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Trade secret litigation jumps after DTSA implementation

The number of trade secret case filings in the U.S. jumped after the federal Defense Trade Secrets Act (DTSA) was passed in 2016.

One report shows that between 2009 and 2016, about 900 trade secret cases were filed each year. In 2017, there were 1,134 cases filed and that number appears to be on track to be eclipsed in 2018.

What is a trade secret?

Trade secrets are different from patents. While patent protection applies to certain unique inventions and designs, trade secret protection applies to any idea or information that provides a competitive advantage.

Also, patent protection lasts for a set period while trade secrets can last indefinitely.

These types of business information are often referred to as trade secrets:

  • Unpatented inventions and unique products
  • Customer information and marketing plans
  • Financial and recruiting information
  • Product designs and research projects
  • Drawings, blueprints, lab notes and training manuals

Who has access to trade secrets?

The study also found that most cases involving trade secrets were resolved with a consent judgment, which most often resulted in claimant wins likely because most claimants are companies and defendants are employees who left the company, the study said. That was also the reason why many of the trade secret cases had overlapping claims of breach of contract or business tort, the study found.

That’s why it’s important for your company to develop a trade secret policy, make sure your employees are aware of the policy, restrict access to the trade secrets on a need-to-know basis, maintain strict computer and facility security, and when an employee leave the company, make sure they understand their responsibilities regarding the information they may have gleaned about your company.

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