Defend Trade Secrets Act — Implications For Private Funds

On May 11, 2016, the federal Defend Trade Secrets Act (DTSA) became law.  The DTSA provides trade-secret protections on the federal level that are similar to those available through the Uniform Trade Secrets Act (UTSA) adopted (with variations) in 48 States.  The DTSA will have at least three effects upon private funds, particularly those with public investors.

First, the DTSA has a broader definition of "trade secret" than the UTSA, which means that more fund materials (e.g., formation and governing documents) may now qualify for protection from disclosure under State open-records and open-meetings laws.  For example, where a State law provides that "other law" can exempt certain information from disclosure, the DTSA may now qualify as that separate basis to protect fund documents possessed by public investors.