Imagine That IP Law Blog

As always, the intellectual property (IP) landscape is changing and IP strategy is evolving with it.

For years, patents were often considered the primary tool for protecting a company’s innovations. Patents offer relatively straightforward legal rights, with a defined path to enforceability and corresponding deterrent value. On the non-legal side, they also provide significant business advantages.

From a purely business perspective, patents offer significant practical benefits. They offer a clear legal path to acquisition enforceability with corresponding deterrent value. Companies, investors, and lenders alike recognize patents as tangible assets that boost business value, generate licensing revenue, and can even serve as collateral in financing transactions. Patents also serve as powerful tools for competitive differentiation and deterrence, making competitors think twice before copying or pursuing their own patent claims.  In addition, they can provide companies with a seat at the table in certain industries where standard-setting bodies can offer influence over future technologies that is as valuable as exclusivity itself.

The Practical Appeal of Trade Secrets
While patents carry many important legal and business advantages,, more companies are now turning to trade secrets to protect their most valuable innovations. The reasons for this vary.   Many companies perceive today’s patent environment as less favorable than in the past. The perceived value and predictability of patents have been somewhat affected by shifting judicial standards, the rise of inter partes review (IPR) proceedings at the USPTO, and the costs associated with obtaining and defending them. Although there are signs that the pendulum may be swinging back toward a more favorable environment for patent owners, it is too early to know how that may develop or for how long.   However, that could be counterbalanced by a recent report in the Wall Street Journal that the Trump administration is considering proposals to charge patent holders 1% to 5% of their patents’ value to maintain the patent after grant.

In addition, companies are increasingly drawn to trade secrets for purely practical reasons.   Not all innovations qualify for patent protection, particularly business methods and certain software. Likewise, in fast-moving industries such as AI, software, and biotech, companies often find that secrecy is a more effective way to meet their business objectives than the sometimes-lengthy patent process. For such assets, secrecy may be the only practical path of protection. 

Finally, the value of trade secrets as an IP asset has also increased since the passage of the Defend Trade Secrets Act (DTSA) in 2016, which created a federal cause of action for trade secret misappropriation.     Before the DTSA, companies faced a patchwork of state laws. Now, businesses can access federal courts directly, with the related advantages of nationwide service of process, as well as strong remedies and injunctive relief. As a result, trade secrets are a more attractive option. This is reflected in the growth of DTSA filings and judgments.  Since its enactment, DTSA litigation has expanded significantly. In the first year after passage, about 173 DTSA suits were filed, compared to roughly 600 by 2017, a nearly 250 percent increase. As of 2023, filings reached approximately 749 nationwide, according to one analysis. Between 2018 and 2022, plaintiffs in trade secret cases secured more than $540 million in punitive or willfulness damages, based on Lex Machina data.

The benefits of trade secrets come with tradeoffs that should be considered when developing an IP strategy. Unlike patents, trade secrets offer no exclusivity against independent discovery or reverse engineering. Enforcement depends on showing not only that misappropriation occurred but also that the information qualifies as a “trade secret” and provides economic value. This is where recent cases provide a reminder and wake-up call to those relying on trade secret protection as part of their IP strategy.

Recent court decisions reinforce expectations for trade secret cases.

In Quintara Biosciences v. Ruifeng Biztech, Inc., 149 F.4th 1081 (9th Cir. Aug. 12, 2025), the Ninth Circuit clarified that under the Defend Trade Secrets Act (DTSA), plaintiffs are not required to identify their trade secrets with “reasonable particularity” at the very outset of a case, as California’s state law (CUTSA) demands. Instead, the question of whether a trade secret has been described with sufficient specificity is treated as a fact issue to be resolved later, typically at summary judgment or trial. Even so, the court emphasized that trade secrets must eventually be defined with precision, and district courts retain discretion during discovery to manage the scope of disclosure and require greater detail as needed. The takeaway for businesses is clear: while DTSA may provide more breathing room early in litigation, companies must still prepare to articulate their trade secrets with particularity before the case reaches its critical stages.

In Double Eagle Alloys v. Hooper, 134 F.4th 1078 (10th Cir. April 22, 2025), the Tenth Circuit reached the opposite procedural stage but delivered a similar message. In Double Eagle, the plaintiff alleged misappropriation of “business information” and “customer data” but failed to identify the specific information that qualified as a trade secret or demonstrate the steps taken to keep it confidential. The court affirmed summary judgment for the defendant, holding that generalized categories of information, without evidence of documented secrecy measures, cannot support a claim. The 10th Circuit decision reinforces that even where factual disputes exist, trade secret claims will not survive if they are based on vague definitions or insufficient protective measures.

Together, these cases underscore three core judicial expectations necessary to ensure that a claim for trade secret infringement will survive summary judgment and eventual success at trial.

1. Specificity. While the DTSA may provide more breathing room early in litigation, plaintiffs must still identify trade secrets with precision, not in broad categories, during the litigation.
2. Secrecy Measures. Reasonable steps, such as NDAs, access restrictions, and security protocols, must be demonstrably in place before the trade secret theft occurs.
3. Independent Value. Plaintiffs must show that the information has genuine economic value from being secret, not merely from being useful.

The message is clear: courts will not rescue businesses that treat trade secrets casually.

A balanced strategy requires acknowledging these tradeoffs and risks and acting accordingly.

Trade Secrets as Part of an Integrated IP Strategy
In many cases, the most effective approach is not to choose between patents and trade secrets, but to integrate them. As noted above, each tool has unique strengths and weaknesses.

A hybrid protection strategy can combine patent and trade secret protection by patenting certain aspects of an innovation while keeping related processes or data confidential. For example, a medical device manufacturer might patent the design of a sensor while keeping its calibration methods secret, and an artificial intelligence company might patent its user interface while safeguarding its underlying model architecture and training datasets.

In order to protect and maximize the value of trade secrets, companies must integrate them as a part of an overall IP strategy, which requires deliberate planning and management. Therefore, companies should establish a trade secret asset management program that includes:

1. Inventory and Classification. Cataloging trade secrets with specificity.
2. Policies and Contracts. Using NDAs, employee agreements, and access controls.
3. Security Measures. Both digital and physical protections.
4. Training and Culture. Ensuring employees understand and respect confidentiality.
5. Ongoing Review. Regularly reassessing whether an asset should remain secret and assessing the current safeguard.

Implanting trade secret management into corporate IP strategy ensures that secrecy decisions are made strategically, not reactively.

What it Means for Business Leaders
For companies that already use trade secrets or are shifting more toward trade secrets, several practical lessons emerge:

• Treat trade secrets as assets, not assumptions. Protection arises only when secrecy is actively maintained.
• Define and identify before disputes. Courts demand specificity; waiting until litigation to define a trade secret is a losing strategy.
• Invest in infrastructure. NDAs, policies, restricted access, and cybersecurity are not optional; they are important evidence of reasonable measures.
• Integrate all IP. Consider patents, trade secrets, trademarks, and copyrights as complementary tools for protecting intellectual property.
• Revisit strategy regularly. Business models evolve, and so should IP strategies. Annual reviews can prevent gaps.

Conclusion
Trade secrets are powerful tools in any business’ IP arsenal. They offer flexibility, cost efficiency, and potentially indefinite protection. But they are also fragile. Without precision, documentation, and proactive management, they can evaporate when most needed for enforcement.

The choice should not be binary between patents and trade secrets, but should focus on how to utilize each within an integrated IP strategy.