JONES DAY PRESENTS®: Trade Secret Litigation 10 Years After Enactment of the Defend Trade Secrets Act

Randy Kay:

Over the 10 years that we've had the Defend Trade Secrets Act providing a private right of action for civil matters in federal court, we've seen trade secret litigation move to federal court by and large. It used to be that trade secret litigation was predominantly in state court and the only matters that could get to federal court were either with diversity jurisdiction or if there was a companion federal claim. Now, a trade secret claim is a federal claim and it allows a plaintiff to bring that claim in federal court. So most trade secret cases now are brought in federal court. It provides a number of benefits. The courts have more resources between the judges and their law clerks to administer the cases and to write opinions on the matters that come before them on the motions and during trial. And the federal courts also provide better protection for enforcing judgments abroad.

So we've seen a significant spike in the filing of trade secret cases in the US federal courts. In fact, over the last two years, we've seen a 25% rise in filings. And why is this happening? It's for several reasons. First, there's actually more misappropriation going on. Why is that? Well, it's because information is digital now and the proliferation of data and digital information makes it far easier for employees to take information with them before leaving a company. But interestingly, the flip side of the coin is, technology now helps employers detect misappropriation better. So we have more companies learning that their employees are stealing trade secrets from them. So at Jones Day, we advise clients on the protection of trade secrets before there's a problem with any theft. So we will help clients develop a trade secret protection program and we can perform a trade secret audit for clients working with them to identify their trade secrets, catalog them, and make sure that they're locked down in appropriate ways.

Companies need to make choices about how much they're going to devote to the protection of trade secrets in their trade secret protection program. But the important thing is that they have a program and they make those choices. And of course, start with the crown jewels. Make sure that the most important trade secrets are identified and protected and locked down and guard against the theft of them. Every industry is prone to trade secret theft. Now, what we see, the majority of our cases are either in the technology area or in life sciences, but those are very broad categories. There's a lot of convergence between those as well. So we have medical devices, artificial intelligence, all kinds of industries across technology areas and scientific fields where we're working with clients on protecting their trade secrets. Criminal prosecutions are a real thing and they do lead to prison time for individual defendants and significant fines and penalties for corporations who are found to have misappropriated.

So while trade secret misappropriation occurs everywhere around the globe, the most common cross-border trade secret problems are between the US, California in particular, and China. We see a growing number of exfiltration of US trade secrets from throughout the US, but particularly California being taken to China. Jones Day is uniquely situated with five offices in California and multiple offices throughout China and greater China to handle these matters. And we've successfully handled numerous matters where they're cross border and were in court, both in the US and in another jurisdiction in Asia.