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New Trade Secrets Law Provides Useful Language for MARPA Members

The President has signed into the law the new Defend Trade Secrets Act (DTSA).  The new law provides a federal private right of action for trade secret infringement – previously, such private actions were brought under state law.

For MARPA member, there is an important safe harbor – the DTSA specifically explains that trade secret infringement is limited to obtaining information by improper means, and limits the scope of “improper means” by excluding some normal methods used by PMA applicants, like reverse engineering and independent derivation:

the term ‘improper means’—

(A) includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means; and
(B) does not include reverse engineering, independent derivation, or any other lawful means of acquisition

This is a valuable restatement of the common-law safe harbor.

But MARPA members are also holders of their own trade secrets, and this change permits MARPA members to sue in federal court when their trade secrets are infringed.

The existing statutes provide a definition of trade secret that will continue to control the new private right of action:

the term “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, photographically, 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]{another person who can obtain economic value from the disclosure or use of the information};

18 U.S.C. 1839(3).  The square-bracketed [] language is the old text and the curly-bracketed language {} is the new replacement text that has been added by the new law.

This standard continues to provide important guidance to those who wish to retain their trade secrets – it is especially important to take reasonable measures to keep the information secret.  And where information cannot be kept secret, because it is already in the public domain or because it is required by law to be disclosed, then the possessor of that information may not have a trade secret, if there are no reasonable measures that may be taken to maintain secrecy.

The extent of the security measures taken by the owner of the trade secret need not be absolute, but must be reasonable under the circumstances, depending on the facts of the specific case.  The owner’s reasonable efforts can include advising employees that the information is a trade secret, limiting access to the information to those with a specific “need to know,” requiring employees or business partners to sign confidentiality agreements, and keeping secret documents secured (like in a safe).

For PMA applicants, this new law underscores the importance of documenting the processes associated with the development of PMA design data.  A PMA company that possesses that sort of development-process-documentation, and can offer it as a defense to an allegation of trade secret misappropriation, should be a more defensible position.

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About Jason Dickstein

Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Aircraft Fleet Recycling Association and the Modification and Replacement Parts Association.

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