A Closer Look at the Defend Trade Secrets Act of 2016
Earlier this year, Congress passed the Defend Trade Secrets Act of 2016 (DTSA) with near unanimous support. Since so many of my articles about ag data have focused on the law of trade secrets, I thought it makes sense to see what impact, if any, the DTSA has on ag data issues.
How does the DTSA define “trade secrets”?
The DTSA incorporates the definition of “trade secret” from the Economic Espionage Act of 1996:
“‘trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photo- graphically, or in writing if—
(A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public
What are the key provisions of the DTSA?
Federal Jurisdiction: Traditionally, a party seeking to recover for misappropriation of a trade secret was limited to state law remedies in state court. The DTSA creates a federal cause of action, provided the trade secret was related to a product or service used in, or intended for use in, interstate or foreign commerce.
Immunity for Whistleblowers: The DTSA creates immunity from liability for employees that disclose trade secrets to federal or state officials for the purpose of reporting or investigating a suspected violation of law. The immunity provisions also require employers to include certain notice requirements in their employment agreements or employee handbooks advising employees of their rights. Failure to do so prohibits the employer for seeking attorneys’ fees or exemplary damages in a trade secret lawsuit against the infringing employee.
What does the DTSA mean for employers?
Employers should revise their handbooks, employee agreements, and non-disclosure agreements to comply with the DTSA. This is not required by law, but if an employee or contractor steals trade secrets, an employer wants as many remedies as possible to stop the infringing disclosure. If the employer provides proper notice, federal courts are available to help stop unlawful trade secret disclosure.
What does this mean for ag data?
Whether different pipelines of ag data are considered “trade secrets” is still an open question. Many farmers view the way in which they farm as proprietary and unique—the farm's trade secret. Not all ag technology providers agree, but some clearly do. For example, Farmobile’s treatment of ag data as an “Electronic Field Records” is clear indication it sees the collected ag data as the farmer’s trade secret.
In spite of the unknown legal status of ag data, the DTSA at least makes it possible that a famer could use federal court to challenge the unauthorized disclosure of ag data by an ag tech provider, agronomist, or other party in possession of the farmer’s ag data.
In sum, the DTSA means a lot for employers or companies that have trade secrets and regularly issue NDAs, but for farmers seeking to protect their ag data, the DTSA provides little additional protection.