Why Trade Secret Litigation often fails and how CJI can help.

In the excellent article, “Rare First Circuit Decision Invalidating NDA and Overturning Misappropriation Verdict Serves as a Cautionary Tale”,  published by Seyfarth Shaw, on August 12, 2020, the reader comes away with several lessons about why companies are struggling to defend their trade secrets and earn damages on the back end of a misappropriation case.  Despite the fact that more states are adopting stricter laws around trade secrets, and on the federal level, the DTSA offers a strong path to damages, judges are seemingly annoyed by the policies and practices many companies have towards managing their trade secret assets.  This annoyance with the plaintiffs and their law firms is manifesting in early dismissal at summary judgement, or in this case, a rare overturn of an underlying court’s decision.

There are several reasons, cited in the article, the court took the position it took (trade secrets not clearly defined up front, NDAs and non-competes too broad).  What I wanted to talk about is how Crown Jewel Protector(CJP) can be picked up and dropped into an ERM program of virtually any company, as it is our contention that most firms (the vast majority even?) have NO formal process to identify, value, secure, insure (not ensure), and mitigate/litigate these critical IP assets.  CJP includes a full front to back end Trade Secret Asset Risk Management program (TSARM) that:

1. Helps the client determine which assets (sitting right under their noses) could be considered trade secrets, (hint: any asset that a company might be about to file for patent protection is a trade secret),

2. Determine how “defensible” those assets are using the decades old “6 Factor Litmus Test” courts use to determine if a trade secret passes as such,

3. Take a deeper dive into protection of those assets, and provide dark web monitoring for same,

4. Provide a third-party valuation that will stand up to legal and accounting scrutiny,

5. Have insurance proceeds that pay forensic and legal fees, and if needed, the “Fair Market Value” of the insured assets,

6. Brings immediate legal and Intelligence community assistance to the fore when and if we find ourselves in an offensive position on the back end, going after the offender for damages.

There are many reasons most companies skip past trade secrets as a critical (maybe the most critical) IP asset that needs protecting, insuring, and managing like any other asset.   Perhaps the most relevant are that investors and Boards do not understand the value these assets bring (they are lumped under a catch-all of Intangible Assets), nor do they realize that there is no insurance protection for them.  This should be a wake-up call.

Having taken the key steps in the Risk Management process and attached them to the cyber and other (theft related) perils that threaten these corporate crown jewels, we’ve developed a laser focused policy wording and a new kind of insurance called Crown Jewel Insurance℠.  We have $50M+ in dedicated Lloyd’s capacity behind the policy wording, available exclusively to CJI and including the full suite of risk management and mitigation services offered through CJI and our partners. 

Author, Mary Guzman, CEO Crown Jewel Insurance

Full Seyfarth article here:

https://www.jdsupra.com/post/contentViewerEmbed.aspx?fid=b223de31-9b05-4e34-863d-348a8e9f4b7e

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