Trade secret cases 2017
Are they always applied? Do third parties have access to the networks? Do third parties have access to keycard-protected space? Are valuable secrets kept in segmented need-to-know portions of the network, or are they widely available to all employees? These questions matter, not only because they will be important in litigation if your trade secrets are stolen, but because responding to them with effective protections may well keep your trade secrets from being stolen in the first place.
Are your secrets really yours, or do they belong to your business partners? We have seen a number of highly contentious disputes arise when joint ventures and similar business partnerships are dissolved. Your legal department may do a crackerjack job of documenting such deals and who owns what , but the same might not be true of the legal department in the subsidiary you acquired overseas five years ago.
Furthermore, in a well documented deal, upon dissolution of the joint relationship, it may turn out that the ownership of trade secrets you thought were yours is joint — or worse, belong to the other party.
In a poorly-documented deal, it may be unclear who owns contributed or even jointly-developed trade secrets — or it may never have been considered in the first place. Are your employees putting you at risk of a trade secrets case? Much of the discussion above has centered on protecting your company's own trade secrets.
But what of those secrets owned by your business partners, customers, vendors and competitors? And what happens when an employee betrays your confidential information, or that of your vendors?
In some industries, chat rooms on the dark web are used by engineers to trade away secrets and designs anonymously, or to obtain other parties' trade secrets for the company's benefit. We are also aware of situations in which a company's employee has claimed credit for ideas or developments actually contributed by a vendor, supplier or business partner.
While the company must be vigilant about protecting its own valuable trade secret technology, even the most respectable company must also take steps to protect itself from trade secret entanglements into which its own employees may draw it. You experience a trade secrets breach. What are the first things you should be thinking about?
Ideally, the first thing we hope you will think is: We strongly recommend that, well before any problems arise, companies put in place a high-risk contingency plan that includes clear action steps and identifies the team that will handle this high-priority issue. That plan would set out the careful preservation of evidence of the trade secret, your ownership of it, its misappropriation and your past efforts to keep it secret. Your trade secrets litigator should be regarded as an integral part of your first-response team because such secrets, once gone, have a very limited window for recovery.
Do you have an established go-to legal relationship you can count on in a pinch? When a trade secret breach is discovered, companies often turn first to their patent or corporate lawyers — who typically have little experience with high-profile, high-technology trade secret matters. If possible, well before running into trouble, the company should look into establishing a relationship with an experienced IP trial lawyer who is familiar with trade secret litigation.
What can you expect in trade secret litigation? The specifics of trade secret litigation vary widely by venue. Your case may involve anything from US federal court to the state courts, the International Trade Commission, foreign and domestic arbitration or even foreign courts.
Moreover, trade secret litigation tends to be the most intrusive of IP litigation, prying into highly sensitive aspects of both the plaintiff's and the defendant's internal business structure and operations. And trade secret cases tend to be hard fought and to come with deep tradeoffs between the company's business operations and the litigation strategy itself.
Moreover, trade secret litigation tends to concern precisely the type of newly available and easily transportable technology discussed above. Some studies indicate that from to , as much as 50 percent or more of federal and state trade secret litigation concerned technical know-how and software. As much as 50 percent or more of federal and state trade secret litigation concerned technical know-how and software. Additionally, trade secret plaintiffs have been highly successful. Only 61 out of the cases identified in the study — about 22 percent — were dismissed.
This is lower than the historical average dismissal rate for complex civil litigation in federal courts 27 percent, according to litigation research company Lex Machina ; however, given the early stage of most of these cases, it is too soon to tell whether DTSA case dismissal rates will vary from historical ones. Data on preliminary injunctions is ripe, however, and rather surprising.
Upon enactment of the DTSA, it was generally expected that courts would be more inclined to grant preliminary relief, at least in part because the urgency of action in these cases was underscored by the availability of ex parte injunctions — whereby U.
Yet only five preliminary injunctions — about 2 percent — were granted in the cases, according to the Cybersecurity Lawyer study. A larger sample size of cases will reveal more reliable statistics, but it is noteworthy that the general expectation of an increase in preliminary injunctive relief under the DTSA is not reflected in the data to date.
Patents will continue to be the dominant form of intellectual property protection in certain industries. Companies must be cognizant of the risks associated with the movement of confidential information. The success rate and damages awarded in recent trade secret litigation indicate that defendants should take trade secret matters seriously. The data also should give heart to aggrieved parties seeking recompense for stolen and misused information, as should the unprecedented ex parte seizure provisions that are part of the DTSA.
The Increasing Popularity of Trade Secret Litigation According to federal judicial caseload statistics, the rates for both federal and state trade secret litigation have skyrocketed. Conclusion Patents will continue to be the dominant form of intellectual property protection in certain industries. This memorandum is considered advertising under applicable state laws.
April 5 RT dressforsuccess: Happy 70th anniversary to SkaddenArps Law Firm!