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March 9, 2017

Newly-Minted Defend Trade Secrets Act Put to Test to Protect Autonomous Vehicle Technology

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Alphabet Inc.’s subsidiary Waymo has accused Uber Technologies of stealing its "crown jewels": 14,000 proprietary and confidential files amounting to about 10 GB of data, including circuit board designs and technology used to develop a laser-scanning system that guides self-driving cars as part of Google’s autonomous vehicle project.

Among the claims alleged in the suit is a violation of the Defend Trade Secrets Act (DTSA), a new federal law enacted in May 2016. Although less than a year old, litigation concerning this act is likely to ramp up, particularly over the provision which allows for civil seizure of misappropriated trade secrets.

The DTSA was designed to bring uniformity to trade secrets litigation, an area of law marred by inconsistency among state courts in an increasingly mobile society. “Trade secrets” is defined under the DTSA as it is under most state laws: information whose owner has taken reasonable measures to keep such information secret; and which derives independent economic value from not being generally known or ascertainable to others. The acquisition of a trade secret by improper means or use or disclosure of a trade secret without the consent of its owner continues to be the hallmark of a misappropriation claim.

The difference under the DTSA lies in the available forms of relief. Like state law, the DTSA allows for injunctions prohibiting use or disclosure of misappropriated trade secrets, as well as exemplary damages and attorney fees. But if and when DTSA's civil seizure provision is invoked, the alleged trade secret is taken into custody by the United States government and the court as a means to halt the loss or dissemination of trade secrets, particularly overseas. No company has successfully obtained relief under the DTSA’s civil seizure provision.

In addition to this extraordinary remedy, the DTSA also differs from state law in that it offers immunity to employees who take trade secrets from an employer in order to report violations of the law. This "whistleblower–like" protection must be communicated to employees. Companies with protectable trade secrets should consider updating employment and confidentiality agreements to satisfy this notification requirement, as the failure to do so may result in the forfeiture of exemplary damages and attorney fees should litigation over stolen trade secrets arise.

In the case filed by Waymo LLC in the Northern District of California, Waymo alleges that a former employee took the information to benefit his new employer, Uber, which the complaint alleges is behind the pack in automated vehicle technology. According to the complaint, the defendants took the information to “avoid incurring the risk, time, and expense of independently developing their own technology.”

Waymo is one of many companies using the DTSA to protect its trade secrets. A week ago, specialty food company Dalmatia Import Group, Inc. obtained the first verdict under the DTSA in a case involving the alleged palming off of impersonator fruit jam. In addition to technology designs and jam recipes, the DTSA has been invoked in suits involving, among other things, pricing lists and bid information, customer contacts and needs, analysis of market trends, and product testing and development plans. 

The protections offered by the DTSA and other trade secrets law topics were addressed at the CLE International's Defend Trade Secrets Act Conference on February 24, 2017 in Denver, Colorado. Detroit Partner Elizabeth Favaro's presentation at the conference on the “Nuts and Bolts of the Defend Trade Secrets Act” focused not only on the DTSA’s remedies, but also on the manner in which courts have been interpreting it since its passage. To request a copy of the presentation, email Elizabeth Favaro

Bowman and Brooke is ready to assist our clients with evaluating trade secrets programs, finding solutions for protecting misappropriated trade secrets, and defending unfounded claims of misappropriation when employees are hired away from competitors. For questions regarding the DTSA, trade secret protection, or other issues regarding non-compete and trade secrets litigation, please contact Partners Richard Morgan or Elizabeth Favaro.

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