A new study of federal court trade secret litigation confirms that the number of lawsuits involving alleged trade secret misappropriation continues to grow exponentially. According to the study, which was published in the Gonzaga Law Review on March 17, 2010, the number of federal court “trade secret cases doubled in the seven years from 1988 to 1995, and doubled again in the nine years from 1995 to 2004.”
Other interesting findings in the study include the following:
• “In over 85% of trade secret cases, the alleged misappropriator was someone the trade secret owner knew – either an employee or a business partner.”
• The usage of confidentiality agreements significantly increases the likelihood that a court will find that a trade secret owner took reasonable measures to protect the purported trade secrets.
• The Northern District of Illinois (i.e., Chicago) handles the largest number of trade secret lawsuits, and “Courts applied the laws of Illinois, California, or New York in almost 30% of trade secret cases.”
• When seeking injunctive relief, owners of trade secrets had a much higher rate of success against employees (about whom extensive pre-filing investigations can be done) than against a business partner (with respect to which the trade secret owner may have only limited information).
• Similarly, trade secret litigation against employees is “much more likely to conclude early in the litigation” than is trade secret litigation against a business partner.
For anyone interested in this area of the law, the study is well worth reading.