The Defend Trade Secrets Act of 2016 creates a predictable exercise to protect manufacturing processes

September 26, 2016 - Think of a new invention? File a patent. Figure out a new manufacturing process? Up until Congress passed the Defend Trade Secrets Act of 2016 (DTSA) earlier this year, entrepreneurs and innovators in the manufacturing sector had a foggier set of options.

Using nano-layering technology, Seattle-based Modumetal manufactures metals that are stronger, lighter, more corrosion resistant and durable than conventional steels and alloys. The story, covered by Modern Metals in December 2015, honed in on the company’s breakthrough for the process of manufacturing nanolaminated metals. 

In the months that followed, the company has found itself in a legal battle with Massachusetts-based Xtalic Corp. to protect its proprietary technology and manufacturing process. Prior to the passage of this bill, legal protections for such trade secrets varied state by state. In Modumetal’s case, Xtalic attempted to dismiss the action on the grounds that it was not proper to bring the suit in Washington where Modumetal is located. Modumetal defeated Xtalic’s motion, but at a cost. “We spent a lot of time and money just defending our right to enforce our trade secrets in our home state,” says CEO Christina Lomasney.

“We took a very rigorous look at the technology we hold and how we envision that technology would be rolled out in the industry—and we recognized that as a manufacturing technology, there are pieces of intellectual property that are difficult to protect or enforce through patents alone,” Lomasney says. 

The technology that Modumetal alleges Xtalic misappropriated, if patented, could have been difficult to police without knowledge of a competitor’s internal operations. “We took some steps internally to protect pieces [of IP] through trade secrets and basically made the decision to keep that information out of the public domain entirely,” she continues. 

Predictable value

If executives feel a company’s rights have been violated, Lomasney says a predictable, nationally standardized process for taking action is crucial. “On an industry-wide basis, it means we are now able to know the value that intellectual property holds and more rigorously defend and protect it,” she says. “I think the DTSA will provide a predictable approach to protecting these types of innovation.”

A clear direction in the legal system will be helpful to entrepreneurs looking to develop groundbreaking ideas. “The DTSA shows that there is a growing appreciation of what trade secrets mean to our economy—that’s a really important change,” Lomasney says. “We’ll see where it takes us. Modumetal is going through the painful process of protecting its confidential information but for the next time around, there will at least be a much more predictable process.”