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Interstate Trade Secrets? A Principled Framework for Identifying Federal Trade Secrets

The Defend Trade Secrets Act of 2016 (DTSA) greatly expanded federal intellectual property law to include trade secrets. But the scope of the DTSA is not certain. Unlike Patent and Copyright, there is no independent constitutional basis for congressional legislation of trade secrets. Like Trademarks, federal Trade Secrets are regulated under the Commerce Clause. However, unlike the Trademarks—which are regulated to the broadest extent of the congressional commerce power—Trade Secrets are regulated under a limited exercise of federal commerce power. In other words, the DTSA only federalizes certain trade secrets. 
 
Interpretation of the jurisdictional element is the key judicial dilemma of the DTSA’s early years, and this paper provides a principled interpretation of the DTSA’s jurisdictional element. The element imposes two requirements on plaintiff’s trade secrets: (1) that the trade secret closely relates to a product or service and (2) that the product or service actually flows in interstate commerce. The jurisdictional element, creates a two-tiered system relying on both federal and state trade secret protection. 
 
The practical implication of the jurisdictional element is that federal protection—including access to the civil seizure remedy—is generally only available to technical trade secrets. General business information, however, will remain protected by state law. The theoretical implication brings trade secrets in line with other species of federal intellectual property.