One insurance coverage that’s expected to be hotly litigated in 2025

Trade secrets are expected to be one of the most hotly litigated areas in 2025, an intellectual property (IP) expert tells Canadian Underwriter.

“One of the reasons is…because trade secrets by their very nature are not a registerable right — the idea is that it needs to be kept secret,” says Michael Brunero, head of tech, media and intellectual property with CFC. “And so, when you have an IP right [that’s] essentially not as clear cut…that does expose itself really to exploitation a lot more.

“You add that with some significant damages awards, it’s becoming a hotly looked-at area, I think, of IP litigation…,” Brunero says. “A trade secret is really driven by how much you’ve gone to protect it and that, in and of itself, is gray. It just exposes itself to a lot of opportunity.”

Brunero adds he’s already seen legal action tick up, with “some really, really huge demands often overturned on appeal.”

In one case last July, the Virginia Court of Appeals overturned an unprecedented $2 billion damages award, one of the largest ever trade secrets verdicts in the United States. It ruled the trial court committed a series of legal and evidentiary errors that warranted a new trial. The lower court awarded the damages after finding Pegasystems Inc. misappropriated trade secrets from its competitor Appian Corp.

 

IP litigation in Canada

“We find that we get litigation on the IP side in Canada as well, and it’s often because of the interrelationship and the closeness it has to the U.S.,” Brunero adds.

He defines trade secrets as internal pieces of information that companies go to lengths to not make public, such as Google’s algorithm or Coca Cola’s recipe. This differs from patents — inventions that are registered, giving the inventor exclusive use and protection for a period of time.

“The reason they don’t patent that is because after a period of time, then everyone can use it because you put it in a public space,” Brunero says. “So, businesses are now increasingly turning towards trade secrets as their way of protecting their IP because it’s indefinite, as long as it remains a secret, it’s yours and yours alone.”

Businesses must go to great lengths to protect their trade secrets. But in the tech company space in particular, people will switch jobs and try to use a misappropriation of a trade secret action. And with large damage awards, it can be a very attractive course of action to use against competitors, Brunero says. “It’s quite a grey area as to what lengths you have to go in order to protect [a trade secret].”

 

Digital dilemma

As traditional industries begin to digitize, Brunero anticipates more litigation, given technology processes can be trade secrets.

On the cryptocurrency side, the incoming administration of president-elect Donald Trump will have implications for the tech space and economy generally, Brunero says.

With Trump’s pro-cryptocurrency/digital assets stance, there will be investment in that space, Brunero predicts. “Being able to capitalize on a new industry, being able to understand it and [identify opportunities] is definitely a real opportunity for the industry.”

The flip side is potential get rich quick schemes. “I think that the interesting area will be [how many of those] businesses are really adding value, and how much are really there to make those who bring it up a quick buck.

“We’ve had so many high-profile collapses as well over the years that have very much tarnished the industry,” he says. “The industry…is here to stay. Just exactly what that looks like and what impact Trump will have on what that industry looks like will be interesting…”

 

Feature image by iStock.com/Andrei Sauko