Wednesday, March 24, 2010, 3/24/2010 03:23:00 PM

O'Melveny's David Almeling and Colleagues Publish New Article Analyzing Federal Trade Secret Litigation

By Todd

There is an attorney at the esteemed O'Melveny & Myers law firm in San Francisco who is a friend of this blog. His name is David Almeling and you can find his impressive bio linked here: We like this guy. We first started communicating with Mr. Almeling in connection with a law review article he published in the Fordham Intellectual Property, Media & Entertainment Law Journal titled "Four Reasons to Enact a Federal Trade Secrets Act." The article made some interesting arguments regarding the rationales for creating a uniform federal law respecting trade secrets.

Well, folks, David Almeling is at it again - and this time he involved his friends and colleagues. They've published a new article titled "A Statistical Analysis of Trade Secret Litigation in Federal Courts" and it was published last week in the Gonzaga Law Review. We're just starting to digest the article but David and four colleagues read 1,500 trade secret cases from 1950 through 2008, and then they coded 394 of those cases for 28 criteria. David and his team then worked with statisticians to analyze and present the data. We will publish a link to this article once one is available.

Some of their article's findings include:

(a) Trade secret litigation in federal courts is growing exponentially, doubling every decade or so.
(b) In over 85% of trade secret cases, the alleged misappropriator was someone the trade secret owner knew — either an employee or a business partner.
(c) Trade secret owners were twice as likely to prevail on a motion for preliminary relief when they sued employees than when they sued business partners.
(d) The top venues for trade secret cases were the N.D. Ill. (Chicago), the N.D. Cal. (San Francisco, Oakland, and San Jose), the S.D.N.Y. (much of New York City), and the E.D. Pa. (Philadelphia).
(e) Courts applied the substantive laws of Illinois, California, or New York in almost 30% of trade secret cases.
(f) Despite the burdens faced by the moving party, alleged misappropriators prevailed at summary judgment more than half the time.
(g) As one element of its prima facie case, a trade secret owner must establish that it took reasonable measures to protect its purported trade secrets. Two measures — confidentiality agreements with employees and third parties — were significantly associated with a finding that this element was satisfied.
(h) In over 25% of trade secret cases, the courts cited to and justified their decisions based at least in part on authority from outside their jurisdiction.
This is novel and interesting research. We'd suggest to David and his friends at O'Melveny & Meyers that they know full well why California proves such a fertile state for trade secrets litigation - not only are that state's high-tech companies generating relatively large numbers of trade secrets in their day-to-day operations, but that state's statutory prohibitions on noncompete agreements and their weak commitment to tort theories inhibiting unfair competition force oh-so-many cases into a trade secret posture. Well, that's what we think. Sorry for the editorial interruption - but this is, after all, a blog. We can do that.
The community of attorneys and others who continue to study the evolution of trade secrets law owe David Almeling and Darin Snyder and Michael Sapoznikow and Whitney McCollum and Jill Weader a debt of gratitude. This is a unique article and it reports some interesting findings. While trade secret law is a creature of state law and this team's article and research focuses on cases litigated in federal courts, this is still important work. We think it somehat likely that David Almeling (this guy had a full head of hair before he started writing about trade secrets matters) will drink too much Starbucks some day and decide to do the analysis of the reported state cases - but let's applaud this current work and carefully study this review and analysis. More on this as we digest the article.


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