuss the racial discrimination claims surroundingAirbnb and how it’s handled the situation. They also discuss some practical tips for businesses experiencing similar issues.

September 8, 2016

Nasir and Matt discuss whyAmazon seller accounts are getting suspended and banned without notice and how business owners can rectify this situation through a Corrective Action Plan.

August 25, 2016

Nasir and Matt talk about the accusations surroundingfashion giant Zararipping off the designs of independent artists like Tuesday Bassen and howsmaller companies can battle the industry giants.

August 18, 2016

Nasir and Matt discuss Brave Software’s ad replacing technology that has caught the eye of almost every national newspaper and has a potential copyright infringement claim looming. They also welcome digital marketing expert Matt Michaelree to speak on the specifics of what Brave is attempting to do and whether it has the answers moving forward.

July 28, 2016

Nasir and Matt discuss the sexual harassment lawsuit filed by Gretchen Carlson against Fox CEO Roger Ailes. They also talk aboutthe importance of sexual harassment training and properly handling such allegations in the office.

July 15, 2016

Nasir and Matt talk about the changes at Starbucks that have led to many disgruntled employees and customers.

We represent businesses.
That’s all we do.

Oh, and we love it.

We love our work. We love reviewing that lease for your new location. We thrive on closing that acquisition that nearly fell through. We’re fulfilled when we structure a business to grow, raise capital, and be legally protected.

We focus on developing close relationships with our clients by being like business partners. A partner who provides essential, personalized, proactive legal support.

We do all of this without utilizing the traditional billable hour model. You pay for the value we bring, not the time spent on calls, emails, and meetings.

Our team is made up of attorneys and staff that share these values and we are retained by clients who want the same.

Pasha Law PC operates in the states of California, Illinois, New York, and Texas.

Meet Our Team

Fractional General Counsel Services

Pasha Law Select offers the expertise of a high-end general counsel legal team for every aspect of your business at a fixed monthly rate. Pasha Law Select is deliberately designed to allow our legal team to be proactive, to anticipate, and to be comprehensive in serving our clients. To be great lawyers, we need to know our clients. We can’t know our clients unless we represent a select number of clients in the long-term. This is Pasha Law Select.

Learn More