Posts in Trade Secrets

What You Need to Know About Trade Secrets in 2023 (Part I)

Trade secrets in the United States have a fascinating history, during which courts shaped the common law tort as a way to enforce confidential relationships. Now the legal framework is statutory, with some version of the Uniform Trade Secrets Act (UTSA) in effect in every state except New York, and with uniformity in the federal system thanks to the Defend Trade Secrets Act of 2016 (DTSA). Nevertheless, the law continues to evolve much as it did a century ago—that is, through the opinions of judges deciding individual cases on their facts. What follows is a selection of those decisions, along with other resources, which have come out during the past year and which I believe provide helpful guideposts about important aspects of trade secret law and practice.

Greater DOJ Action Needed to Stop Corporate IP Theft

In a laudable effort to curtail rampant corporate IP theft, a bipartisan group of U.S. Senators has called on a hesitant Department of Justice (DOJ) to step up its enforcement. As reported in Forbes, Senators Thom Tillis (R-NC), Chris Coons (D-DE), and Marsha Blackburn (R-TN) recently issued a letter to the DOJ identifying the core gap in its prosecution habits. Their primary complaint was “the DOJ’s focus on individual, as opposed to corporate, offenders.” This is an oversight that must be corrected. 

CIPU Survey Finds Fractured Views Among IP Community Over Negative Impacts of Infringement

Today, the Center for Intellectual Property Understanding (CIPU) released the results of a survey on viewpoints within the intellectual property (IP) community about acceptable behaviors surrounding IP rights, as well as guiding IP principles for business and consumers. Responses from inventors, attorneys and consultants across the IP sector revealed a significant disparity in beliefs on how IP protections impact sharing and the effects of IP infringement, though most agreed that IP has positive economic impacts in general.

When Protecting Everything Means Protecting Nothing

Tightening your grip on a company’s trade secrets can actually lead to losing them. Stay with me here; this kind of excessive protection is more widespread than you might think, and most companies don’t appreciate the risks that they are taking by overdoing it. The first category is legal risk. Recall that courts require, as part of any case for misappropriation of trade secrets, that you prove you have taken “reasonable measures” to maintain control over the information. Because most trade secret loss happens through employees, you might assume that judges want you to have strong confidentiality agreements. And you would be right; in fact, if you don’t have them, you are statistically likely to lose. But here’s the hidden problem: if your employee non-disclosure agreements (NDAs) are too broad, courts could throw them out.

AI and Trade Secrets: A Winning Combination

Generative AI (“Gen AI”) is everywhere, with all sorts of promises about how it can help the world. Let’s say a company has created new confidential methods for cancer treatments, but they are not really effective. They ask a Gen AI to come up with a cure for cancer using these new methods.  The gen-AI (using the billions of words and images available to it beyond human comprehension) conceives of the cure, and it works, saving many lives. [Note: Generative AI (“Gen AI”) as used herein will refer to deep-learning models that can generate high-quality text, images or other content based on the billions of pieces of data they were trained on].

SCOTUS Declines Solving Circuit Split on Awarding Avoided Costs in Trade Secret Cases

On November 20, the U.S. Supreme Court denied a petition for writ of certiorari filed in Tata Consultancy Services Ltd. v. Epic Systems Corp. The denial leaves in place an appellate court decision awarding $280 million for unjust enrichment and punitive damages in a trade secret misappropriation case where the plaintiff suffered no economic harm and the defendant gained no actual benefit from the misappropriated information.