Litigation Alert | May 2016
seized must remain in the custody of the court (and
out of the possession of the moving and non-moving
parties) until there is a full court hearing on the
seizure and potential return of property to either
party.
An order entered under the DTSA can also allow
state or local law enforcement officials to participate
in the seizure, but the moving party cannot. Local
officials can also solicit the service of technical
experts (unaffiliated with the moving party) to assist
in the seizure. The court can also appoint a special
master who can facilitate the return of unrelated
property and data that may be seized as part of the
overall seizure. In other words, the DTSA formalizes
and legitimizes a type of self-help trade secret
protection while, at the same time, excluding the
moving party from that process.
By doing so, the
moving party avoids allegations by the responding
party that the self-help was excessive in some way.
By the same respect, the non-moving party can have
some level of assurance that the moving party is not
going to access the responding party’s own trade
secrets in the process and, in fact, will have that
unrelated material captured in a seizure returned to
the responding party.
Beyond injunctive relief, the DTSA provides for
the award of damages for any of the following:
(1) actual loss caused by the misappropriation; (2)
unjust enrichment caused by the misappropriation
not otherwise addressed by the actual loss; or (3) a
reasonable royalty for the unauthorized disclosure
of the trade secret. Exemplary damages of not more
than two times the actual loss may be awarded for
willful and malicious misappropriation.
Although the DTSA provides companies with a
hammer to enforce their trade secrets, the DTSA
also punishes a party who acts inappropriately
in either claiming trade secret protection or
infringing with another’s trade secrets. If a claim of
misappropriation is made in bad faith, the prevailing
responding party is entitled to its reasonable
attorney’s fees.
Conversely, the moving prevailing
party is entitled to its attorney’s fees where the
misappropriation was willful and malicious or where
a motion to terminate an injunction is made in bad
faith.
The DTSA finally provides companies with a
federal right and forum in which to protect their
trade secrets through injunctive relief, seizures
of misappropriated trade secrets and monetary
damages. Through the attorney’s fee shifting
provision, the DTSA provides companies with a
further financial incentive to go after a company
that misappropriated trade secrets in bad faith. At
the same time, companies must act with caution
because pursuing a claim in bad faith could result in
you paying your opponent’s attorney’s fees.
For more information about this alert, please
contact Joshua Horn at 215.299.2184 or
jhorn@foxrothschild.com or any member of the
firm’s Litigation, Intellectual Property or Corporate
Departments.
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