Is the DTSA Ex Parte Seizure Provision Constitutional?

November 12, 2018 · by Eric Goldman · in Evidence/Discovery, Trade Secrets

The Defend Trade Secrets Act (DTSA) has been law for 2 1/2 years. At this point, it’s pretty clear the DTSA ex parte seizure provision never belonged in the statute. Courts have ordered only a few ex parte seizures, and I think none of those actually met the statutory requirements. Furthermore, the Federal Judicial Center guidance to judges proved that trade secret owners could never legitimately use the ex parte seizure procedure for the situations Congress contemplated.

In my pre-passage essay against the ex parte seizure provision, I expressly didn’t address the DTSA ex parte seizure provision’s constitutionality. An NYU Law student, Stephen Levandoski, filled that gap with his note, To Seize the Initiative: Assessing Constitutional Due Process Challenges to the Defend Trade Secrets Act’s Ex Parte Seizure Provision. The note carefully doesn’t flatly declare the provision unconstitutional, but makes its doubts clear:

the Note demonstrates the high risk of error and defendant harm in a novel and uncertain technological landscape–put simply, physical seizures represent a crude and outmoded response to a twenty-first century challenge. It argues that the ex parte seizure provision is unlikely to survive due process scrutiny.

The note emphasizes the potential collateral damage to innocent third parties from ex parte seizures:

the DTSA on its face recognizes the potential impact of seizures on third parties, so it cannot be the mere failure to acknowledge the risk that creates a due process issue. Rather, the fundamental premises of ex parte adjudication create a framework in which the ultimate decider is ill equipped to quantify and comparatively assess these risks. The legislative history of the DTSA itself reflected concerns about the management and seizure of third-party data. One witness testifying before the House Judiciary Committee called attention to the fact that data stored on technological systems often belongs to customers, and that that data is often not physically isolated from other data. While supporters may counter that the provision specifically provides for the court to weigh the extent of deleterious impact to third-party customers, absent testimony from the defendant, it is impossible to determine whether the collateral effects will be felt by five firms or one thousand. While the severely limited ability of the courts to assess collateral harms in an ex parte hearing may not represent an intrinsic and irreparable flaw in the statute’s constitutionality, it strongly suggests the practical and legal challenges making any type of ex parte procedure both operable and compliant with due process requirements. No matter the wording of the statute, or its exact requirements, there is likely to be a danger that the courts lack the technological expertise to weigh the potential risks and government marshals lack the skills to effectuate the seizure without causing further collateral harms.

The DTSA ex parte seizure provision illustrates a larger problem: legislators redressing plaintiff concerns at the cost of giving defendants due process. I think another example is the CASE Act, proposing to create a copyright small claims court without the typical due process protections provided in state or federal court. Instead of ensuring actual due process, these legislative workarounds deploy the atmospherics of due process elsewhere to compensate for a core due process deficiency. Due process doesn’t work that way; we can’t fix its absence in one part by enhancing the protections in other parts. Instead, we should categorically resist any legislation that does not provide complete due process to defendants; any attempted cutbacks to full due process should be extraordinary, and limited to situations where it’s unequivocally impossible to provide justice to plaintiffs any other way. This is such a basic principle that I’m exasperated it needs to be articulated. Sadly, in our post-constitutional political environment, I guess we can’t take anything for granted.

Is the DTSA Ex Parte Seizure Provision Constitutional?

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