Federal Defend Trade Secrets Act (DTSA): When to File a Federal Claim

Until 2016, if your Minnesota business discovered that a former employee or competitor had stolen your trade secrets, your primary remedy was a state court claim under the Minnesota Uniform Trade Secrets Act (MUTSA). Federal court was available only if you could establish diversity jurisdiction—different states and enough money at stake—or tack the trade secret claim onto an existing federal lawsuit.

The Defend Trade Secrets Act (DTSA), enacted in May 2016 as 18 U.S.C. § 1836 et seq., changed that calculus. For the first time, business owners gained a direct federal cause of action for trade secret misappropriation. This means Minnesota businesses now have a strategic choice: file in state court under MUTSA, file in federal court under the DTSA, or pursue both simultaneously.

Understanding when the DTSA applies, what it offers that MUTSA does not, and how to make the right tactical decision is essential for any business owner facing trade secret theft.

Table of Contents

What the DTSA Is and How It Works

The DTSA amended the Economic Espionage Act of 1996 to create a private civil cause of action for trade secret misappropriation. Before the DTSA, the Economic Espionage Act was primarily a criminal statute—useful for federal prosecutors but not directly available to business owners seeking civil remedies.

The DTSA applies when:

The trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce. For most Minnesota businesses, this threshold is easily met. If your customers, suppliers, or competitors operate across state lines—or if the trade secret itself involves interstate business activity—the commerce requirement is satisfied.
The alleged misappropriation occurred on or after May 11, 2016. The DTSA does not apply retroactively.

The DTSA defines “trade secret” and “misappropriation” in terms substantially similar to MUTSA and the Uniform Trade Secrets Act. A trade secret must derive independent economic value from not being generally known or readily ascertainable, and the owner must have taken reasonable measures to keep it secret. Misappropriation includes both improper acquisition and unauthorized use or disclosure.

This similarity is intentional—Congress modeled the DTSA on the same uniform act that underlies MUTSA. But the DTSA includes several provisions that MUTSA does not, and those differences drive the strategic analysis.

Unique Provisions of the DTSA

Ex Parte Seizure (18 U.S.C. § 1836(b)(2))

The DTSA’s most dramatic provision allows a court to issue an order for the seizure of property “necessary to prevent the propagation or dissemination of the trade secret.” This is an extraordinary remedy—the seizure can occur without notice to the other side (ex parte), based on an application to the court.

To obtain a seizure order, the applicant must demonstrate:

An order under Federal Rule of Civil Procedure 65 (a standard temporary restraining order) would be inadequate because the party against whom the order would issue would destroy, move, hide, or otherwise make the trade secret inaccessible
The applicant has not publicized the requested seizure
The applicant is likely to succeed on the merits
The person against whom the seizure is sought actually possesses the trade secret
The application describes the trade secret with reasonable particularity
The harm to the applicant substantially outweighs the harm to the person against whom the seizure is directed and substantially outweighs the harm to third parties
The applicant has identified the matter to be seized with reasonable particularity

The seizure provision is designed for extreme cases—where there is a genuine risk that evidence will be destroyed or that the trade secret will be disseminated before a hearing can occur. Courts have interpreted this provision narrowly, consistent with Congressional intent that it be used only in “extraordinary circumstances.”

In practice, the ex parte seizure provision has been invoked sparingly. But its existence provides leverage in negotiations and may be critical in cases involving digital information that can be transmitted or deleted in seconds.

Whistleblower Immunity (18 U.S.C. § 1833(b))

The DTSA provides immunity from criminal and civil liability for individuals who disclose trade secrets in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected legal violation.

This provision also protects individuals who disclose trade secrets in a document filed under seal in a lawsuit or legal proceeding.

The whistleblower immunity provision creates an important obligation for employers: under 18 U.S.C. § 1833(b)(2), if you enter into any agreement with an employee, contractor, or consultant that governs trade secrets or confidential information, you must provide notice of this immunity—either in the agreement itself or by providing a cross-reference to a separate company policy document.

The practical consequence: If you fail to include this notice in your NDAs, confidentiality agreements, or employment agreements, you cannot recover exemplary damages or attorney fees under the DTSA against that individual. This is not a defense to the underlying claim, but it limits your available remedies.

Action item for every Minnesota business owner: Review your existing NDAs and employment agreements. If they do not contain DTSA whistleblower immunity language, update them. For existing employees, provide notice through a company policy document and reference it in the agreement.

Federal Jurisdiction Without Diversity

Before the DTSA, bringing a trade secret claim in federal court required diversity jurisdiction (parties from different states and at least $75,000 in controversy) or supplemental jurisdiction tied to another federal claim. The DTSA provides original federal jurisdiction for any trade secret claim meeting the interstate commerce requirement, regardless of the parties’ citizenship.

This means two Minnesota companies can litigate a trade secret dispute in the U.S. District Court for the District of Minnesota under the DTSA—something that was not available under MUTSA alone.

DTSA Remedies

The DTSA provides remedies substantially similar to MUTSA, with some differences in scope:

Injunctive Relief (18 U.S.C. § 1836(b)(3)(A))

Courts may grant injunctions to prevent actual or threatened misappropriation, provided the injunction does not:

Prevent a person from entering into an employment relationship (the DTSA cannot be used as a back-door non-compete), or
Otherwise conflict with applicable state law prohibiting restraints on the practice of a profession, trade, or business.

This limitation is significant. The DTSA explicitly prohibits courts from using trade secret injunctions to prevent someone from working for a competitor. An injunction can restrict the use or disclosure of specific trade secrets, but it cannot broadly bar employment. This constraint reflects Congressional concern about the balance between trade secret protection and employee mobility.

Damages (18 U.S.C. § 1836(b)(3)(B))

Damages under the DTSA include:

Actual loss caused by the misappropriation
Unjust enrichment not captured by actual loss
Reasonable royalty as an alternative to actual loss and unjust enrichment

These measures parallel MUTSA, and courts apply similar analytical frameworks.

Exemplary Damages and Attorney Fees (18 U.S.C. § 1836(b)(3)(C)-(D))

For willful and malicious misappropriation, the court may award exemplary damages up to twice the compensatory damages—the same multiplier as MUTSA.

Attorney fees may be awarded against:

A party whose claim of misappropriation was made in bad faith
A party who willfully and maliciously misappropriated trade secrets

Remember: exemplary damages and attorney fees are unavailable against individuals if you failed to provide DTSA whistleblower immunity notice in their agreements.

When to Choose DTSA Over MUTSA (or Both)

The decision between filing under the DTSA, MUTSA, or both is strategic. Here are the factors that typically drive the analysis:

Factors Favoring DTSA (Federal Court)

Multistate misappropriation. If the misappropriation crosses state lines—a former employee takes trade secrets to a company in another state, or the stolen information is being used in multiple jurisdictions—federal court may be a more practical forum. A single federal action can address conduct spanning multiple states, whereas a state court action may face jurisdictional challenges.

Need for ex parte seizure. If you face an imminent risk that the defendant will destroy evidence or disseminate the trade secret before a hearing, the DTSA’s seizure provision provides a remedy that MUTSA does not.

Federal court advantages. Some litigants prefer federal court for its broader discovery tools, more structured scheduling, and the perception of greater procedural rigor. Federal courts also have dedicated magistrate judges for discovery disputes and typically move cases through the system on predictable timelines.

No diversity jurisdiction. If both parties are Minnesota entities and you want to be in federal court, the DTSA is your vehicle—MUTSA alone would limit you to state court.

Nationwide subpoena power. Federal Rule of Civil Procedure 45 provides broader subpoena power, which can be important if key witnesses or documents are located outside Minnesota.

Factors Favoring MUTSA (State Court)

Purely local dispute. If both parties are in Minnesota and the conduct occurred entirely within the state, state court may be more efficient and familiar.

Jury pool considerations. Depending on the case, one forum may offer a more favorable jury pool than the other.

Speed to injunctive relief. In some districts, state courts may schedule TRO hearings more quickly than federal courts. This is fact-specific and depends on the court’s calendar.

Cost. Federal litigation can be more expensive due to its procedural requirements. For smaller disputes, state court may be more cost-effective.

Filing Under Both

Many plaintiffs file claims under both MUTSA and the DTSA in federal court. The DTSA provides federal jurisdiction, and supplemental jurisdiction covers the state law claims. This preserves all available remedies and avoids the risk that one statute’s requirements are met while the other’s are not.

Filing both claims is the most common approach in practice and is generally recommended unless there is a specific reason to limit the case to one statute.

Practical Considerations for Minnesota Business Owners

Before a Dispute Arises

Update your agreements. Ensure all NDAs, employment agreements, and contractor agreements include DTSA whistleblower immunity notice. This is not optional if you want access to the full range of DTSA remedies.

Establish the interstate commerce connection. Document how your trade secrets relate to interstate commerce. This may seem unnecessary now, but having contemporaneous documentation strengthens your ability to invoke the DTSA when a dispute arises.

Preserve evidence proactively. Implement systems that log access to trade secrets, track downloads and transfers, and retain relevant communications. When misappropriation occurs, the strength of your case depends on the evidence available—and evidence preservation begins long before any dispute.

When Misappropriation Is Suspected

Act quickly. Both MUTSA and the DTSA provide injunctive relief, but delay undermines your credibility and may allow the trade secret to be further disseminated. Contact counsel immediately to evaluate emergency relief options.

Preserve your own evidence. Before contacting the other party, secure your evidence. This includes access logs, communications with the suspected misappropriator, copies of the trade secrets at issue, and documentation of your protective measures.

Consider the ex parte seizure option. If there is a genuine risk of evidence destruction, discuss with counsel whether a DTSA seizure order is appropriate. This is an extreme measure with strict requirements, but it exists for exactly these situations.

Evaluate forum selection. Work with counsel to determine whether state court, federal court, or both is the right approach based on the specific facts of your case.

Statute of Limitations

The DTSA has a three-year statute of limitations, running from the date the misappropriation is discovered or should have been discovered through reasonable diligence (18 U.S.C. § 1836(d)). Compare this to MUTSA’s six-year limitations period (Minn. Stat. § 325C.06). If your claim is near the time boundary, the difference between three years (DTSA) and six years (MUTSA) may be outcome-determinative.

Checklist: DTSA Readiness for Minnesota Businesses

[ ] All NDAs and employment agreements include DTSA whistleblower immunity notice
[ ] Trade secrets are documented with their connection to interstate commerce
[ ] Access logs and audit trails are in place for systems containing trade secrets
[ ] Exit interview procedures include device recovery, access revocation, and written reminders of obligations
[ ] Incident response plan exists for suspected misappropriation (who to call, what to preserve, timeline for action)
[ ] Legal counsel identified who can evaluate emergency relief options on short notice
[ ] Existing agreements reviewed and updated within the past 12 months

Frequently Asked Questions

Can I file a DTSA claim if both my company and the defendant are in Minnesota?

Yes. Unlike traditional federal diversity jurisdiction, the DTSA does not require the parties to be from different states. The jurisdictional requirement is that the trade secret be related to a product or service used in, or intended for use in, interstate or foreign commerce. For most businesses, this threshold is easily met.

What is the DTSA whistleblower immunity notice, and where does it go?

The DTSA requires that any contract or agreement with an employee, contractor, or consultant governing trade secrets or confidential information include notice that individuals are immune from liability for disclosing trade secrets in confidence to government officials or attorneys for the purpose of reporting suspected legal violations. This notice can appear directly in the agreement or through a cross-reference to a company policy that describes the immunity. If you do not provide this notice, you cannot recover exemplary damages or attorney fees under the DTSA against that individual.

How realistic is the ex parte seizure provision?

Courts have interpreted the seizure provision narrowly, consistent with Congressional intent that it apply only in extraordinary circumstances. Most trade secret cases proceed through standard injunctive relief (temporary restraining orders and preliminary injunctions) rather than seizure orders. The seizure provision is most relevant where there is a credible threat of immediate destruction or dissemination of the trade secret—for example, where a former employee is actively transferring files to a foreign competitor. Even when seizure is not pursued, the provision’s existence can influence settlement discussions.

Should I file under both the DTSA and MUTSA?

In most cases, yes. Filing under both statutes preserves all available remedies and reduces risk. The two statutes are complementary, and courts routinely handle claims under both in a single proceeding. The primary exception would be if the DTSA’s three-year statute of limitations has expired while MUTSA’s six-year period has not, in which case a MUTSA-only claim may be appropriate.

Does the DTSA replace MUTSA?

No. The DTSA supplements state trade secret law—it does not preempt it. Congress expressly provided that the DTSA does not preempt or displace state trade secret laws (18 U.S.C. § 1838). Minnesota businesses retain all rights under MUTSA and gain additional rights under the DTSA. The two statutes coexist, and the choice between them (or the decision to invoke both) is a strategic one driven by the facts of each case.

For guidance specific to your situation, contact Aaron Hall, attorney for business owners, at aaronhall.com or 612-466-0040.