USA Trends and Developments Contributed by: Dawn Mertineit, Michael Wexler and Marcus Mintz, Seyfarth Shaw LLP
with an average legal spend for misappropriation liti - gation in the millions. While restrictive covenants are commonly used as a first line of defence, they can be challenging for businesses operating in jurisdictions that prohibit or limit non-compete or non-solicit agreements. And as restrictive covenant enforceability becomes more difficult in certain jurisdictions, adequate protection of a company’s trade secrets becomes all the more important, and trade secret misappropriation litigation tends to become more prevalent. Companies should therefore strengthen holistic policies and procedures to safeguard confidential and trade secret informa - tion, and ensure they have a clear action plan for both proactive and reactive efforts (typically, HR, Legal, IT) in the event of potential trade secret misappropriation – particularly when employees depart for competi - tors. Well-settled law (and common sense) dictates that once the trade secret becomes public, it loses its status as a trade secret, which can have detrimental effects on a company’s bottom line. Indeed, “at your fingertips” technology continues to illustrate vulnerabilities associated with trade secret theft. Technological advancements also contribute to new ways for employees to misappropriate informa - tion that were unthinkable just a few years ago, and businesses may thus lag behind in identifying conduct that may amount to misappropriation if they are not aware of such technology (and how to detect and/or prevent theft by these new methods). For example, the wide availability of cloud-based transfer and stor - age technology, particularly for companies that have a remote-employee base, can make it challenging to discern actual threats from business-as-usual. Addi - tionally, external threats including phishing scams and the use of generative AI to facilitate such scams make data breaches and misappropriation a near-constant threat. All the more reason for companies to make sure that they have a belt-and-braces approach to ensure protection of critical trade secrets and confi - dential information, because in the unfortunate event of misappropriation – actual or threatened – courts will not hesitate to deny relief to those who fail to demon- strate reasonable efforts to protect them.
For example, in August 2025, the Tenth Circuit Court of Appeals held that a party that fails to take adequate steps to protect confidential information cannot main - tain claims for trade secret misappropriation under either federal or state law. Snyder v Beam Technolo- gies, Inc. , 147 F.4th 1246, 1256 (10th Cir. 2025) (for - mer employee failed to take reasonable measures and efforts to maintain secrecy of alleged trade secrets, precluding DTSA and CUTSA claims). Nonetheless, for companies that are able to prove a violation of trade secret misappropriation statutes, potential damages awards can be enormous, espe - cially considering the availability of exemplary dam - ages for wilful and malicious misappropriation. For example, in July 2025, after a nearly decade-long legal battle in the US District Court for the Northern District of Illinois, a jury awarded a verdict of nearly USD29 million in actual damages and an additional USD30 million in punitive damages after determining that the plaintiff’s confidential business information had been misappropriated arising out of a failed busi - ness relationship. See Sonrai Systems, LLC v Antho- ny M. Romano , Case No 16-cv-03371 (N.D. Illinois). Additionally, in late 2024, a Defend Trade Secrets Act case in the US District Court for the District of Mas - sachusetts resulted in a jury verdict of USD452 mil - lion (USD170 million in compensatory damages and USD282 million in exemplary damages). See Insu- let Corp. v EOFlow, Ltd. , Case No 23-cv-11780 (D. Mass.). However, such eye-popping damages awards are subject to reversal on appeal. While a decision has not been made as of the time of this publication, the defendants in the Insulet case have appealed the Dis - trict Court’s judgment to the Federal Circuit on a varie - ty of grounds, including the damages award. See also Pegasystems Inc. v Appian Corp. , 924 S.E. 2d 621 (Va. 2026) (affirming Virginia Court of Appeals’ reversal of trial court’s denial of defendant’s motion to strike and set aside plaintiff’s USD2 billion damages award). Finally, many courts are requiring plaintiffs in trade secret misappropriation cases to show that they moved promptly to protect their assets. This is a case-by-case analysis, and courts will consider the underlying circumstances in determining whether the
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