Whistleblower Not Protected Under DTSA
President Obama signed into law the Defend Trade Secrets Act of 2016 (DTSA). Previously, a party claiming a misappropriation of trade secrets could only file a private right of action in state court; however, the DTSA now allows for a private right of action in the federal courts.
Massachusetts Federal District Court Judge Timothy S. Hillman has issued one of the first decisions interpreting the whistleblower exemption, which was designed to protect employees who disclose trade secrets to the government or their attorney solely for the purposes of reporting or investigating a suspected violation of law. The case is Unum Group v. Loftus, LW No. 02-462-16. The whistleblowing provision to the DTSA was regarded as a critical piece of the legislative efforts because Congress wanted to ensure that it did not deter or discourage whistleblowers from coming forward to report violations of law.
In the Unum Group v. Loftus case, the ex-employee provided his attorney with information that the company claimed was confidential, including medical information that was protected by HIPAA. After the company filed a Complaint, the employee filed a Motion to Dismiss and asserted the DTSA whistleblower exemption as an affirmative defense. Judge Hillman denied the employee’s Motion, claiming that there had been no discovery to determine the significance of the documents and that the employee had not filed suit using the information in the documents. Presumably, a summary judgment motion will flesh out additional facts contemplated by Judge Hillman’s decision, such as whether the employee only gave the materials to his attorney and for the express purposes of cloaking the employee in the protection of the whistleblower exemption.
Legal commentators will continue to monitor this case and any others that interpret the DTSA, which is regarded as an incredibly monumental development in the arena of trade secret law.