I recently had the opportunity to serve as lead counsel for the plaintiff in what was—as far as I know—the largest trade secrets case to ever go to trial in Oregon. Since it’s rare for a major trade secrets case to go all the way through trial these days, I want to share five lessons that I picked up along the way:
1. The most important “element” of the trade secrets claim is the human story;
2. Don’t fall too in love with the legal arguments supporting your defenses;
3. Bring in—and budget for—trial consultants early in the case;
4. With careful planning, you can protect your trade secrets from exposure at trial; and
5. Trade secret law is sometimes the most practical way to protect your intellectual property.
Lesson 1: The most important “element” of the trade secrets claim is the human story.
Your company’s innovations may be a source of pride and fascination to company owners, executives, and employees. That can be a helpful driver of internal culture and ongoing creativity. But too often, it leads litigants and their lawyers to place so much focus on the technical aspects of the trade secrets that they lose sight of what outside observers—i.e., jurors—really care about.
The truth is that the technology in a trade secrets case usually isn’t all that interesting to your average juror (or judge). To them, it’s just another product. What most jurors really care about is how the technology has affected the people in the case. Who are the people behind the product? How did they come up with this innovative technology? What did they sacrifice to come up with it? Why does it matter? How have they been hurt? Those questions can be answered through basic storytelling methods that help the jury identify with the protagonists of the story—the people in your company.
A couple of months after my trade secrets trial, a group of jurors tracked us down and wanted to talk about the case. During the meeting, we learned that the jurors still got together every few weeks to talk about the case. The jury foreperson said, “I’m so angry at you. I came into the case viewing it as just a dumb business dispute. And then you made me care. I can’t stop thinking about all of this.”
The key to “making the jurors care” wasn’t the detailed review of the technology at the trial. To some degree, the jurors just viewed that as a necessary evil. Instead, the jurors got to know and love the people behind the technology and identified with the story that they told. They saw how important this technology was to them, what they had gone through to build it, and how the case events affected them.
Lesson 2: Don’t fall too in love with the legal arguments supporting your defenses.
The principle of telling a “human story” applies to both the plaintiff and defense sides of a trade secrets case.
The typical defense playbook is to attack (1) whether the information/technology at issue qualifies as a trade secret and (2) whether the plaintiff adequately protected its trade secrets. Those defenses go right to the heart of a trade secret claim and provide tons of interesting fodder for lawyers and experts to work with. But they can be hard to win on summary judgment and, at trial, the jurors may be prone to view these defenses as technical excuses. To them, it can sound a lot like, “Well, even if we stole it, the plaintiff installed the wrong burglar alarm!”
That perception can be changed by supporting the more “technical” defenses with an honest, relatable story about real human beings. For example, consider a case in which there is credible evidence that the defendant used some of the plaintiff’s ingredients in her product, but there are some questions about the secrecy of those ingredients. To avoid the “burglar alarm” issue above, the defense narrative might focus on the personal sacrifices the defendant made to create her product, and how she thought there was nothing wrong with using some of the ingredients found in other products for inspiration. Why? Those ingredients can be found in 10 other competitive products, and the plaintiff didn’t do anything special to signal that its information was a secret. The defendant had no reason to think there was anything wrong with using the plaintiff’s information as another data point in her research. And now she’s being called a “thief.”
That story shows grit, common sense, and a bit of vulnerability—all things that people can relate to. Your goal as the defendant is usually to never have to tell that story at a trial. But your opponent will figure out whether you’ve come up with a viable story to support your defenses or if you’re just throwing out technical excuses. And that, in turn, will impact the settlement value of the case.
Lesson 3: Bring in—and budget for—trial consultants early in the case.
Clients (and sometimes lawyers) often view the use of trial consultants as a luxury that should wait until close to trial. That’s a mistake in many cases, especially in a complex trade secrets case.
In a trade secrets case, you’re often up against—among other things—two big problems: (1) the jury won’t understand the technology underlying the trade secrets; and (2) as mentioned above, they don’t really care much about it. Good trial consultants are up to speed on the latest jury research and can help you identify themes and storylines that will “make them care.”
Those themes then help determine what you need in discovery to support your story. If, for example, you’ve identified the themes that are most likely to resonate with jurors ahead of depositions, then you can gear questions toward securing testimony that supports those themes. Once that testimony is “in the can,” it will be hard for your opponent to maneuver away from them at trial. By the same token, your own witnesses can weave those themes into their deposition testimony, ensuring consistency later at trial.
The cost for theme development with a trial consultant is typically quite low. The bigger expense, which can and should wait until closer to trial, is conducting mock trials. You should, however, budget for it early. Mock trials will allow you to see how well jurors will understand the trade secrets, how they view your themes and evidence, and the likely range of a trial verdict. You can then adjust your case presentation as needed for trial and you receive important data for assessing the settlement value of the case.
Lesson 4: With careful planning, you can protect your trade secrets from exposure at trial.
One of the biggest problems with trade secret litigation is that it tends to publicly expose the plaintiff’s—and sometimes the defendant’s—trade secrets. To litigate and ultimately decide the claim, the parties, the court, and the jury will need access to the information that the plaintiff considers to be a trade secret. That understandably causes heartburn for clients.
The good news is that stipulated protective orders can be used very effectively during discovery to shield information from public disclosure. In many cases those orders allow only the attorneys and experts to see the protected information. And in my experience, lawyers and experts tend to take those obligations seriously.
Things change when you get to trial. The protective order usually won’t apply to evidence at trial, and each trial exhibit will have to be considered individually to decide if it should be admitted under seal. The judge will need to deal with the tension between the need for—or in Oregon state court, the constitutional right to—open courts and your legitimate concerns about confidentiality.
In a case with thousands of exhibits, the parties need to make difficult decisions about what to protect at trial. By working together to identify a range of documents that both sides agree can be protected, you increase your odds of the judge shielding the information. And once the documents are deemed to be confidential for trial, many courts will clear the courtroom when they are presented to the jury.
The bottom line is that there are mechanisms to protect trade secret information, even at trial, but it requires very careful analysis and planning to take advantage of them.
Lesson 5: Trade secret law is sometimes the most practical way to protect your intellectual property.
Conventional wisdom typically dictates that a company secure patents on as many of its innovations as it can. While patents increase the value of a company’s IP portfolio and can deter infringers, the issuance of a patent makes the technology publicly available. And the reality is that many startups and mid-size companies don’t have the resources to pursue patent litigation against a savvy or well-funded infringer.
Patent litigation is extremely expensive—perhaps the most expensive type of litigation in the U.S. legal system. In one patent infringement case I worked on a few years ago, the judge looked around at the armies of lawyers in the courtroom and commented, “This truly is the sport of kings.” Don’t get me wrong, trade secret claims can be expensive too. But the absence of the claim construction process and the highly technical application of patents is a cost saver.
When looking at an IP strategy, closely examine whether the company really has the ability to pursue patent litigation. If not, then consider whether the company’s technology can be kept secret through trade secret law and non-disclosure agreements.
This will, of course, involve a host of issues to examine, including the likelihood of patent preemption and the company’s ability to keep its information under lock and key. But it may just end up being what allows the company to survive and ultimately thrive.
1 If you’re not familiar with trial consultants, think of an ethical version of Gene Hackman’s character in the 2003 film Runaway Jury or Dr. Jason Bull in the TV series Bull.
2 If you’re the defendant in the case, you’ll want to be sure this is done discreetly and not in a way that suggests to jurors that the plaintiff’s information is so secret that the room needs to be cleared. Most judges are conscious of this problem, but setting parameters on the issue before trial is still important.