Does the L'Etranger have to be active in order for me to have a 40% increased cloak duration?
It's a passive effect and works even if you have your Sapper, Knife, or Disguise Kit out.
Do be aware that if you use it with the Dead Ringer that the damage mitigation and flickerless cloak time remains at 6.5 seconds even though the cloak is longer than that.