www.azbar.org/AZAttorney JANUARY 2017 ARIZONA ATTORNEY 27
Both the DTSA and the AUTSA provide a private right of action for misappropriation of trade secrets. An action brought under either statute
is subject to a three-year statute of limitations.
To bring an action under the DTSA, the plaintiff must be an “owner” of the trade secret that “is related to a product or service used in, or
intended for use in, interstate or foreign commerce.”
The AUTSA does not expressly require the plaintiff be an “owner” of the trade secret. Nor does the AUTSA require that the trade secret be
related to a product used, or intended for use, in interstate commerce.
Both the DTSA and the AUTSA provide expansive definitions of a “trade secret.” The DTSA definition is more expansive than the AUTSA
definition in that it enumerates more “forms and types” of information that may qualify as a trade secret. Although the AUTSA definition may be
interpreted to cover such examples of trade secrets, the DTSA definition may bolster claims based on the types of information expressly described.
The AUTSA definition is broader in that it extends to all information that derives economic value from not being generally known and is the
subject of reasonable efforts to maintain its secrecy. The DTSA, on the other hand, limits trade secrets to financial, business, scientific, technical,
economic or engineering information that derives independent economic value from not being generally known and the owner has taken reasonable measures to keep such information secret.
The DTSA’s and the AUTSA’s definitions of “misappropriation” are virtually identical. The crux of the definitions in both statutes is the
“acquisition, use or disclosure of a trade secret that was acquired by improper means.”
The definition of “improper means” under both statutes includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty
to maintain secrecy or espionage through electronic or other means. The DTSA’s definition of “improper means” differs from the AUTSA’s
definition in its express exclusion of “reverse engineering, independent derivation, or any other lawful means of acquisition.”
The DTSA does not preempt other state causes of action that may arise under the same nucleus of facts. The AUTSA, on the other hand,
preempts other common law claims based on a misappropriation of “trade secrets,” while leaving available claims based on misappropriation of
confidential information (that does not constitute trade secrets). 1 The AUTSA also does not preempt contractual or criminal remedies, whether
or not based on misappropriation of a trade secret.
Both the DTSA and the AUTSA authorize an award of damages for “actual loss” and for unjust enrichment caused by trade secret misappropriation.
The DTSA and the AUTSA also authorize, in lieu of damages for “actual loss” or for unjust enrichment, damages measured by the amount of
a reasonable royalty for a misappropriator’s unauthorized disclosure or use of a trade secret.
The DTSA and the AUTSA both authorize an award of “exemplary damages” up to double the total awarded damages if the trade secret
misappropriation is determined to be “willful and malicious.”
The DTSA and the AUTSA authorize an award of reasonable attorneys’ fees to the prevailing party for any of the following: ( 1) a claim of
misappropriation made in bad faith; ( 2) a motion to terminate an injunction made or resisted in bad faith; or ( 3) willful and malicious trade-secret misappropriation.
Both the DTSA and the AUTSA authorize courts to grant injunctive relief to prevent actual or threatened misappropriation. An injunction under
both the DTSA and the AUTSA also may require that a party found liable for misappropriation take affirmative steps to protect a trade secret.
Both statutes also permit courts to order payment of a reasonable royalty for the use of a trade secret when “exceptional circumstances” would
make an injunction inequitable.
The main difference between the injunctive relief provisions of the DTSA and the AUTSA is that an injunction under the DTSA must not prevent
a person from entering into an employment relationship. This language in the DTSA rejects the “inevitable disclosure” doctrine recognized by
some states, under which a court can enjoin an employee from accepting employment that would inevitably result in the use or disclosure of
trade-secret information known to the employee.
Because the DTSA does not preempt state law, the “inevitable disclosure” doctrine remains available to the extent it is recognized under Arizona
law. Arizona courts, however, have apparently not yet ruled as to whether the theory of “inevitable disclosure” is recognized in Arizona. 2