What is the difference between federal claims under the Defend Trade Secrets Act and state claims under the Uniform Trade Secrets Act?

Trade-secret claims can be filed under federal law, the Defend Trade Secrets Act (“DTSA”), or state law, typically the Uniform Trade Secrets Act.  Federal and state trade-secret claims have many differences that businesses should keep in mind.  

One difference is where the claims are generally filed.  State trade-secret claims can be filed in state court, or in federal court if the requirements for federal jurisdiction are met.  Federal claims, in contrast, are generally filed in federal court.  If a plaintiff brings a federal trade-secret claim in state court, the defendant will have a right to remove the case to federal court. 

A second difference is the extent to which trade-secret claims preempt other types of state tort claims.  The DTSA has no preemption provision, so other federal and state claims can be filed alongside a federal trade-secret claim (such as a claim for patent infringement).  Some state statutes, in contrast, have provisions that preempt other state tort claims that are also based on the misappropriation of trade secrets.

A third difference is the type of relief available.  Damages and injunctions are available remedies for both federal and state trade-secret claims.  But the DTSA also provides plaintiffs with the ability to request a seizure order, although it limits such relief to “extraordinary circumstances.” 

Finally, a fourth difference is the possibility for criminal liability.  States generally do not have statutes that impose criminal liability for the misappropriation of trade secrets.  The DTSA, however, does impose criminal penalties for theft of trade secrets.  Only the federal government can prosecute a criminal case under the DTSA.  But the Department of Justice has, in some instances, investigated the allegations set forth in private civil cases and decided to initiate a criminal prosecution.  Even misappropriation that forms the basis of a trade-secret claim under state law can be prosecuted criminally if it meets the DTSA’s requirements. 

To learn more about trade secrets and related business disputes, go to www.mololamken.com and follow us on LinkedIn.  “Brilliant lawyers with courtroom savvy” — Benchmark Litigation.  Copyright MoloLamken LLP 2022.

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