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June 05, 2020 Practice Points

New Data Regarding Litigating Trade Secret Cases

The information is particularly relevant to the Defend Trade Secrets Act.

By Michael Shepherd

April 2020 reports from Stout Risius Ross, LLC, and Lex Machina summarized data from from between 2010 and 2019, comparing it against data from previous reports. Here is the critical data from the reports according to Peter J. Toren in IP Watchdog:

  1. The amount of trade secret cases increased since Congress passed the DTSA, but the increased amount has not overwhelmed the federal courts.
  2. It is a lot more likely that a permanent injunction will be entered by a consent judgment than on the merits.
  3. Expedited relief in the form of temporary restraining orders and preliminary injunctions decreased in 2019 due to (1) “[m]any claimants [being] unable to clear the bar for a likelihood of success on the merits because the court [was] unable to determine if there [was] a trade secret” and (2) many courts finding no need for injunctive relief “if there [wa]s evidence the defendant gave back all materials.” 
    1. Tip: Plaintiffs need to provide the requisite specificity to show the court a trade secret exists.
    2. Tip: Plaintiffs need to argue that the defendant returning all the trade materials does not necessarily mean the defendant will no longer be able to use such materials.
  4. Regarding damages, the total amount of awarded damages in 2019 was less than the total amount of awarded damages in four other years of the previous decade. Thus, damages in trade secrets cases are neither on the rise nor on the decline.
  5. According to Stout Risius Ross, trade secret claimants prevail 68 percent of the time at trial. In contrast, Lex Machina reported that defendants were more likely to win during summary judgments and judgment on the pleadings.
  6. Based on the two reports, it takes on average more than two years to go to trial. This varies substantially based on jurisdiction.
    1. Tip: Where plaintiffs bring a DTSA claim will have a material effect on the outcome of the litigation, particularly damages.

Michael Shepherd is an associate with Carlton Fields, P.A. in Miami, Florida.

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