Trade Secrets Litigation Increasing In Digital Age

Trade secrets claims are an increasingly common avenue companies are using to safeguard their intellectual property rights.

Trade secrets litigation has grown as the digital age has made sharing information quick and easy. In addition, the Defend Trade Secrets Act, passed in 2016, raised trade secrets from simply a state law claim to a federal one. 

“Intellectual property holders are increasingly aware they have this tool in their arsenal,” Michael W. De Vries, with Kirkland & Ellis LLP in Los Angeles, told Bloomberg Law. De Vries has substantial experience representing clients in complex intellectual property disputes including patent litigation and litigation involving misappropriation of trade secrets.

Life sciences and health care companies are among the industry sectors taking advantage of the trade secrets tool. Since the DTSA’s enactment a little more than two years ago, more than 70 cases out of the one thousand cases filed involved companies in the life sciences/health care sector, according to Bloomberg Law data.

Some of the more well-known companies which have brought such cases are medical device giants Becton Dickinson & Co., Stryker Corp. and Fresenius Kabi USA and drug companies AbbVie Inc., Novartis Pharmaceuticals Corp., Par Pharmaceutical Inc., Shire Pharmaceuticals LLC and Teva Pharmaceuticals USA Inc.

“With a good economy, workers have more mobility and people are taking things with them,” he said. “Companies are being more aggressive about protecting their trade secrets,” C. Bryan Wilson of Williams & Connolly LLP, said. 

One of the main factors behind the growth in trade-secret litigation stems from the enactment in 2016 of the federal “Defend Trade Secrets Act.” The DTSA created a private right of action in federal court for those who allege their trade secrets were misappropriated. Before the DTSA, such claims had to be brought in state court.

“As a consequence, we’ve seen more cases that involve both trade secrets and patent protection,” De Vries said. “I view them as potentially complementary enforcement mechanisms.”

Read my article on our enhanced news site.

Stay on top of new developments in health law and regulation, and learn more, by signing up for a free trial to Bloomberg Law.