Regulatory: Think twice before asserting a trade secrets claim

When a plaintiff asserts a trade secrets claim, it is escalating the risk for both sides of the suit.

A trade secrets claim can dramatically escalate the defendant’s litigation exposure. The Uniform Trade Secrets Act provides a generous measure of damages, and if the defendant is found liable for willful misappropriation, then the exposure increases to include both fee shifting and multiple damages. Thus, it is not surprising that many plaintiffs consider a trade secrets claim an essential part of a strong offensive litigation strategy.

However, in-house and retained counsel should also consider carefully the risks of a trade secrets claim for a plaintiff. Asserting a claim under the Uniform Trade Secrets Act can backfire on the plaintiff and tip the balance of litigation leverage against the plaintiff and in the defendant’s favor. The risk that a trade secrets defendant will use the claim to turn the tables on the plaintiff is often greatest when the plaintiff has pleaded the claim without adequate pre-suit investigation and analysis or has added the claim to the complaint as an afterthought simply to enhance the remedies that the plaintiff can include in its prayer for relief.


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Matthew Prewitt

Matthew Prewitt is a partner in the Chicago office of Schiff Hardin, where he concentrates in complex litigation and also co-chairs the firm's Trade Secrets Client Services...

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