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Trade secrets litigation on the rise with new federal law

Before the signing of the Defend Trade Secrets Act in 2016, state courts in California handled litigation for violations of trade secrets. Defenders of intellectual property can now bring these cases before federal courts when they want to charge another party with misappropriation of trade secrets.

Federal protection has also raised awareness among intellectual property rights holders about their options for defending against infringement. Companies involved in life sciences and health care frequently have a substantial stake in protecting their trade secrets. These industries have welcomed the ability to assert their rights in federal court. Since the DTSA became effective, more than 70 cases out of 1,000 lawsuits arose from the life sciences and health care sectors, especially from corporations that make drugs and medical devices.

Digital communications and employee mobility in a low unemployment environment have also contributed to an increase in trade secrets litigation. People can easily transfer files containing trade secrets and patent details to outside parties. Employers have become more sensitive to the misappropriation of intellectual property when employees leave a company, and they are launching more legal actions to prevent high-value assets from falling into competitors' hands.

Confidentiality agreements executed between employers and employees often represent the first line of defense for companies that need to protect intellectual property. A person who suspects that someone violated a confidentiality or licensing agreement could reach out to an attorney for help with business litigation. Legal counsel could study the agreements and identify where the other party allegedly violated the terms. After filing court papers, an attorney could meet with the opposing party's counsel and seek a negotiated settlement. If the financial damages are considerable, the lawyer might recommend taking the case to trial to pursue monetary losses.

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