Trade Secret Litigation: What to Expect and How to Prepare

When trade secret misappropriation occurs, understanding the litigation process is essential for making informed decisions about enforcement. This guide provides an educational overview of how trade secret cases proceed and what preparation looks like.

Legal Framework

Trade secret claims can be brought under two primary frameworks:

Both frameworks require the plaintiff to establish:

1. The existence of a trade secret (information with independent economic value from not being generally known)
2. That the holder took reasonable measures to maintain its secrecy
3. That the defendant acquired, disclosed, or used the trade secret through improper means

Pre-Litigation Steps

Before filing a claim, several preparatory steps are typically important:

• Evidence preservation: Issue litigation hold notices to prevent destruction of relevant documents, emails, and electronic data
• Forensic investigation: Engage digital forensics specialists to examine company devices, access logs, and file transfer records
• Trade secret identification: Document exactly what information constitutes the trade secret, including its boundaries and the value it provides
• Protective measures audit: Compile evidence of all protective measures taken, including NDAs, access controls, policies, and training records (see our audit framework guide)
• Damage assessment: Begin evaluating the potential economic impact of the misappropriation

Filing Trade Secret Claims

Key considerations when filing include:

• Specificity of identification: Courts generally require plaintiffs to identify trade secrets with reasonable particularity, not just broadly claim "all confidential information"
• Preliminary injunctive relief: In urgent cases, plaintiffs may seek temporary restraining orders or preliminary injunctions to prevent further use or disclosure
• Ex parte seizure: The DTSA provides for ex parte seizure of property in extraordinary circumstances where other relief would be inadequate
• Protective orders: Trade secret cases typically involve protective orders that govern how confidential information is handled during litigation

The Discovery Process

Discovery in trade secret cases involves specific considerations:

1. Document production: Both parties produce relevant documents, emails, code repositories, and business records
2. Depositions: Key witnesses including the alleged misappropriator, supervisors, and technical personnel may be deposed
3. Expert testimony: Technical experts may analyze code similarity, data access patterns, or the technical characteristics of the trade secret
4. Balancing disclosure: Courts must balance the plaintiff's need to prove misappropriation with the risk of further disclosing the trade secret through the litigation process

Available Remedies

• Injunctive relief: Court orders preventing further use or disclosure of the trade secret
• Compensatory damages: The plaintiff's actual losses and/or the defendant's unjust enrichment from the misappropriation
• Exemplary damages: Under both the DTSA and most state statutes, courts may award up to double damages for willful and malicious misappropriation
• Attorney's fees: May be awarded in cases of willful misappropriation or bad faith claims
• Reasonable royalty: When other measures of damages are inadequate, courts may impose a reasonable royalty for continued use

Preparation Checklist

Companies can prepare for potential trade secret disputes by maintaining:

1. A current trade secret register with classification and access documentation
2. Executed NDAs and trade secret acknowledgments with all employees and contractors
3. Documented employee departure protocols with evidence of consistent enforcement
4. Technical access controls with audit logging capabilities
5. Training records demonstrating employee awareness of trade secret obligations
6. An incident response plan for suspected misappropriation events
7. Relationships with qualified litigation counsel and digital forensics providers

Sources

• Defend Trade Secrets Act (18 U.S.C. Chapter 90)
• Uniform Trade Secrets Act
• Idea Partnership: Trade Secret Development