The Defend Trade Secrets Act of 2016 is the federal statute that lets the owner of a misappropriated trade secret sue in federal court. Signed on May 11, 2016 as Public Law 114-153, it amended the Economic Espionage Act of 1996 and is codified at 18 U.S.C. § 1836 and following. Its central move was small on paper and large in practice: it grafted a private civil cause of action onto a criminal statute that had, for twenty years, only let federal prosecutors act.
What it did not do matters just as much. The DTSA does not preempt state law. Section 1838 preserves other civil and criminal remedies, subject only to the whistleblower immunity in section 1833(b), so the state Uniform Trade Secrets Act claim your lawyer would have filed in 2015 still exists and is usually filed alongside the federal one. Trade secrets are the one major category of intellectual property where federal law is additive rather than exclusive.
Patents, copyrights, and registered trademarks all have federal homes. Trade secrets did not. Until 2016 an owner had to sue under one of the fifty state regimes, nearly all of them versions of the Uniform Trade Secrets Act, and could reach federal court only through diversity jurisdiction: different states of citizenship plus more than $75,000 at stake. A company whose engineer walked across town to a local competitor was stuck in state court by definition.
That was awkward for a category of asset that routinely crosses state lines inside a laptop. The DTSA’s answer, at 18 U.S.C. § 1836(c), is original federal jurisdiction over the new claim. No diversity, no amount in controversy. It brought nationwide service of process, federal discovery practice, and a single body of appellate law that is now slowly accumulating.
Three gates.
Section 1836(b)(3) sets out the menu:
There is also ex parte civil seizure under § 1836(b)(2), the provision that drew the most attention when the bill passed. A court can order federal marshals to seize property to prevent propagation of the secret, without notice to the target, but only in extraordinary circumstances and only after findings that an ordinary injunction would be inadequate because the target would evade it. Seized material goes into the court’s custody, a hearing must follow within seven days, and a wrongful seizure exposes the applicant to damages under § 1836(b)(2)(G). Courts have granted it rarely. Most DTSA plaintiffs use the ordinary temporary restraining order they would have used anyway.
Section 1836(d) gives three years from the date the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. This is a discovery rule, not an accrual-at-the-act rule, which matters because trade secret theft is often invisible for years. The statute also provides that a continuing misappropriation constitutes a single claim, so a defendant’s ongoing use does not restart the clock each morning.
On timing of a different kind: the DTSA applies to misappropriation occurring on or after May 11, 2016. The Ninth Circuit held in Attia v. Google LLC, 983 F.3d 420 (9th Cir. 2020), that continued use after that date can support a DTSA claim even where the acquisition predated enactment, since use is itself an act of misappropriation.
Section 1833(b) is the part of the DTSA that quietly rewrote a generation of confidentiality agreements.
Subsection (b)(1) grants immunity: no individual may be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret in confidence to a government official or an attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a complaint or other document filed under seal in a lawsuit. Subsection (b)(2) lets someone who sues an employer for retaliation use the trade secret in that case, under seal.
Then comes the trap. Subsection (b)(3) requires an employer to provide notice of that immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information. Compliance is cheap: a cross-reference to a policy document setting out the reporting policy is enough. “Employee” is defined at § 1833(b)(4) to include contractors and consultants.
The consequence of skipping it is specific and asymmetric. If the employer did not provide the notice, it may not be awarded exemplary damages or attorney’s fees under the DTSA against that employee. The underlying claim survives. Injunctive relief and compensatory damages survive. Only the enhanced recovery, the part that makes litigation worth funding, evaporates. The requirement attaches to contracts entered into or updated after May 11, 2016, which means an NDA template last touched in 2014 and still in circulation is quietly capping its owner’s recovery.
The most cited DTSA fact pattern, Waymo LLC v. Uber Technologies, pled the federal claim alongside California’s UTSA and settled in 2018 for a slice of Uber equity rather than producing a merits opinion. That is typical. The statute’s practical effect shows up less in landmark judgments than in where these cases are filed and what an ordinary confidentiality agreement now has to say.
What is the Defend Trade Secrets Act? The Defend Trade Secrets Act of 2016 (Pub. L. 114-153) is a federal statute, codified at 18 U.S.C. § 1836 and following, that gives the owner of a misappropriated trade secret the right to sue in federal court. Before it passed, trade secret owners had only state law and generally needed diversity of citizenship to reach a federal courtroom. The DTSA added a federal claim without displacing any state remedy.
Does the DTSA preempt state trade secret law? No. 18 U.S.C. § 1838 says the statute does not preempt or displace other remedies, whether civil or criminal, provided by federal, state, commonwealth, possession, or territory law. This is the opposite of the patent and copyright model. Most DTSA complaints plead the federal claim and a parallel state Uniform Trade Secrets Act claim side by side, and the same facts support both.
What damages are available under the DTSA? Under 18 U.S.C. § 1836(b)(3), a court may award actual loss plus any unjust enrichment not counted in that loss, or a reasonable royalty in lieu of both. If the misappropriation was willful and malicious, the court may add exemplary damages of up to twice the compensatory award and may award reasonable attorney’s fees. Injunctive relief is also available, subject to limits on restraining employment.
What is the DTSA notice requirement? Section 1833(b)(3) requires an employer to give notice of the statute’s whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information. A cross-reference to a policy document satisfies it. Employee includes contractors and consultants. If the notice is missing, the employer cannot recover exemplary damages or attorney’s fees from that person under the DTSA.
Going further: The Trade Secret Protection Playbook .
This page is general legal information, not legal advice, and it does not create an attorney-client relationship.
The Ninth Circuit held trade-secret identification is usually a fact question, and one secret described with particularity defeats early summary judgment.
The first court to read the DTSA's whistleblower immunity treated it as an affirmative defense, not a pleading-stage shield, and let the suit proceed.
The Ninth Circuit held the federal Defend Trade Secrets Act does not force plaintiffs to identify secrets with reasonable particularity before discovery, splitting from California's state-law rule.
The Ninth Circuit endorses a continued-use theory under the Defend Trade Secrets Act, then holds that Google's published patent applications extinguished the very secret the plaintiff needed.
The Second Circuit vacated a roughly $285 million unjust-enrichment award, holding that avoided development costs were unavailable because Syntel's only unjust gain was already addressed in computing TriZetto's actual loss.
The Third Circuit vacated a baking-supply injunction because the district court never said precisely what the protected trade secrets were, a cautionary tale about identifying the secret before enjoining anyone.
After four dismissals, the Third Circuit revived a microsphere drug-development trade-secret suit and gave the broadest appellate definition yet of what it means to 'use' a trade secret.
