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Trade Secrets LitigationIntroduction:

Intellectual property (IP) litigation accounts for a large percentage of cases heard in United States district courts, perhaps reaching as much as sixty-percent or higher in recent years. See generally, e.g., Matthew Sag, “IP Litigation in U.S. District Courts: 1994-2014,” Iowa Law Review, Vol. 101, Iss. 3, P. 1065, 2016. When Congress enacted the Defend Trade Secrets Act in 2016, litigation of trade secrets intellectual property claims became more defined and certain trends emerged in the courts. See, e.g., K & L Gates, “Emerging Trends in Defend Trade Secrets Act,” Lexology, Sep. 26, 2017. According to some legal commentators, “Trade secret litigation has jumped since 2000 among the information technology, consumer discretionary, and healthcare sectors, and we expect this trend to continue.” PR Newswire, “Stout’s Trade Secret Litigation Report Provides Extensive Research and Trends in Federal Trade Secret Cases,” Sep. 22, 2017. This article examines trade secrets litigation and the role of expert witnesses in such cases.

Discussion:

Until 2016, trade secret litigation was overseen by state law, rather than federal statute. See K & L Gates, supra. In 2016, the Defend Trade Secrets Act brought such issues into the federal courts. See id. As one legal analyst explains, “Congress created the first statutory private federal cause of action for trade secret misappropriation when it enacted the Defend Trade Secrets Act (‘DTSA’) on May 11, 2016. Although the DTSA has some material differences from existing state laws (which are predominately variations of the Uniform Trade Secrets Act (‘UTSA’)),…the statute generally extends similar protections to those afforded by most states. Nonetheless, the ability to enforce trade secret rights in federal courts and achieve a consistent application of trade secret law across state borders generated a lot of interest amongst employers throughout the United States.” K & L Gates, supra.

In many ways, trade secret litigation is somewhat similar to other intellectual property (IP) cases, such as with damages awards and their elements. However, unlike other IP lawsuits, trade secrets litigation rights are different of the ownership rights involved. See, e.g., PR Newswire, supra. As one well-respected trade secrets litigation report notes, “Attorneys and industry experts alike must be increasingly mindful of the nuances impacting where a trade secret case is filed, the damage remedies available in that venue, and emerging precedents available to practitioners for determining damages.” PRNewswire, quoting Stout’s “Trends in Trade Secret Litigation Report,” supra.

In any case involving proprietary information and/or trade secrets, expert witnesses can play a pivotal role. For example, experts in trade secrets can provide invaluable opinions and evidence regarding whether or not the trade secret law was actually violated, given the difficulty in these cases, due to the ownership issue.  As previously noted, such experts should be aware of the nuances that exist in trade secrets litigation and understand the specific damage determination formulae. In certain instances, general IP experts may also be of assistance, as there are certainly a number of similarities among different types of IP cases.

Conclusion:

There is a host of current litigation that involves trade secrets cases, and attorneys in the field are likely to encounter more and more in the months and years to come. Using expert witnesses who are intimately familiar with the concepts of the Defend Trade Secrets Act and the components of trade secrets ownership claims may assist litigators in successfully making or defending their cases.