Whistleblowers Win Big in the Defend Trade Secrets Act

Washington, D.C. On April 27, 2016 Congress passed the Defend Trade Secrets Act, a bill supported by the White House and for which President Obama is expected to sign shortly. The bill included a whistleblower protection amendment, offered by Senators Leahy and Grassley.

The Act contains strong and much needed protections for corporate whistleblowers, establishing immunity for employees who disclose trade secrets to the government as part of a whistleblower case. The Act sets forth clear procedures employees can file to obtain this immunity, and requires all employers to notify their employees of these rights.

The National Whistleblower Center strongly supported the Leahy-Grassley amendment. In December 2015 the Center endorsed the proposed amendment as “an important legislative fix.” The Center further explained to the Judiciary Committee that the amendment was “needed” “because Whistleblowers are being threatened with counterclaims based on the pretext and/or a legitimate concern over ‘trade secrets.’” The Center also concluded that the “proposed bill sets up reasonable procedures for a whistleblower to raise a concern, and not be fearful that he or she will be faced with a counter-lawsuit.”

The Senate Judiciary Committee report on the Trade Secrets bill explained the purpose behind the whistleblower amendment: “Senators Leahy and Grassley offered an amendment to provide protection to whistleblowers who disclose trade secrets to law enforcement in confidence for the purpose of reporting or investigating a suspected violation of law. The amendment also immunizes the confidential disclosure of a trade secret in a lawsuit, including an anti-retaliation proceeding. The amendment was accepted by a voice vote without objection.”

Stephen M. Kohn, Executive Director of the National Whistleblower Center, stated “This bill was badly needed. Employees must have the right to report criminal activity to law enforcement agencies, even if the information at issue is viewed as a potential ‘trade secret.’” After this bill is signed into law, corporations will not be able to hide behind the trade secrets privilege to cover-up their wrongdoing. Whistleblowers who follow the clear and reasonable procedures set forth in the law will not need to fear retaliatory counter-lawsuits, which were becoming a favorite tool used by companies to silence whistleblowers.”

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