Intellectual property can become a valuable asset, especially during an economic downturn. That may be why new patent lawsuits have increased over 15% in recent months. Trade secret litigation is likely to follow—which may be encouraged by the overwhelming availability of third-party litigation funding.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Intellectual property can become a valuable asset, especially during an economic downturn. That may be why new patent lawsuits have increased over 15% in recent months. Trade secret litigation is likely to follow—which may be encouraged by the overwhelming availability of third-party litigation funding.
Therium details that the five most prominent patent litigation plaintiffs in 2020 are non-practicing. Many take this to mean that these companies are using their patent portfolios to finance their claims. When budgets are tight, patent and other types of IP litigation may be pursued, and meritorious claims that might otherwise be discarded can in fact see the light of day.
Experts suggest that several specific factors are driving the increase in trade secret actions. The Defend Trade Secrets Act, signed by President Obama in 2016, makes trade secret law more favorable to plaintiffs. The definition of ‘trade secrets’ has become broader in recent years, and some sizable awards have been issued as a result. Companies are also avoiding the patent process in favor of listing innovations as trade secrets instead.
The shift to work-from-home and widespread employee furloughs may cause an increase in trade secret cases—simply because they make trade secret violations more likely. People who are out of work and desperate may be more likely to use an employer’s trade secrets for their own gain. Remote working can also lead to unsecure video chats, while important documents being left unsecured in communal work or living spaces, and a lack of proper encryption, can all lead to a loss of IP. Security overall is down during COVID, as the emphasis is placed on the safety of workers and slowing/negating virus transmission.
Anyone pursuing a case involving trade secrets should move quickly. Urgency is of the essence, especially since the loss of IP can be lead to swift and crippling impacts. Trade secret litigation can lead to monetary damages or injunctive relief, either of which would be welcome during these uncertain times.
