Navigating the New Frontier: The Rise of U.S. Trade Secret Litigation in a Globalized Economy
For many lawyers practicing outside the United States, intellectual property protection and risk are most often associated with patents, trademarks and copyrights. Trade secrets are frequently treated as the forgotten stepchild—associated with employment law and contracts rather than as an independent body of law. But since the passage of the Federal Defend Trade Secrets Act (DTSA) in 2016, trade secret issues and disputes have steadily increased, and are now increasingly impacting both foreign companies doing business in the U.S. and domestic companies doing business abroad.
Patent litigation has declined over the past decade, while trade secret case filings have grown significantly. Court decisions and administrative remedies have left patents more vulnerable to invalidation under §§ 101 and 112, and much of the juice has been squeezed from the fruit of massive patent litigation campaigns by non-practicing entities, sometimes referred to as “patent trolls.” These developments, coupled with uncertainty about whether patents can effectively cover emerging technologies such as artificial intelligence, have driven many companies and lawyers to increase their reliance on trade secret law.
The creation of a federal claim for trade secret misappropriation under the DTSA has reinforced this shift by introducing more predictability into a previously fragmented legal landscape. Within a year of its passage in 2016, trade secret case filings rose by 25%, and last year over 1,200 trade secret cases were filed in U.S. courts. The stakes are often high: juries have returned verdicts in the hundreds of millions and even billions of dollars—though some awards have been reduced or overturned on appeal. At the same time, patent cases now face greater procedural hurdles and damages seem to be shrinking, making trade secrets an increasingly important tool for protecting and enforcing critical intellectual property in the U.S. Many plaintiffs also prefer trade secret cases because there is often a bad-guy narrative that is more compelling to a jury than the relatively dry, technical issues of patent infringement and invalidity.
The U.S. Legal Framework and Reach
Trade secrets are protected under both federal and state law in the United States. Most states follow the Uniform Trade Secrets Act (UTSA), while the DTSA operates at the federal level. A single dispute may proceed under both regimes, which have overlapping but not identical provisions.
For example, some states such as California require the plaintiff to identify its trade secrets with particularity before it can take discovery from defendants, creating a hurdle where a plaintiff sees smoke, but cannot quite show a fire. Federal courts have wrestled with whether to adopt this requirement, with one Court of Appeals—the Ninth Circuit, which includes California—very recently deciding that the plaintiff-must-go-first requirement does not apply under the Federal DTSA. Quintara Biosciences, Inc. v. Rufeng Bitztehc, Inc., 149 F.4th 1081 (9th Cir. 2025). These differences require a trade secret practitioner to be familiar with both state and federal regimes.
The DTSA is particularly significant for foreign businesses as it applies extraterritorially where conduct abroad has an impact in the United States. Limited activity, such as presenting at U.S. trade shows, partnering with U.S. firms, or hiring former U.S.-based employees may be enough to support jurisdiction over a foreign corporation under the DTSA. The DTSA also allows extraordinary remedies such as ex parte seizure orders, and provides access to the intrusive discovery tools of U.S. litigation that do not exist in most foreign jurisdictions.
The case of Motorola Solutions, Inc. v. Hytera Communications Corp., 108 F.4th 458 (7th Cir. 2024) illustrates the reach of the DTSA. Although much of the alleged misappropriation by Hytera occurred abroad—including hiring away Motorola engineers and developing infringing products based on their knowledge—the court held that Hytera’s high-level use of the trade secrets in U.S. trade shows was sufficient to establish jurisdiction. The court also concluded that the scope of the DTSA does not limit damages to derive from U.S. revenues, and allowed Motorola to seek damages based on Hytera’s worldwide sales.
Clients should be proactively advised on this expansion of the reach of U.S. trade secret law.
Trade Secrets and Artificial Intelligence
While the big AI copyright infringement cases have garnered most of the headlines in the U.S. in recent months, behind the scenes, artificial intelligence has also become a focal point for trade secret law. Because of human inventorship, eligibility and description requirements, patent protection may be unavailable, and trade secret law may provide the best protection for key AI assets. Algorithms, data compilations and AI model architectures may qualify as trade secrets if they meet the legal definition, which requires both secrecy—“reasonable measures to keep such information secret”—and that the information derives independent value from its secrecy. But trade secret owners must describe these with sufficient particularity in any litigation, and so must be familiar with both substantive and procedural aspects of trade secret cases, such as the use of protective orders to prevent public disclosure of these trade secrets.
Relying on trade secrets to protect AI-related innovations also presents unique risks. Competitors may misappropriate secrets through scraping, model querying, or even “prompt injection” attacks that coax proprietary information from systems. The opacity of advanced AI—the so-called “black box” problem—further complicates proof of misappropriation. And unlike patents, trade secret law cannot protect against “honest” reverse engineering or independent development. Further, business collaborations involving AI provide unique challenges to preserving trade secret protection because of the potential loss of secrecy. For foreign companies operating in the U.S. or with U.S. businesses, structuring agreements and compliance policies with these risks in mind is crucial.
U.S. Litigation
Like most types of U.S. litigation, trade secret cases expose clients to the distinctive features of U.S. litigation, including unpredictable juries that may impose massive damage awards and extensive discovery. U.S. discovery includes depositions, interrogatories, and extensive e-discovery. For businesses accustomed to civil law systems with limited disclosure, this can be intrusive and burdensome. And combined with extensive motion practice and expert witness discovery, these procedures can drive litigation costs to reach millions of dollars, even before trial.
Some clients also fail to appreciate the implications of the presumption in the U.S. that litigation should be public. While protective orders may prevent a business’s most sensitive information from being part of the public record, this presumption substantially increases the risk that a client’s trade secrets may become public. For this reason, clients should consider dispute resolution provisions requiring private arbitration in contracts that implicate their trade secrets, but consider a carve-out to permit emergency relief when necessary to “stop the bleeding” when trade secrets are taken.
Strategies and Preventive Measures
Given these challenges and the changing legal landscape, education and preparation are critical. Non-U.S. lawyers should become familiar with U.S. risks and standards related to trade secret law. Employment contracts, nondisclosure agreements, licenses, and many other commercial contracts touching the U.S. should be drafted with this law in mind. Internally, companies should implement and document confidentiality protocols, restrict access to sensitive information, and conduct thorough exit interviews with employees, with an eye towards protecting trade secrets. These measures not only reduce the risk of misappropriation but also help establish that the company took “reasonable measures” to protect its secrets—an essential requirement in U.S. courts.
When the possibility of litigation does arise, engaging experienced U.S. co-counsel early is vital to avoiding litigation, if possible, pursuing litigation, if necessary, and navigating U.S. trade secret litigation once the die is cast.
Conclusion
U.S. trade secret law and litigation are expanding, along with the reach of the DTSA, as patent protection may be shrinking. By understanding the distinctive features and changing landscape of U.S. law and helping their clients tailor their strategies and procedures strategies accordingly, foreign practitioners can help clients minimize risks while maximizing the benefits of trade secret protection in one of the world’s most dynamic and high-stakes legal environments.
