The case went to trial in April and was one of the most closely watched disputes given the prominence of the parties. Once the jury was given the case for deliberation, a quick decision was made on the timeliness of the filing and none of the merits were considered. The jury found that the case was filed too late and entered a verdict in favor of Sam Altman and OpenAI. While Musk will likely appeal the decision, this case is a powerful reminder of the importance of acting promptly to protect business interests when disputes arise.

This theme is reinforced in our recent IAM Patent article, “The cost of waiting: why speed often wins in trade secret disputes,” which examines trends in Defend Trade Secrets Act cases and related state-law claims, including the practical importance of timely filing. As the article highlights, waiting too long can result in lost claims, faded memories, and dispersed evidence—often before a court ever reaches the merits.

Recent data confirms that trade secret litigation is at an all‑time high, reflecting a fundamental shift in how companies protect proprietary information. As panelists during the recent Lex Machina webinar “Trends in Trade Secret Litigation: Key Insights from 2026 Lex Machina Report,” we discussed the drivers behind this surge and what companies should expect going forward.

A central takeaway from the discussion was the critical need for speed. Practitioners are seeing trade secret claims rise, driven largely by employee mobility and competitive hiring, particularly where employees move directly to competitors with access to sensitive information. As a result, companies are becoming more sophisticated about identifying potential misappropriation early and acting quickly to protect trade secrets before competitive harm occurs.

Another key driver is the maturation of damages models under the Defend Trade Secrets Act. Courts and juries are increasingly comfortable with complex damages theories, contributing to larger and more consistent awards. Recent verdicts — including awards exceeding $200 million — have reinforced trade secret litigation as a high‑stakes enforcement tool rather than a secondary alternative to patent claims. 

Another theme was the growing wave of AI‑related trade secret litigation, where cases involving both the theft of information and its subsequent use are consistently producing substantial damage awards. Based on current analytics, these trends show no signs of slowing. Rapid technological advancement, combined with increasingly sophisticated digital forensics, is making it easier to detect misconduct—and more costly for those who fail to act promptly.

Practical Takeaway for Companies and Counsel

As trade secret litigation continues to grow, the message from the panel was clear: trade secret protection is now a core risk‑management issue, not just a litigation concern. Companies should proactively audit confidential information, strengthen onboarding and offboarding practices, and be prepared to act swiftly when misappropriation is suspected.

While the FTC’s formal rule providing a blanket ban on noncompetes was struck down by a Texas-based court in August of 2024, rendering the ban ineffectual nationwide, the Biden-led FTC filed notices of appeal of the federal court decisions preventing the rule from taking effect.

However, on September 5, 2025, the Trump Administration’s FTC officially withdrew its appeals of those decisions. The move indicates that the FTC’s attempted nationwide ban will remain dead in the water for the foreseeable future. Nonetheless, the FTC took certain actions indicating that it would not become inactive in the noncompete policy-making space. One day prior to the announcement, the FTC filed a noncompete-related complaint against Gateway Services Inc., the largest pet cremation business in the U.S. with over 100 locations and nearly 1,800 employees. The FTC issued a proposed consent order which would, among other terms, prohibit Gateway from executing new noncompete agreements with employees or enforcing existing noncompete agreements, with limited exceptions. Gateway would also be required to notify all its employees that their noncompete agreements no longer had effect. With regard to solicitation, Gateway would only be allowed to prohibit employees from soliciting current and prospective customers, with whom the employee had contact or personally provided service in the final 12 months of employment.

Chairman Andrew N. Ferguson, joined by Commissioner Melissa Holyoak, issued a statement with the Gateway order. The statement indicated the FTC’s plan to apply a case-specific approach (a “case-by-case adjudication”) to assessing the lawfulness of noncompete agreements and initiate enforcement actions where deemed appropriate, i.e. the Gateway order.

But the FTC did not stop there. On September 4, the FTC also launched a public inquiry “to better understand the scope, prevalence, and effects of employer noncompete agreements, as well as to gather information to inform possible future enforcement actions.” The public has 60 days (until November 3, 2025) to submit comments to the commission through a link on the announcement page. The announcement quotes Kelse Moen, Deputy Director of the Bureau of Competition and co-chair, “We are asking the public to help shine a light on unfair and anticompetitive agreements.” The Commission encouraged both “current and former employees restricted by noncompete agreements, and employers facing hiring difficulties due to a rival’s noncompete agreements” to share information.

While the FTC has officially abandoned any attempts to revive its blanket ban on noncompetes, employers should stay abreast of its evolving strategy regarding individual enforcement actions in order to maintain best practices in the sphere of restrictive covenants.

Several topics were key takeaways for us. We previously wrote on the theft of company information and forensics and the nuances of joint representation of an onboarding employee and the hiring company. Our last topic recap will cover jury selection. 

The Importance of Jury Selection

During the age of “nuclear verdicts,” the importance of jury selection cannot be overstated. Amongst the various panels presenting at the AIPLA, jury consultant DOER Research Center provided invaluable insight. As a backdrop to the presentation was a jury award in Manhattan to TriZetto of $284 million in compensatory and $570 million in punitive damages, an Illinois jury award of $764 million to Motorola, and a Virginia jury award of almost $2 billion to Appian Corp. Given these awards, DOER conducted a very telling survey to determine the best juror in a trade secret case, depending on what side of the case your client finds itself. 

One of the key questions asked (a question that is asked in virtually every trade secret deposition) was “How acceptable or unacceptable is it for a departing employee to take technical plans for technology developed by their employer?”. A second question was “How acceptable or unacceptable is it for a departing employee to take technical plans for technology that she or he helped develop?”. The study allowed for answers of completely acceptable, somewhat acceptable, slightly acceptable to slightly unacceptable, somewhat unacceptable, and completely unacceptable. 

As may be expected, 74% answered that it was unacceptable to take an employer developed technology, with 56% finding it to be completely unacceptable. However, and perhaps a little surprising given common company policies and work for hire agreements clearly establishing ownership of all work product in favor of the company, the tide turned when it came to technology the employee helped to develop. Just under 60% indicated that it was acceptable to take plans they helped develop when they left their job, with 15% finding it to be completely acceptable. 

To obtain more insightful guidance, DOER broke down the differences in response based on age and gender. Well over 60 percent of individuals aged 55 and older found it completely unacceptable to take their employer’s technology, while a majority of 18–24-year-olds found it to be acceptable. The stark contrast based on age was not borne out when distinguishing between men and women, though there are differences. In general, women find it more unacceptable than men to take an employer’s technology when leaving a job.

DOER’s research was interesting and provides great questions for jury selection. One of the key take aways from the survey is that women in the age category of 55 and older may be the best jurors for a plaintiff when it comes to establishing a violation of the Defend Trade Secrets Act for taking an employer’s technology. A final note of interest is that the DOER research found that it made little substantive difference when it came to venue for litigating the claims. Of course, the research touched upon many questions beyond what is referenced here.

For a deeper analysis of the CHOICE Act and its implications, read our full client alert on this legislation here.

Several topics were key takeaways for us. We last wrote on the nuances of joint representation of an onboarding employee and the hiring company. Another key topic that should be a key consideration for companies protecting trade secrets is the theft of company information and forensics.

Theft of Company Information and Forensics

Theft of company information has become a technological artform. A study referenced during the AIPLA was performed by the Ponemon Institute. The study found that over 60 percent of companies polled had experienced attempts to steal proprietary information. With this as a backdrop, there does not appear to be any question that companies large and small should be taking action to protect their valuable information from theft. Based on experience, the low hanging fruit for finding evidence of information migration outside of the organization is email, removable media, printed materials, remote network access, file transfer, downloads to laptops, and now a fan favorite, screen shots from an alternative device (which can be very difficult to detect without obtaining the device used). When an employee is offboarding, it is crucial to take inventory of all electronic equipment to be left behind inclusive of external storage devices. There is no better time than at the exit interview to discuss every device utilized by the employee and the return of those devices. It is also crucial to obtain credentials to any company device being returned and passwords to any cloud-based accounts used the by the exiting employee.

These steps may seem self-evident and, in some cases, may seem to come across as accusatory, but gathering this information once the individual is off at another place of employment is very difficult if not impossible to accomplish. If there is any inkling of suspicion: 

1. A company should engage in a multi month look back at email traffic to determine if there is any suspicious activity. 
    
2. If suspicious activity is found, calling upon forensic experts to run full evaluations of all returned devices typically provides a picture that leads to a full throttle approach to retrieving stolen information or to a level of comfort that the exited employee has left all proprietary information behind. 

In any trade secret investigation, there is little question that utilizing third party forensic experts will provide a court with a level of confidence necessary to justify entry of restraining orders and ultimately injunctive relief intended to retrieve, prevent use of propriety information, and to cease any potential damage coming to fruition.  

The foregoing was a common theme amongst many presenters at the conference and excellent guidance for practitioners and their clients. 

Hearing firsthand how companies handle these issues reinforced just how vital it is to stay proactive and ahead of the curve. Our team has put together a series of key take aways from the event that may help companies to guard against unfair competition and trade secret theft. Our first topic for consideration is joint representation. 

Joint Representation  

Representing an onboarding employee and the company concerning the hiring of the individual can be a tricky proposition. There are good reasons for engaging in a joint representation with proper warnings and there are definite pitfalls. 

One of those pitfalls is the appearance that the new employee and the new employer are joined at the hip relating to the conduct of the employee exiting a former employer (especially if the former employer is a direct competitor). When this situation occurs, the first step is to review the representation from an ethical standpoint under existing Ethics and Professionalism rules. 

It is considered ethical to simultaneously represent multiple clients whose interests may not ultimately be aligned if the law does not prohibit the representation and if no client asserts a claim against any other client involved in the proceeding. 

1. First things first—obtain an acknowledgement from the new employee that there is no restrictive covenant impeding the employment, the employee has exited his former company without any trade secret/confidential/proprietary information, and the employee has not destroyed or spoliated any information that belongs to the former employer. 
    
2. If these factors check out, proceed cautiously with the caveat that if it is learned that the acknowledgement is false, representation of the employee will end and representation of the company will continue. In this type of situation, informing each party of the risks of dual representation is key to continued representation of the company when bad facts present themselves. This is not to say that disqualification may still occur, particularly if privileged information obtained from the onboarding employee could assist the employer in defending any claims.   

A key case to review before undertaking any dual representation is Upjohn v U.S, 449 U.S. 383 ( 1981).   

Charles Schwab alleges that Roberto Ivan Ortega misappropriated its trade secrets and client information to solicit the business of former customers after joining a competitor. After Ortega refused Schwab’s requests to return its information, Schwab filed suit and moved for a preliminary injunction preventing the use or disclosure of its information. 

Faced with the reality that a court would likely enter an injunction, Ortega’s counsel agreed to an injunction that prohibited Ortega from using, disclosing, or disseminating Schwab confidential information or soliciting Schwab customers. Ortega is also required to give Schwab access to his computing devices for Schwab to conduct discovery to uncover the scope of the misappropriation. 

​Courts continue to stress the need to maintain the status quo in cases involving the theft of information. Employers must take the necessary steps to prevent the theft of their information and in the cases where their information has been taken, prevent the use or disclosure of that information by filing a lawsuit and seeking an injunction. 

While the recent nuclear verdicts have mainly been in personal injury situations, this highlights risks associated with theft of trade secret information. This also highlights the need to perform internal audits on protection of sensitive information. A key to protecting valuable information is taking proactive steps to restrict access to certain proprietary information, including designs of products not readily available in the public setting. 

Click here to read more on this ruling.

Employers should review and, if necessary, revise their employee non-solicitation provisions to make sure they comply with the finding in this case.  

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