JONES DAY PRESENTS®: Trade Secret vs. Patent Litigation
To launch our video series on trade secret protection, Jones Day Intellectual Property partner Randy Kay explains how trade secret misappropriation cases differ from patent disputes. Strategic issues discussed include trade secret identification, venue, monetary remedies, injunctions, and the civil seizure remedy unique to cases under the Defend Trade Secrets Act.
Read the full transcript below:
So the biggest difference between patent litigation and trade secret litigation is in a patent case, you start with the patent and then you look to the patent claims to see what was claimed as the invention. And you see it there at the end of the patent listed 1 through end. Now in a trade secret case in contrast, there's nowhere to look to see what's the narrative of the trade secret because trade secrets don't get filed in a government filing like patents, copyrights, and trademarks do. The first task at hand, usually for both plaintiffs and defendants, is to define the trade secrets and to determine what are the trade secrets, how do they get described, and how do they get described in writing from beginning to end, such as a method for doing a certain activity, using the steps of A, B, and C or something like that.
Both patent and trade secret cases, there are similarities, which are plaintiff is claiming an invention that it owns that it is claiming the defendant is using without authorization. Now, patent cases are strict liability. If the defendant is using the claimed invention and the claimed invention is protectable and not invalid, then the defendant will be liable. Whereas on the trade secret side, it's an intentional tort and there's a requirement that the defendant know or be deemed to have known that it's using someone else's protectable IP. In a patent case, you look at infringement, validity, and damages.
In a trade secret case, we're looking at two things which is defining the protectable trade secret that the plaintiff owns or has sufficient rights to assert as licensee, for example. And is it not subject to publication? So patent cases are filed either in the federal district court or at the International Trade Commission in the United States. Trade secret cases can be filed in federal court and can be filed at the International Trade Commission or the ITC, but they also often arise in state court and in arbitration, if a collaboration agreement or other contract provides for disputes to be determined in arbitration.
In patent cases, we have either lost profits or reasonable royalty as the damage measures. In trade secret cases, we have those plus more. We have actual losses, we have royalties. And then we also have unjust enrichment, which is a completely different way of looking at damage. And there's many different ways to look at how to calculate unjust enrichment. But one of the ways looks at the gain to the defendant rather than the loss to the plaintiff. Like in patent litigation, in trade secret cases, you can get an injunction under certain circumstances. And in fact, in trade secret cases, injunction are often where the rubber meets the road, but in addition to injunction being broader in trade secret cases than it is in patent cases, there's another remedy under the Defend Trade Secrets Act, which allows for seizure of information and materials from the defendant under certain circumstances where the district court can direct the marshal to go seize information in the hands of the defendant, or even a third party, if necessary to protect the trade secrets.
Sometimes people refer to trade secret litigation as soft IP, but I really don't believe that. And it's looked at as not as hard a science say as patent litigation, but if you consider in trade secret litigation, we don't have anything like patent claims to look at, to define the boundary of the invention. And instead, the inventions get litigated and determined during the course of the trade secret litigation in terms of what are the trade secrets. So it's pretty different. And I really don't consider trade secret litigation as soft IP.
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