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Trade Secret Law Reform: The Basics

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Many businesses maintain an industry advantage through control and utilization of trade secrets. Be it a formula, a design, or a process, trade secrets can provide advantages over the competition. Not surprisingly, trade secret misappropriation is a serious concern for many businesses. Until recently, it’s been state law at the forefront of regulating and protecting these highly sensitive forms of intellectual property. Trade secret law has been recently reformed, however, to help combat increased instances of trade secret misappropriation. If you have a trade secret, here is some information on how the reforms could affect you.

The Defend Trade Secrets Act (DTSA), passed in April 2016, allows victims of trade secret misappropriation to file civil lawsuits under federal law. What does this mean for the average business? For many, their trade secret is akin to a secret weapon. It is a piece of intellectual property and it is particularly vulnerable to misappropriation. The DTSA gives businesses a chance to seek compensation for losses sustained because of misappropriation. Businesses could do this previously, but only under state law. With the addition of the federal protections, businesses now have broader power to legally enforce their rights.

Unfortunately, being given the federal forum to file suit over trade secret misappropriation doesn’t necessarily help businesses prevent misappropriation in the first place. In fact, trade secret misappropriation was already criminalized under the Economic Espionage Act of 1996. But that too, only provided another way to enforce trade secret rights and seek recovery.

Because there are both state and federal laws governing trade secret misappropriation, businesses need to be able to navigate both sets of laws if they are to file suit. They must also confirm their security practices to laws to preserve any legal claims. So, while they have more protection and flexibility in under what jurisdiction they file suit, businesses must know how to leverage that protection to get compensation for their losses.

This article is a service of Kundani & Chang LLP. We are an award-winning law firm that specializes in business and estate planning for clients like you. The goal for every family is to stay educated on all topics like this, avoid probate, avoid estate taxes, and build a legacy for you and your loved ones. What sets our firm apart is that we build lasting, lifelong relationships with our clients. They rely on us to keep them updated, provide sound legal counsel, and be there for them immediately if any problems should ever arise. The best part is we don’t charge hourly fees to our families, so you never have to worry about speaking to us. If you’re ready to keep your family out of Court, contact us today to schedule an initial consultation or visit our website at

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