October 11, 2019
Authored by: Anthony George
Since 2016, the Defend Trade Secrets Act (DTSA) has provided employers with a federal cause of action against employees, former employees and other bad actors who misappropriate trade secrets. In addition to injunctive relief, DTSA remedies include civil seizure, compensatory damages, punitive damages and attorney fees. However, in order to preserve the right to seek punitive damages and attorney fees from an employee or former employee, the employer must have provided notice of the whistleblower-protection provisions of the Act. Those provisions protect employees and former employees from criminal or civil liability for disclosure of trade secrets made (a) in confidence to a government official or an attorney for the purpose of reporting or investigating a suspected violation of law, or (b) under seal in a judicial proceeding.
Notice of the whistle-blower protection provisions must be included “in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.” This would commonly include, for example, employment agreements, confidentiality or nondisclosure agreements, noncompetition agreements, and separation agreements. The notice requirement applies to all such contracts entered into or revised after May 11, 2016.
The notice may be provided by including the whistleblower-protection provision in the agreement or by cross-referencing a policy that contains the required disclosure. It is unclear whether paraphrasing the statutory language will be sufficient. Therefore, the safer course is to quote the pertinent text, such as:
Notwithstanding the foregoing, 18 U.S.C. §1833(b) provides, in part: “(1) An individual shall not be