DTSA and Ex Parte Seizure – Lessons from the First Ex Parte Seizure Under The DTSA

DTSA Ex Parte Civil Seizure Overview

• The Defend Trade Secrets Act (DTSA) allows courts to order ex parte civil seizure of stolen trade secrets.
• Federal marshals may seize and secure misappropriated materials.
• Intended for use only in “extraordinary circumstances.”
• Courts have generally applied this remedy narrowly.
• Several courts have denied seizure requests where:
  • Rule 65 injunctions were deemed sufficient.
  • Plaintiffs relied on bare assertions that defendants would destroy evidence.

First Civil Seizure Order Under DTSA

• Case: Mission Capital Advisors LLC v. Romaka (S.D.N.Y. July 29, 2016).
• Court ordered seizure of:
  • Contact lists
  • Electronically stored confidential information
• Defendant was a former employee accused of misappropriation.

Key Facts of the Case

• Defendant allegedly downloaded:
  • Entire 65,000-person client/contact list
  • Confidential finance and deal documents
  • Employee and broker information
• Information took over a decade to compile.
• Defendant:
  • Initially claimed deletion of files.
  • Was later found to possess a “trove” of misappropriated data.
  • Stopped responding to communications.
  • Failed to appear in court.
  • Evaded service and ignored court orders.

Court’s Reasoning for Granting Seizure

• Rule 65 injunction was deemed inadequate.
• Court believed Defendant would:
  • Evade or not comply with a court order.
• Court emphasized:
  • Defendant’s failure to appear and evasion of service.
  • High business value of the trade secrets.
  • Plaintiff’s significant time and financial investment.
  • Risk of irreparable harm if information were disseminated.

Guidance on “Extraordinary Circumstances”

• Plaintiffs must show:
  • Defendant is unlikely to comply with a court order.
• Mere speculation is insufficient.
• Evidence of past evasion or noncompliance is critical.
• Must satisfy requirements under 18 U.S.C. § 1836(b)(2)(A)(ii).

Practical Takeaways for Companies

• Civil seizure is available but rarely granted.
• Strong evidence of defendant misconduct is required.
• Companies should:
  1. Diligently seek return of misappropriated materials.
  2. Document failures to return materials.
  3. Record any attempts by defendant to evade court orders.
• Courts are more likely to grant seizure where clear evasion is demonstrated.