Court Declines to Issue Seizure Order under Defend Trade Secrets Act

As we previously reported, the federal Defend Trade Secrets Act (DTSA) enacted last May includes a powerful ex parte seizure proceeding that allows courts in “extraordinary circumstances” to order the seizure of property necessary to prevent the immediate dissemination of trade secrets.

Last month, the Northern District of California issued one of the first (if not the first) decision on an ex parte seizure request under the new statute.  While it is still too early to establish any trends, this decision might give some insight into how courts will interpret and apply the seizure provision of the DTSA.

In OOO Brunswick Rail Management et al. v. Sultanov et al., Brunswick alleged that two former employees emailed company confidential information to their personal email accounts, and one of the former employees refused to return a company-issued phone and laptop.  Brunswick also alleges that the former employees provided the confidential information to one of Brunswick’s creditors in order to harm Brunswick in its debt restructuring negotiations.

The court denied Brunswick’s request under the DTSA for the court to seize the company-issued devices on the grounds that alternative measures exist for the court to protect the data.  Specifically, the court (1) issued a preservation order on the hosts of the former employees’ personal email accounts preventing the destruction of any of the email; (2) entered a temporary restraining order preventing the former employees from accessing or modifying the company-issued devices, destroying or modifying evidence relating to the action, or violating their employment agreements; and (3) ordered the former employees to bring the company-issued devices to the next hearing date and deliver them into the court’s custody.

Thus, while the court declined to issue the requested DTSA seizure order, the court provided various other mechanisms for controlling dissemination of the confidential information.  Time will tell whether other courts will take a similar approach.

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