Compliance Clause

DTSA Immunity Notice

Federally required whistleblower protection notice informing employees and contractors of their immunity when disclosing trade secrets to government officials or attorneys.

Low Complexity

What This Clause Does

The DTSA Immunity Notice is a federally mandated disclosure required under the Defend Trade Secrets Act of 2016 (18 U.S.C. 1833(b)). This notice informs employees and contractors that they have legal immunity from civil and criminal liability under federal and state trade secret laws if they disclose trade secrets in confidence to government officials or attorneys for the purpose of reporting suspected violations of law, or if they use trade secret information in a court filing under seal in a whistleblower retaliation lawsuit.

Why This Clause Matters

Legal Requirement: The DTSA requires employers to include this notice in any contract or agreement with an employee that governs the use of trade secrets or confidential information. Failure to include it has consequences.
Penalty for Omission: If an employer does not provide the required notice, they cannot recover exemplary (punitive) damages or attorney's fees against the employee in a trade secret misappropriation lawsuit, even if the employee is found liable.
Whistleblower Protection: The notice protects employees who report suspected illegal activity to the government, ensuring they cannot be sued for trade secret violations for doing so.
Applies to Contractors: The requirement extends to independent contractors, not just traditional employees, if the agreement governs confidential information or trade secrets.
Cross-Reference Option: Employers may satisfy the requirement by providing a cross-reference to a policy document that contains the notice, rather than including it in every agreement.

Legal Context

The Defend Trade Secrets Act (DTSA) was enacted in 2016 to create a federal civil cause of action for trade secret misappropriation. Section 7 of the DTSA added whistleblower immunity provisions to encourage reporting of illegal activity without fear of trade secret retaliation. The notice requirement applies to any contract or agreement entered into or updated after May 11, 2016. Courts have generally held that the notice must be provided in a manner that makes the employee aware of the immunity, though the exact language need not match the statute verbatim. Some companies include the notice in employee handbooks with a cross-reference in NDAs to satisfy the requirement.

Notice of Immunity Under the Defend Trade Secrets Act Pursuant to 18 U.S.C. 1833(b), the Receiving Party is hereby notified that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law. An individual shall also not be held criminally or civilly liable for such disclosure in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

Basic Version: Tracks the statutory language closely. This is the minimum required to preserve the employer's ability to seek exemplary damages and attorney's fees.

Defend Trade Secrets Act Notice In accordance with the Defend Trade Secrets Act of 2016 (18 U.S.C. 1833), the Receiving Party is notified of the following immunity rights: (a) Immunity for Whistleblowing. An individual will not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret if the disclosure is made: (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law. (b) Immunity in Litigation. An individual will not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret in a complaint or other document filed in a lawsuit or other proceeding, provided the filing is made under seal. (c) Retaliation Lawsuits. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the employer's trade secrets to the attorney and use the trade secret information in the court proceeding, provided that any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order. This notice is provided for informational purposes and does not limit or expand any rights under the Defend Trade Secrets Act or any other law.

Standard Version: Provides clearer explanation of the immunity rights in plain language while covering all three immunity scenarios described in the statute.

Trade Secret Whistleblower Protection Notice IMPORTANT NOTICE REGARDING TRADE SECRET IMMUNITY The Receiving Party acknowledges receipt of the following notice required by the Defend Trade Secrets Act of 2016 (18 U.S.C. 1833(b)): 1. IMMUNITY FOR REPORTING TO GOVERNMENT You will not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret if: - You disclose the trade secret in confidence to a government official (federal, state, or local) or to an attorney; AND - The sole purpose of the disclosure is to report or investigate a suspected violation of law. 2. IMMUNITY FOR COURT FILINGS You will not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret in a lawsuit or other legal proceeding if: - The document containing the trade secret is filed under seal; AND - The trade secret is not otherwise disclosed except as permitted by court order. 3. IMMUNITY IN RETALIATION CASES If you file a lawsuit claiming your employer retaliated against you for reporting a suspected violation of law, you may: - Disclose trade secrets to your attorney; AND - Use the trade secret information in the court proceeding; PROVIDED that you file any document containing the trade secret under seal and do not disclose the trade secret except pursuant to court order. ACKNOWLEDGMENT By signing this Agreement, the Receiving Party acknowledges that they have received this notice, have had the opportunity to ask questions about it, and understand the whistleblower immunity protections described above. This notice does not authorize disclosure of trade secrets except as specifically permitted under 18 U.S.C. 1833(b). Unauthorized disclosure of trade secrets may result in civil liability and criminal penalties. The Disclosing Party reserves all rights to seek remedies for any trade secret misappropriation that does not fall within the immunity provisions described above.

Warning - Employer-Favorable: This version includes an acknowledgment requirement and emphasizes that unauthorized disclosures remain actionable. Some receiving parties may object to the acknowledgment language or the warning about penalties.

1
Do Not Delete This Clause: If you are the employer/disclosing party, never remove this notice. Doing so forfeits your right to recover exemplary damages and attorney's fees in trade secret litigation, which can be substantial.
2
Cross-Reference is Sufficient: If you prefer not to include the full notice in every agreement, you may instead reference a policy document (like an employee handbook) that contains the notice. Ensure the reference is clear and the policy is actually provided.
3
Resist Acknowledgment Requirements: If you are the receiving party, push back on requirements to sign a separate acknowledgment. The statute requires notice, not acknowledgment. Courts have not required proof that the individual read or understood the notice.
4
Remove Chilling Language: If the notice includes prominent warnings about criminal penalties or unauthorized disclosure, consider requesting removal as these may create a chilling effect on legitimate whistleblowing.
5
Verify Applicability: The notice is only required in agreements with employees and contractors. Purely business-to-business NDAs between companies do not require this notice, though including it is not harmful.
6
Consider State Law: Some states have their own whistleblower protections that may be broader than the federal DTSA. The federal notice does not limit state law protections, but consider whether additional state-specific language is needed.

Missing DTSA Notice Entirely

If an NDA with employees or contractors lacks the DTSA notice, the employer cannot recover exemplary damages or attorney's fees for trade secret misappropriation. This is a significant oversight that should be corrected.

Language That Contradicts the Immunity

Watch for provisions that purport to prohibit all disclosures to attorneys or government officials, or that require pre-approval for such disclosures. These may conflict with the statutory immunity and create confusion.

Excessive Warnings About Penalties

While the disclosing party may want to note that unauthorized disclosures remain actionable, excessive emphasis on criminal penalties or threats may be seen as attempting to chill legitimate whistleblowing activity.

Required Waiver of Immunity Rights

Any provision requiring the receiving party to waive their whistleblower immunity rights is likely unenforceable and against public policy. Such provisions should be removed.

Notice Buried or Hard to Find

The notice should be reasonably prominent and not hidden in fine print or obscure locations. While there is no specific formatting requirement, burying the notice could undermine its purpose.

DTSA Immunity Notice

What This Clause Does

Why This Clause Matters

Legal Context

Missing DTSA Notice Entirely

Language That Contradicts the Immunity

Excessive Warnings About Penalties

Required Waiver of Immunity Rights

Notice Buried or Hard to Find

Related Clauses

Trade Secrets Definition

Injunctive Relief

Attorney Fees

Governing Law

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