How To Comply with New Notice Requirements of DTSA

Enacted on May 11, 2016, the new Defend Trade Secrets Act (DTSA) contains immunity and anti-retaliation provisions intended to protect employees who may need to disclose trade secrets to federal enforcement authorities. The primary goal of the DTSA was to permit
trade secret owners to bring private rights of action in federal court against individuals misappropriating trade secrets. However, businesses must take note that the whistle-blower immunity provisions now require notice in nondisclosure agreements about a whistle-blower’s right to disclose trade secrets in certain circumstances. As explained in a recent National Law Review article, the following language will provide the required notice under the DTSA:

"Pursuant to the Defend Trade Secrets Act of 2016, I understand that:

An individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding."

In light of the act, employers should review their employment agreements covering trade secrets to determine what revisions need to be made to nondisclosures, non-competes and confidentiality agreements.