The now five-year-old Defend Trade Secrets Act has had a big impact, I reported in a Texas Lawyer commentary “Tracking the Impact of the Defend Trade Secrets Act After Five Years.”
“Trade secret filings were on the rise even before the DTSA and have only increased since. Texas is no exception: three judicial districts in Texas—the Eastern, Northern and Southern Districts—were among the top five in the United States for trade secret litigation filings, according to an analysis by the global advisory firm Stout. Meanwhile, workplace trends affected by the pandemic shutdown are expected to keep trade secret litigation dockets busy going forward,” I wrote.
Because the notion lifetime employment is now a thing of the past, and workers increasingly view themselves as free agents with loyalty first and foremost to themselves, an increase in these kinds of cases was coming even before the new law. The COVID-19 shutdown magnified this trend.
President Joe Biden favors limiting the use of covenants not to compete by businesses that use these agreements as a blunt tool for protecting proprietary confidential information and several states have limited the ability to enforce noncompete agreements. If this happens on a national level too, I expect businesses will turn to trade secret theft litigation even more to protect confidential information.