Do We Need A New Judicial Fast Lane To Combat Trade Secret Theft? (Forbes Cross-Post)

Do We Need A New Judicial Fast Lane To Combat Trade Secret Theft? (Forbes Cross-Post)

I’ve previously described the Defend Trade Secrets Act as “the most important intellectual property development you aren’t paying attention to.” The bill would create a new federal trade secret law that would dramatically change trade secret practice throughout the country. Given the importance of trade secrets to most businesses and our economy generally, even minor changes to trade secret law have potentially outsized consequences.

Yet, given the bill’s implications, the Defend Trade Secrets Act is generating surprisingly little public discussion. Supporting the Defend Trade Secrets Act are a few big businesses (and their representatives) with large trade secret portfolios, who like the idea of getting more powerful tools to squash defendants. Opposing the bill are many academics, who object to a variety of problems with the bill. Virtually everyone else has stayed on the sidelines or is not aware of the bill at all.

The Defend Trade Secrets Act includes a proposed new judicial “fast lane” for trade secret owners to pursue trade secret thieves by seizing key assets on an “ex parte” basis, i.e., without telling the person whose assets are going to be seized that a court proceeding is adjudicating their rights. The proposed “fast lane” stands out for several reasons. First, it is doctrinally unprecedented; no other federal or state trade secret law includes a similar ex parte provision. Second, it visually dominates the bill, taking up over 40% of the bill’s text. Third, the fast lane would suspend typical due process requirements of giving defendants notice of judicial proceedings against them and an opportunity to be heard in court. Without these due process elements, the risk of judicial errors goes up substantially. Fourth, unless the provision is calibrated perfectly, it will be misused for anti-competitive purposes.

I have just published an article, “Ex Parte Seizures and the Defend Trade Secrets Act,” in the Washington & Lee Law Review Online detailing the case against this new judicial fast lane–and against ex parte proceedings in trade secret cases generally. The article highlights several key drafting mistakes, shows how the provision doesn’t actually redress its primary use case, and explains why ex parte proceedings in trade secret cases are more problematic than complementary ex parte seizure procedures for trademarks and copyrights. More generally, given the unavoidable “he said/she said” nature of most trade secret litigation, any ex parte procedure in trade secret cases is fraught with unusual peril. That’s a good reason to scale back ex parte mechanisms in trade secret cases, not expand them.

My article is part of an online symposium on the Defend Trade Secrets Act. Other contributions to the symposium include:

* Christopher B. Seaman, Introduction: The Defend Trade Secrets Act of 2015
* Sharon Sandeen, The DTSA: The Litigator’s Full-Employment Act
* David S. Levine, School Boy’s Tricks: Reasonable Cybersecurity and the Panic of Law Creation

Last year, I posted a more detailed critique of the Defend Trade Secrets Act.

Related posts:

* 42 Law Professors Oppose The Defend Trade Secrets Act
* Federal Trade Secret Bill Re-Introduced–And It’s Still Troublesome (Guest Blog Post)
* Some Specific Problems With The Proposed Federal Trade Secret Law (Comments From a Reader)
* A Bibliography About Federal Trade Secret Law Reform (Guest Blog Post)
* Do We Need a New Federal Trade Secret Law?