Third Time's the Charm: How the Federal Defend Trade Secrets Act Will Benefit Texas Companies

Posted By Godwin Bowman & Martinez || May 11, 2016

We have previously written about the FDTSA, describing its outline, citing its differences from Texas law and, detailing its Whistleblower protections. Now that the Act is just a Presidential signature away from becoming law, we will look at how the FDTSA will benefit Texas companies.

Uniform Standard

Once the FDTSA becomes law, trade secrets will be federally protected just like other forms of intellectual property such as patents, copyrights, and trademarks. Although most states have already adopted some version of the Uniform Trade Secrets Act, different states' laws contain varying interpretations of important aspects of trade secret law, such as different statutes of limitations, varying penalties, and differing interpretations of key statutory language. The FDTSA will provide a harmonized federal law framework for all companies across the United States, including those located in Texas.

Access to Federal Courts

The FDTSA gives Texas companies the opportunity to enforce their trade secrets in federal courts, which already ably handle other forms of intellectual property disputes such as patents, copyrights, and trademarks. Federal jurisdiction will likely provide advantages in large, complex cases, where the deeper resources and intellectual property experience of the federal system may allow a more sophisticated approach to deciding trade secrets issues. Access to federal courts also means that the federal rules of evidence and civil procedure will apply, which could simplify evidentiary issues when misappropriation spans multiple states. Perhaps most significantly, the FDTSA does not preempt state law. Thus, Texas companies will be able to choose whether to pursue a claim under the FDTSA in federal court or under the Texas version of the UTSA in Texas state courts. This flexibility will be especially useful for Texas companies by allowing them to pick and choose under which statute to seek redress based on the specific circumstances underlying their claim.

Additional Remedies Not Available Under the State Statute

The FDTSA offers a broad range of remedies for Texas companies, including actual damages incurred due to misappropriation of trade secrets, as well as punitive damages where the misappropriation was "willful and malicious." Courts may also award attorney’s fees if the misappropriation was in bad faith. Additionally, the FDTSA allows for injunctive relief. Finally, in extraordinary cases, Texas companies may seek ex parte civil seizure – an aspect of the FDSTA that we will discuss in depth in next week’s post.

In the end, the FDTSA will benefit Texas companies through greater uniformity, flexibility in terms of where and how they can protect their trade secrets, and a broad range of remedies.

Leiza DolghihAlex CleeterLeiza Dolghih is a Senior Attorney in Godwin Bowman & Martinez's Unfair Competition, Trade Secrets and Copyright Section. She has over a decade of experience in commercial litigation and has handled multiple temporary restraining order and temporary injunction hearings in trade secrets lawsuits.

Alex Cleeter is an Associate in Godwin Bowman & Martinez’s Commercial Litigation Section with experience in matters involving breach of fiduciary duty, breach of contract, employment, and OSHA issues.