If DTSA is so fantastic, why do we still see some trade secret cases argued at state courts instead of federal? Great question!
The short answer is maybe they didn’t have a choice – not every dispute qualifies for federal jurisdiction under the DTSA. The statute at 18 USC 1836(b)(1) requires that “the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce”. This makes the trade secret theft a “federal question” and gives the federal court subject matter jurisdiction (flashback to my law school civil procedure class with Professor Bob Ragazzo at UH Law Center!). Another simple explanation is maybe the plaintiff’s lawyers have more experience at state courts and felt they could achieve a better result for their clients.
If the product or service didn’t cross state lines or country lines, you can only bring the case in state court using UTSA. For example, if an employee takes trade secrets and leaves Company A to join Company B, but both are in the same state and serve local clients, Company A will use UTSA in state court. On the other hand, if Company A or B used the trade secret in interstate or international commerce, DTSA and the federal courts would be available to Company A.
There are a few differences between the federal DTSA and state UTSA, but they are remarkably similar.
Being in state court is not necessarily a bad thing, especially if the state court system has lots of experience handling trade secret and other intellectual property cases (think California, New York, Texas, and so on).
