Unlocking the Future: 5 Game-Changing Trends Shaping Trade Secrets in 2025

Looking ahead to 2025, the crossroads of generative AI, shifts in regulation and new legal precedents, trade secrets are set to become a pivotal battleground. With the surge in popularity innovation in areas like green technology, telecoms, aerospace, and other forward moving industries, we can expect an increase in legal disputes surrounding ownership, use, and misappropriation of data, algorithms, formulas, negative know-how, and all the other valuable components that can be defined as trade secrets.

To help organizations safeguard their most valuable assets, we’ve identified five key predictions that will impact trade secrets in the coming year:

#1.  Increase in Enforcement and Litigation (especially involving foreign organizations)

Expect a surge in enforcement actions and litigation, particularly against foreign organizations. As businesses become more vigilant in protecting their trade secrets, legal disputes are likely to rise, highlighting the need for robust legal strategies.

Since the passage of the Defend Trade Secrets Act of 2016 (DTSA), trade secret litigation has surged, with cases increasing by over 25% in just one year. Although there was a temporary decline during the COVID-19 pandemic, filings in federal court are now on the rise again. The DTSA has made trade secret misappropriation a federal crime, allowing owners to pursue cases in federal court without the need for diversity jurisdiction.

As the U.S. Department of Justice (DOJ) intensifies its focus on foreign threats, particularly from countries like China, we can expect a more aggressive pursuit of trade secret theft. The recent guilty plea by Hytera Communications, a Chinese telecommunications firm, for conspiracy to steal trade secrets highlights the growing risks companies face. This trend is further supported by the DOJ's new rules aimed at safeguarding Americans' sensitive data from foreign adversaries, enhancing national security in the digital age.

With the incoming administration likely to prioritize the protection of trade secrets, businesses must prepare for an increase in litigation and the complexities that come with it. As companies increasingly rely on trade secrets to maintain their competitive edge in the global marketplace, the landscape of trade secret enforcement will continue to evolve, making vigilance and proactive measures essential.

#2. A hard balance between AI Transparency & Trade Secret Protection

The push for AI transparency will create tensions with the need to protect proprietary information. Companies will need to navigate new regulations that require disclosure while safeguarding their trade secrets.

As states like California, Illinois, and Washington take the lead in drafting laws to regulate artificial intelligence (AI), the push for transparency and disclosure is becoming a significant trend. The establishment of an Artificial Intelligence Task Force in Washington reflects a growing commitment across the nation to enhance oversight of generative AI technologies. However, this emphasis on transparency poses critical implications for trade secrets and intellectual property law.

The debate surrounding AI models and copyright infringement has already led to high-profile lawsuits involving companies like OpenAI, The New York Times, and Microsoft. As organizations are urged to disclose more about their AI systems to avoid discriminatory practices, they face a dilemma: how to balance transparency with the need to protect proprietary information. Compliance with transparency requirements may force companies to reveal aspects of their AI algorithms and datasets, potentially exposing valuable trade secrets that are essential to their competitive advantage.

Generative artificial intelligence (GenAI) continues to evolve, setting new benchmarks in content quality and creativity, particularly in areas such as drug development. With increased investments in AI-assisted inventions, the issue of intellectual property (IP) rights is becoming increasingly critical. The U.S. Patent and Trademark Office (PTO) and the U.S. Copyright Office maintain that only natural persons can be recognized as inventors or authors. This creates complexities, as both offices require substantial human involvement before granting protections, leading many organizations to categorize generative AI outputs as trade secrets to insure and monetize these valuable innovations.

This evolving landscape presents a unique opportunity for companies to enhance their trade secret protections. By clearly defining what constitutes a trade secret and implementing robust security measures, businesses can better safeguard their proprietary information while complying with legal requirements. Companies that proactively insure their trade secrets not only protect their proprietary assets but also build a framework that allows them to navigate the complexities of AI regulation.

#3. Shifts in Protection Protocols

A noticeable shift from patents and copyrights in favor of trade secrets as a preferred means of protection is anticipated. Many organizations will opt for trade secret status to maintain confidentiality and avoid lengthy patent processes.

For decades, companies relied heavily on patents to protect their intellectual property, yet with increasing cost and complexity, risks of disclosure, and the scope and duration of protection, more organizations are shifting to relying on trade secrets.

While patents certainly still have their purpose, the cost of patent prosecution, time to approval, and weakening or inability to patent certain types of assets (business processes/strategies, Gen AI output, innovation such as in algorithms where velocity of change makes a patent impractical) has moved Trade Secrets to the top of the IP pack.  We estimate that in the US today, trade secrets are worth 5 times the value of patents.  In some cases, the innovations or processes a company wants to protect may be difficult to reverse engineer, making trade secret protection a more viable option than seeking patent protection.

With the increased capabilities of generative AI, and the ability to reverse engineer code, recipes, and other classified information, companies will increasingly follow Coca-Cola’s time-tested belief, in keeping their prized formulas as trade secrets. By keeping these innovations confidential, they can maintain a competitive advantage without the need for public disclosure that comes with patents and copyrights, where the benefits of trade secrets include the ability to maintain confidentiality, insurability, monetization, indefinite protection duration, broader scope, cost-effectiveness,  and reduced risk of invalidation.

#4. Significant Verdicts and Sizable Damages

The legal landscape will remain unstable, with significant verdicts and sizable damages becoming the norm. Businesses must prepare for potential financial repercussions arising from trade secret disputes.

In 2024, the trend of substantial damages awards in Defend Trade Secrets Act (DTSA) claims has persisted, and projections for 2025 indicate that these awards are likely to continue rising. Recent years have witnessed extraordinary verdicts in trade secret cases, reflecting a shift in how damages are calculated and awarded. High-profile cases are setting precedents that encourage plaintiffs to pursue larger damages based on favorable outcomes from previous trials.

As innovation accelerates, the stakes associated with trade secrets grow, leading to potentially larger damages awards when these secrets are misappropriated. With more businesses recognizing the intrinsic value of their trade secrets, there is a greater inclination to seek substantial compensation when those assets are compromised.

However, it is important to note that the Courts have vacated several large damages awards in the past year, some due to flaws in identifying (substantiating) and evidentiary value trade secrets, as was 2024 case of Appian V. Pega. This case has underscored the necessity for organizations to adopt robust methodologies, particularly by obtaining trade secret insurance. By doing so, companies can ensure that, in the event of litigation, any awarded damages are well-supported and less susceptible to appeal.

#5 -New streams of revenue unlocked

As companies increasingly recognize the value of their trade secrets, new revenue streams will emerge. Organizations will find innovative ways to monetize their proprietary information through licensing and strategic partnerships.

Recent reports indicate that 90% of the value of S&P 500 companies stems from their intangible assets. While these intangibles enhance stock valuation, they also present opportunities for additional revenue through sales, licensing, and enforcement. In today's innovation-driven economy, intellectual property (IP) has become a cornerstone for wealth creation across industries, with its value increasingly recognized.

Businesses are familiar with monetizing trademarks, patents, and copyrights to extract value from their intellectual property. However, trade secrets, a critical component of IP, often remain overlooked in discussions about monetization. As the global economic landscape evolves, trade secrets are emerging as vital assets that can drive value and growth. Changes in U.S. and international accounting practices now pressure firms to recognize and value all identifiable intangible assets during transactions, such as mergers and acquisitions. This shift underscores the importance of accurately valuing trade secrets and implementing protective measures to safeguard that value.

Companies are beginning to realize the immense potential of their trade secrets. With innovative strategies, businesses can leverage these assets without compromising their confidentiality. By insuring trade secrets, organizations not only protect their proprietary information but also establish a framework that provides evidence of existence, ownership, and baseline worth. This approach treats trade secrets as tangible assets, ensuring they are valued and safeguarded.

The evolution of trade secret insurance empowers organizations to unlock new revenue streams. By insuring their trade secrets, companies can confidently license them, sell them at a premium, and maximize the potential of their intangible assets. This modern business need reflects a strategic shift in how organizations view and manage their intellectual property.

As previously mentioned, the benefits for companies who proactively insure their trade secrets are immense, from protecting the value of their proprietary assets to establishing frameworks to securely navigate complex regulations and evolving laws, and even support for monetization and growth.  Crown Jewel® Insurance has introduced a groundbreaking solution that addresses a multi-trillion-dollar gap in the market, the value protection of trade secrets. Our innovative insurance not only safeguards dormant assets within the financial ecosystem but also opens avenues for licensing revenue, enhances leverage during capital raises, and improves valuation for exits.

Crown Jewel's due diligence and underwriting process validates the existence of a company's trade secrets—typically recognized only as litigation rights—while enhancing their protection and insuring their value through a pioneering policy called InnovationGuard®. This represents essential bottom-line protection that can prevent potential bankruptcy. More than just an insurance policy, Crown Jewel® Insurance offers a strategic advantage, serving as a robust shield against unexpected losses of competitive advantage. By positioning companies for sustainable success, this approach transforms trade secret insurance into a vital component of modern business strategy allowing organizations to stay ahead of what’s to come.