Trade secret litigation surged to historic levels in 2025, with more than 1,500 federal cases filed last year, according to recent data from Lex Machina reported in Law360. 

What federal law protects trade secrets?

The Defend Trade Secrets Act (DTSA) was enacted in 2016 and states that trade secrets include confidential and proprietary information a business has taken steps to keep secret. Such information includes, but is not limited to, formulas, programs, processes, or compilations of data that derive independent economic value from not being generally known. The DTSA provides protection to employers when a current or former employee improperly takes and/or discloses the information. 

What about state laws protecting trade secrets?

While the DTSA is a federal law, many states (e.g., Ohio, California, Texas, etc.) have their own similar laws to protect trade secrets.  

Why are trade secret claims on the rise?

The DTSA and state equivalent trade secret claims are likely on the rise due to more states scrutinizing restrictive covenants. For example, California and Minnesota have laws prohibiting noncompete agreements. Other states, like Wyoming and Washington, are following suit and beginning to restrict them more. 

Additionally, some states scrutinize one-sided, fee-shifting provisions in employment agreements, but the DTSA and many state equivalent laws provide for attorneys' fees if an employer is the prevailing party.  While there may be many reasons for filing a trade secrets claim, the above stick out.

What is the advantage of trade secret laws?

If an employer does not have employees sign an agreement with restrictive covenants (e.g., noncompete, nonsolicit, or confidentiality provisions) — or restrictive covenants are either not enforceable or difficult to enforce in a state — the DTSA and state laws protect those employers should a current or former employee abscond with confidential and proprietary information.

How does the DTSA (and state laws) protect trade secrets?

Employers filing a trade secrets claim against a current or former employee typically seek injunctive and monetary relief. Injunctions bar the current or former employee from using and/or disclosing the information, while monetary damages are usually in the form of lost profits. Monetary damages are doubled if the employee acted willfully or maliciously.

What should employers do to protect trade secrets?

Employers can take steps to keep confidential and proprietary information secret by implementing protective measures, such as keeping information in password-protected systems, implementing policies related to the protection of information, and having employees sign agreements with confidentiality clauses.