Employment law firm Littler Mendelson dominates trade secret filings
Trade secret case filings remained stable last year, after a jump in filings following the implementation of the Defend Trade Secrets Act (DTSA), according to a newly-released report from Lex Machina.
The most active law firms tend to be firms known for their employment practices. However, only 0.4% of trade secret cases also involve employment claims such as discrimination and harassment, Lex Machina’s report revealed, released today, April 21.
The report concluded that claimants were tending to file under the DTSA and will likely file proportionately more trade secret cases with DTSA claims in the coming years.
While courts awarded damages in fewer cases in 2019 than the year prior, a larger amount of money was awarded overall. Overall, in 2019, damages were awarded in 15 cases to a total of $105 million. In 2018, damages were awarded in 19 cases, totalling nearly $72 million.
The largest damages award was in Liqwd, Inc v L'Oréal USA for nearly $50 million. This was a mixed damages award for both trade secret violation and breach of contract.
Littler Mendelson dominates
Employment law firm Littler Mendelson was the most active plaintiffs’ firm of the decade with 239 cases. Ogletree Deakins Nash Smoak & Stewart with 192 cases, and Seyfarth Shaw with 181 cases took the second and third spots.
“Because trade secret cases often involve an employee who left the company, it makes sense that the company would then call its employment firm, which may have written the company’s employment agreements or handbook,” added the report.
In 2019, Fisher & Phillips was the top plaintiffs’ law firm with 33 cases, 30 of which had DTSA claims.
On the other side, similar names are included on the top defendants’ list but with smaller case numbers. Ogletree Deakins Nash Smoak & Stewart had 122 cases, Jackson Lewis had 112 cases, and Littler Mendelson had 100 cases.
Gordon Rees Scully Mansukhani was the top defendants’ law firm in 2019 with 14 cases in 12 districts.
Insurance and financial services ‘most active’
In 2019, DiscoverOrg Data—which offers sales intelligence software and sued parties who gained unauthorised access to its database—was the most active plaintiff.
Over the past decade, many insurance and financial services companies were the most active plaintiffs. According to Lex Machina, these companies often use a licensing or franchising system, then they sue for trade secret misappropriation when owners fail to pay the requisite fees or move to another company without returning the materials.
Between 2010 and 2019, Allstate Insurance Company was the most active plaintiff, with 51 filings in 31 districts.
Location, location, location
The Central District of California saw the most trade secret cases in the decade with 729 cases, amounting to just over 6% of all trade secret cases during this time.
“While the top districts in 2019 mostly mirror the decade overall, the Southern District of Texas jumped from number nine in the decade to number four in 2019. The Northern District of Georgia was 10th in the decade, but it dropped off the list in 2019 and was replaced by the Northern District of Texas and the District of Colorado,” added the report.
As the case filings are spread throughout the districts, they are also spread out among judges, with no judge seeing more than 1% of case filings in the decade.
Judge Michael Barrett, who is based in the Southern District of Ohio, presided over the most trade secret cases in the decade with 68 cases (10 of his cases were filed by Total Quality Logistics, a freight brokerage service).
Last year, three judges saw 1% or more of all trade secret filings: Judge Christina Snyder of the Central District of California; Judge Robert Lee Pitman of the Western District of Texas; and Judge Amos Louis Mazzant III of the Eastern District of Texas.
Hitting milestones
In 2019, cases took longer to reach all three milestones (summary judgment, trial and termination) than in the decade overall. Significantly, the median time to trial was 79 days shorter in the decade than in 2019.
Lex Machina added: “The other two events took just about the same amount of time across 2019 and the decade. In both time periods, the median time to summary judgment in trade secret cases was over 1.5 years, whereas the median time to termination was about nine months.”
And, over the past decade, more than 1,000 cases had permanent injunctions granted by consent.
In the decade overall, 295 cases resolved at trial with claimant wins in 230 cases. Summary judgments were more even as claimants won in 148 cases that were resolved at summary judgment versus 183 cases where claim defendants won.
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