Wednesday, February 16, 2011, 2/16/2011 09:36:00 AM

David Almeling's O'Melveny Team Does It Again - New Law Review Article on State-Filed Trade Secrets Litigation

By Todd

We've told you before - we really like David Almeling at the San Francisco office of O'Melveny & Myers. He and a team of his colleagues wrote an informative and interesting piece in the March 2010 Gonzaga Law Review called "A Statistical Analysis of Trade Secret Litigation in Federal Courts." They studied virtually every reported federal case that involved trade secret claims and culled data regarding those cases and published them. Great stuff - and we told you about that article back here:

Well - the trade secret freakazoid (that's you, David) is at it again, folks. Linked above is the follow-up Gonzaga Law Review article from the November 2010 edition that involves their analysis of STATE filed cases. Here are some of their key findings:

(1) In more than 90% of trade secret cases in both state and federal courts, the alleged misappropriator was either an employee or business partner of the trade secret owner.

(2) Just five states account for about half of all trade secret litigation in state appellate courts. California leads the pack (16% of cases), followed by Texas (11%), Ohio (10%), New York (6%), and Georgia (6%).

(3) State appellate courts affirmed 68% of trade secret decisions and reversed 30% of them.
State appellate courts favor defendants. Alleged misappropriators (the defendants) prevailed in 57% of cases and trade secret owners (the plaintiffs) prevailed in 41%.

(4) State courts appear to be a tougher venue for trade secret owners who are suing business partners than for those suing employees. Trade secret owners won 42% of the time on appeal when the owner sued an employee, but only 34% when the owner sued a business partner.

(5) For decades following its 1939 publication, the Restatement (First) of Torts “was almost universally cited by state courts, and in effect became the bedrock of modern trade secret law.” James Pooley, Trade Secrets § 2.02[1] (2010). Those days are over. Only 5% of the cases in the state study cited the Restatement.

(6) Unlike federal courts, which cite persuasive authority in more than a quarter of cases, state courts cited persuasive authority in only 7% of cases.

(7) In contrast to the exponential growth of trade secret litigation in federal courts, trade secret litigation in state appellate courts is increasing, but only in a linear pattern at a modest pace.
Of all the reasonable measures trade secret owners took, only two statistically predicted that the court would find that this element was satisfied: confidentiality agreements with employees and confidentiality agreements with third parties.
Folks, David Almeling's team has done the trade secret bar and legal topic a great service here. They are revealing for us what really happens in the reported cases. This is valuable, informative stuff and we thank David and his team for publishing it and permitting us to link you to their work.


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