WINNING!
According to Lex Machina, between 2019 and 2023, trade secret plaintiffs in federal cases that went to trial won 86% of cases, which is approximately 30% higher than the success rate across all federal cases. This is particularly interesting because more trade secret cases are being filed while the number of patent infringement cases are decreasing.
I think the most important reason is an obvious one. A federal appellate court in Boston found “the inclusion of some information in compilations which could have been obtained from public sources does not mean the compilations were not trade secrets” — in other words, courts increasingly understand public information will inevitably be found in compilations of data with the explosion of freely available data.
UNJUST ENRICHMENT: SHOULD DAMAGES INCLUDE COST SAVINGS?
Federal courts are split as to whether unjust enrichment damages in the form of avoided
costs should be granted in trade secret cases when the avoided costs “proxy” bears no
relationship to the plaintiff’s harm or the defendant’s gain.
For those of us in Chicago, it is important to note that the Seventh Circuit ruled a defendant’s trade secret theft gave it a “significant head start” in operations because research and development expenditures were avoided even though the theft did not result in sales.
NDA ENFORCEMENT IS UP; NONCOMPETE AGREEMENTS ARE DOWN
This was true before the FTC issued its rule banning noncompete provisions and agreements. Judges now mostly appreciate the Cotton Gin was king, not the cotton itself. Signatories to NDAs expressly state and agree that the disclosed information is “valuable” and there is no intent to “transfer ownership or license” the disclosed information, litigants and judges; therefore, it is far more important for defendants to start their cases with a focus on limiting damages when liability is obvious.
Therefore, I strongly disagree with most sports coaches: both offense and defense win championships.
David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, and other issues. In particular, he has a significant amount of experience in hospitality law by representing third party management companies, owners, and developers.
He can be reached at david@seidmanlawgroup.com or 312-399-7390.
This blog post is not legal advice. Please consult an experienced attorney to assist with your legal issues.
Photo: “Top Secret” by Nick Youngson CC BY-SA 3.0 Pix4free
