Friday, January 26, 2018

Trade Secret Litigation Statistics Revisited

Thank God for firms like Skadden Arps.

Unlike some terrible "national" law firms that attempt to blog and end up shoveling out worthless drivel, Skadden regularly publishes great content (not to mention high-quality lawyering).

This January 23 post is no different and provides very helpful, practical information for trade secrets attorneys and litigants. Though the article is titled "The Rise of Trade Secret Litigation in the Digital Age," some of its most interesting tidbits focus on statistical measures.

For instance, Skadden notes the following:

  • Trade secrets cases increased 14 percent per year from 2001 to 2012. This runs against the grain, as civil litigation statistics confirm a steady downward trend of filings.
  • Trade secrets holders have a recent success rate of 69 percent at trial.
  • Trade secrets cases are dismissed at a lower rate (22 percent) than other types of complex civil litigation actions.
  • In recent trade secrets cases, only 2 percent resulted in preliminary injunctions -  a surprising trend, given that historically the rate is 10 percent.
Data on litigation outcomes is not easy to come by. Federal court statistics generally can present a skewed picture, given the high percentage of prisoner 1983 actions. So data aggregated on a macro basis is not reflective of all litigation. A high percentage of cases settle very early, so we don't know how meritorious all filings are.

But generally, the public literature shows a few general points to keep in mind, which dovetail nicely with what Skadden summarized:

  • Contract claims usually fare better than tort claims. Trade secrets actions are more akin to tort suits.
  • Federal court jury verdicts tend to be a bit higher.
  • Tort actions involving products liability and medical malpractice fare worse than other civil actions, somewhat skewing the tort number downward. This is even more pronounced in federal court.
  • In trade secrets cases where the employee was the alleged misappropriating party, the plaintiff was nearly twice as likely to obtain a preliminary injunction as when the claimed wrongdoer was a former business partner.
The bible, if you will, on statistical analysis of trade secret litigation comes from David Almeling, and his article is available here.

Generally, my rules of thumb are as follows. And bear in mind that these are grounded less in statistics and more in anecdotal experience and general kibitzing with other nerds:

  • A court will dismiss a trade secrets case on the pleadings less than 10 percent of the time (assuming no abject incompetence on the plaintiff's part).
  • Preliminary injunctions are successful at a rate of 20 and 30 percent.
  • Of those, at least 75 percent are partially successful and deny the plaintiff part of what it seeks.
  • Summary judgments motions are 50/50 propositions at best, but in trade secrets cases the legal standards push that down closer to 40 percent. Non-compete claims are more amenable to summary judgments.
  • At trial, plaintiffs in commercial actions win some material claim at a 60 to 65 percent clip.
  • In 85 percent of jury cases, a trade secrets lawyer will put at least two jurors asleep.
  • In 100 percent of cases, judges beg the parties to try and settle.

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