Introduction

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INTRODUCTION

Why Protect a

Trade Secret?

Legal experts agree that trade secrets are of great and increas-

ing importance to the U.S. economy. The estimated value of trade

secret information in the United States is a staggering $5 trillion.1

Trade secrets represent the vast majority of U.S. intellectual prop-

erty.2 Trade secret protection can extend beyond the coverage of

federally defined statutory forms of intellectual property, such as

patents, trademarks, and copyrights, to virtually all competitively

sensitive and confidential information at relatively little cost.

Corporations spend billions of dollars to protect their trade

secrets. In 2010, nearly half of the businesses responding to the

Computer Security Institute’s 15th annual Computer Crime and

Security Survey dedicated more than 5 percent of their intellectual

technology budgets to protecting confidential electronic informa-

tion.3 The magnitude of this undertaking is not surprising. Studies

indicate that billions of dollars are lost each year as a result of trade

secret theft. Indeed, in its 2002 annual report to the U.S. Congress,

the Office of the National Counterintelligence Executive reported

$300 billion in losses as the result of industrial espionage.4 Other

studies have also reported losses in the billions, including studies

conducted by PricewaterhouseCoopers and ASIS.5

At the same time, trade secret litigation is increasing at a phe-

nomenal rate. A 2008 study revealed that the number of trade

secret cases brought or removed to federal court doubled in the

seven years from 1988 to 1995 and again in the nine years between