Trade Secret Cases On the Rise

In recent years, there has been a noticeable uptick in trade secret litigation, signaling a shift in how businesses safeguard their valuable intellectual property. 

According to Law360, “Just under 1,100 trade secret cases were filed in federal court in 2013, a number that rose to nearly 1,400 in 2017, the year after the trade secrets law took effect, according to data from legal analytics firm Lex Machina and Law360 reporting. The number of cases remained at over 1,300 annually until dipping during the height of the pandemic to 1,236 in 2021 and then 1,129 in 2022. Last year, 1,231 trade secret cases were filed in federal court.”

Trade secrets can encompass a broad range of confidential information, including formulas, algorithms, customer lists, and manufacturing processes, which provide businesses with a competitive edge. Unlike patents, which require public disclosure of the invention in exchange for protection, trade secrets rely on maintaining confidentiality. This aspect makes them an attractive option for companies seeking to protect proprietary information without disclosing it to competitors or the public.

The surge in trade secret litigation can be attributed to several factors, including the enactment of the Defend Trade Secrets Act (DTSA) in 2016, which provided for a federal cause of action for trade secret misappropriation. This legislation bolstered the legal arsenal available to businesses seeking to enforce their trade secret rights and pursue remedies for misappropriation. 

Clients are increasingly turning to trade secrets as a means of protecting their innovations, particularly in sectors where rapid technological advancements and short product life cycles render patents less effective. Trade secrets offer perpetual protection as long as the information remains confidential, providing a valuable alternative for companies operating in dynamic and fast-paced markets.

The rise of trade secret litigation also highlights the need for robust internal policies and procedures to safeguard confidential information proactively.  Companies must invest in measures such as employee training, restricted access controls, and non-disclosure agreements to mitigate the risk of inadvertent disclosure or theft of trade secrets.

As businesses continue to navigate the complex landscape of IP protection, trade secrets offer a way to safeguard valuable innovations and maintain a competitive advantage in today's dynamic marketplace.