Jim Singer writes:

Copyright: bacho12345 / 123RF Stock Photo
Copyright: bacho12345 / 123RF Stock Photo

Have you updated your company’s form employee and independent contractor non-disclosure agreements lately? Do they comply with notice requirements relating to “whistleblowers” that took effect May 11, 2016 under a new federal law? If your answer is “no” or “I don’t know,” read on.

The new Defend Trade Secrets Act helps U.S. businesses protect their trade secrets by asking federal courts to order seizure of property necessary to prevent dissemination of the trade secrets. It also permits businesses to seek injunctions and damages in federal court for trade secret misappropriation. The DTSA applies to any company that owns trade secrets and wants to protect those trade secrets from theft, breach of a duty to maintain secrecy, or espionage.

The DTSA also provides some immunity for whistleblowers who disclose trade secrets under certain circumstances to government officials or attorneys in connection with reporting or investigating a suspected violation of law or in lawsuits alleging whistleblower retaliation.

The immunity section of the DTSA is especially important for employers because it requires employers to provide notice of the DTSA’s immunity clauses “in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.” The Act defines “employee” to include both actual employees and independent contractors. If an employer does not comply with the notice requirement, the employer’s ability to recover damages against that employee in a federal action for misappropriation of trade secrets will be limited.

Employers can comply with the notice requirement by updating their form employee and independent contractor agreements to include either the notice requirement or a cross-reference to a policy document (such as an employee handbook) that states the employer’s reporting policy for a suspected violation of law.

For assistance reviewing or updating your company’s form non-disclosure agreements, please contact the attorneys in Fox Rothschild’s intellectual property, labor & employment or corporate departments.


Jim Singer is a partner and chair of the firm’s Intellectual Property Department, resident in the Pittsburgh office.