Trade Secrets: What You Need to Know; The National Law Review, December 12, 2019

Michael J. Kasdan, Kevin M. Smith, Benjamin Daniels,The National Law Review; Trade Secrets: What You Need to Know

"Coca-Cola’s secret formula. McDonalds’ special sauce. Google’s search algorithm. Bumble’s dating software. This proprietary information is vital to these companies’ survival, and among their most valuable corporate assets.  Each is protected as a trade secret.  While patent law offers strong protections for proprietary inventions, obtaining a patent requires establishing that the invention is novel, non-obvious, and patent-eligible. It also requires disclosure of the invention itself in the patent application. And while patents last for twenty years, they do not last forever.  By contrast, trade secrecy provides another avenue to protecting a company’s IP that allows the inventions to be kept secret and potentially protected forever.

In the last few years, businesses, governments, and law enforcement agencies have increased their focus on trade secrets as an effective way of protecting a company’s “secret sauce.” This trend accelerated with the passage of the federal Defend Trade Secrets Act of 2016 (“DTSA”), and trade secret litigation has moved toward the forefront of intellectual property law. As described in recent press, such as Trade Secrets Litigation: The No-Longer-Forgotten Part of the Tech IP Arsenal (Corporate Counsel, Warren, Z., July 28, 2017), “[t]hese days, many of the big IP litigation battles involving companies like Facebook…, Uber … and Epic … have nothing to do with patents, trademarks or copyrights at all. Instead, it's all about the perhaps forgotten part of IP: trade secrets…With massive jury rewards and the DTSA encouraging federal litigation, trade secrets litigation is seeing a surge in the tech industry.” This reporting is consistent with reported industry data. According to a 2016 Report by Willamette Management Associates, the number of federal trade secret cases increased by 14 percent for each year from 2001 to 2012. According to a 2018 Lex Machina Report, this increased even more dramatically with the passage of the DTSA. 2016 saw 860 U.S. trade secret cases filed, but this rose to 1,134 cases filed in 2017. Through the first half of 2018, 581 trade secret cases had been filed, putting the number of trade secret cases filed in 2018 on pace to slightly exceed 2017."