Statistical analysis of trade secret case trends

Economists and statisticians are most often involved in business damages cases involving trade secrets in the capacity of expert witnesses who provide analyses of economic damages in the form of lost profits. The paper, ‘A Statistical Analysis of Trade Secret Litigation in State Courts’ (2011), is the product of a different kind of relationship between statistics and trade secret cases.

The article provides a statistical analysis of litigation involving trade secrets in state courts, and is co-authored by David Almeling, Darin Snyder, Michael Sapoznikow, Whitney McCollum and Jill Weader. The researchers analyzed 2,077 state appellate court decisions, of which 358 met their criteria as a ‘trade secret case’.

The analysis yielded a number of intriguing insights. In both trial and appellate court, the alleged misappropriators won more often than the owners, approximately 57% and 41% respectively. Almost all of the cases involve internal business trade secrets and technical trade secrets. Ninety-three percent of trade secret cases involve an alleged misappropriator who was an employee or business partner.

The authors note that trade secret cases in federal courts doubled between 1988 and 1995, doubled again from 1995 to 2004, and is projected to double once again before 2017. The rate of increase in state courts is more modest, but still growing. The authors suggest that more research be done to analyze the results of the litigation, including the amount of damages awarded and the win-loss rate in jury and bench trials. You can read the full article here.