Trade Secrets

Specialized Expertise to Evaluate the Strategic Importance of Trade Secrets

Trade secrets provide an important avenue for companies to protect their market position in today’s complex, global business landscape. Trade secrets, a form of intellectual property, are confidential information that derive independent economic value from not being generally known. Disputes over trade secret misappropriation can create complicated environments for determining remedies.

Trade secret matters often involve important economic issues including an assessment of causality (i.e., a nexus, or economic link, between the allegedly misappropriated trade secrets and economic performance), determination of the loss period, and identification of relevant remedies and offsets to recoveries. Our economic, finance, accounting, and statistical experts provide robust research, analysis, and expertise to assist clients in resolving trade secret disputes involving claims for monetary recovery or injunctive relief.

Trade secret disputes present unique challenges for evaluating remedies. For example, trade secrets generally do not have a defined lifetime, unlike other forms of intellectual property such as patents or copyrights. As a result, determining a damages or recovery period can be an important part of a damages evaluation. Further, the same or similar trade secrets can be independently derived by different companies, which may have implications for both liability and damages aspects of a trade secrets matter. While available recoveries in trade secret matters overlap with other intellectual property disputes (e.g., lost profits, reasonable royalties, and unjust enrichment), there are potentially important differences in the analyses that are performed.

No two trade secret disputes are the same and as a result our analyses of these issues are not cookie-cutter; instead, we tailor our approaches to the specific issues in each matter, letting relevant facts and robust analytical principles guide our work. Our experts routinely provide analysis, opinions, and testimony in trade secret misappropriation matters for both plaintiffs and defendants across a variety of industries, including healthcare, pharmaceuticals, financial services, electronics, consumer products, insurance, sports, and energy.

Focus Areas

Lost Profits

Lost profits are often described as the difference between a patentholder’s actual profits and the profits that would have been earned but for patent infringment. Accordingly, infringement that impacts prices, sales quantities, or costs of the patentholder may result in lost profits.

Engagement Examples

  • Developed reliable econometric models of product sales to estimate the sales revenue that would have occurred but for patent infringement. The econometric models included multi-variate regressions that were calibrated during a time period without infringement and then applied during the period of infringement, thereby isolating the effects of the infringement separate and apart from other factors that impacted product sales.
  • Defined the relevant market for products accused of infringement along with a quantitative determination of market shares among suppliers, which was used in a Mor-Flo market-share approach that was specifically tailored to the factual circumstances of the products, suppliers, and customers.
  • In an industry characterized by few sales transactions that are each unique for the purchase of large equipment, we performed analysis of the economic factors driving the purchase of each individual transaction. Analysis of manufacturing and sales capacity, along with product differentiation, directly impacted the calculation of lost profits.
  • In connection with the Panduit factors, evaluated the economic viability of non-infringing alternatives, substitution patterns across products, pricing dynamics, and the evolution of product availability across time to quantify product sales that would have occurred but for infringement.
Unjust Enrichment

Upon a finding of misuse of certain types of intellectual property (i.e., trade secret misappropriation, copyright infringement, and trademark infringement), a court may award unjust enrichment caused by the misuse. Unjust enrichment refers to the benefit or gain received by the defendant as a result of the misuse. Unjust enrichment can be measured in several ways depending on relevant facts and economic principles.

One measure of unjust enrichment is the defendant’s profits that were caused by the misuse of intellectual property. This may be an appropriate measure in cases where the defendant’s profits, or a portion thereof, are attributable to the misuse. Under this measure of unjust enrichment, an issue often disputed is the causal relationship, or lack thereof, between the misuse and the claimed profits.

Another measure of unjust enrichment is the defendant’s cost savings that were caused by the misuse of intellectual property. This may be an appropriate measure in cases where the misuse enabled the defendant to save or avoid costs. Cost savings or avoided costs measures often involve careful consideration of actual and counterfactual costs.

Another related measure of unjust enrichment is the defendant’s head-start advantage that was caused by the misuse of intellectual property. This may be an appropriate measure in cases where the defendant gained a temporal advantage as a result of the misuse. Identification of the timing of the advantage, and potentially when the advantage ends, can be a fundamental aspect of head-start advantage measures.

Engagement Examples

  • Performed an analysis of unjust enrichment resulting from alleged misappropriation of trade secrets relating to payment transaction processing middleware, including evaluation of the economic benefit of the trade secrets, the contribution of the trade secrets to the middleware, and costs and time associated with development of economic alternatives.
  • Evaluated unjust enrichment to an internet service provider resulting from alleged copyright infringement via file sharing based on an analysis of internet use, internet demand, internet service subscriptions, and costs.
  • Analyzed pricing, design, and other aspects of relevant products to inform on the economic value of the trade secrets at issue in a dispute involving two large semiconductor manufacturing foundries.
  • Evaluated unjust enrichment in litigation involving alleged misappropriation of trade secrets relating to mobile device testing based on consideration of supply agreements, product sales, product costs, and the contribution of the trade secrets to the defendant’s profits.
Reasonable Royalties

Upon a finding of patent infringement, a court shall award damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer. A reasonable royalty can be determined through an analysis of what a willing licensor and a willing licensee would have bargained for during an arm’s-length, hypothetical negotiation occurring on the eve of infringement. Several approaches, along with the Georgia-Pacific factors, can provide guidance.

The market approach often utilizes comparable license agreements or similar transactions to inform upon a reasonable royalty. Economic and technological differences between the comparable agreement and the hypothetical negotiation can often be quantified by way of economic, financial, or statistical methods. Such differences can include products, technologies, suppliers, customers, time periods, and competitive environments.

The income approach considers financial benefits derived by the infringer as a result of using the patented technology. These benefits can include higher prices, increased sales quantities, or reduced costs.

The cost approach can evaluate the costs of implementing a viable non-infringing alternative that provides that is reasonably available and provides similar benefits to the patented technology.

Engagement Examples

  • Calculated reasonable royalties in litigation involving video coding technology used in personal computers and gaming devices, including investigation of standard-essential patents, reasonable and non-discriminatory licensing practices, and the impact of patent licensing pools.
  • In litigation involving the alleged unauthorized use of a consumer electronic patent, quantified economic damages and analyzed the economic aspects of contracts containing a license to the patent-in-suit. Also analyzed economic substitution, marketplace competition, product differentiation, sales, profitability, and other economic considerations relating to a reasonable royalty.
  • Performed an analysis of damages relating to alleged infringement of patented biotechnology by quantifying reasonable royalties based on consideration of relevant licensing agreements, accused sales and profitability, and the unique contribution of the patented technology.
  • Utilized statistical methods to isolate the impact of the asserted patents to the accused product’s price due to the associated performance enhancements. In certain cases, using statistical methods improves the precision of reasonable royalty calculations based on an income approach.
Injunctive Relief

Irreparable harm, public interest, and balance of the equities are factors considered by courts in evaluating whether injunctive relief is appropriate in the context of patent infringement. The issue of irreparable harm examines whether the claimant’s harms are quantifiable and evaluates the causal nexus between the alleged harm and patent infringement. The public interest is evaluated by reviewing benefits and losses realized by the public, including the availability of substitutes, the impact of an injunction on prices, and the importance of patent rights in innovation. The balance of equities weighs the harms faced by the accused party if an injunction is granted versus the harms faced by the claimant if not granted.

Engagement Examples

  • Conducted analysis for a pharmaceutical supplier to help decide whether to seek injunctive relief against drug stockpiling. Defined modeling criteria for measuring the potential economic effects of generic drug stockpiling to a branded pharmaceutical supplier. Analyzed economic effects and determined that the magnitude of these economic effects varies due to multiple factors, including the amount of stockpiled generic product, unconstrained generic demand, generic production capacity, branded and generic pricing strategies, and branded price erosion, among others.
  • Performed detailed economic analysis in 48 hours to assist our client in response to an application for a temporary restraining order and preliminary injunction that would prohibit the client from launching a new sporting goods product line that allegedly infringed patents held by a competitor. Evaluated marketplace dynamics, pricing, production costs, production processes, marketing strategies, market segmentation, quantification of potential damages, and potential impacts on business opportunities and reputation.
  • Provided expert analysis on behalf of the defendants in a global patent litigation case involving an innovative heart valve repair treatment. Opined that harm was not irreparable, and that the balance of equities and the public interest did not favor an injunction. Analysis was instrumental in U.S. Judge’s decision to deny Plaintiffs’ motions for a TRO and a preliminary injunction.

Latest Insights

Explore Other Services

Antitrust & Competition

Courts and regulatory authorities around the world rely on our economic analysis to formulate and apply competition law.

Auctions & Bargaining

From airwave spectrum rights to mineral rights and more, markets today depend on auctions, and potential bidders in these high-stakes auctions rely on sophisticated analysis and expert guidance to be successful.

Class Actions

The ability to gather and distill the volumes of data often underlying a class action – and present a clear and meaningful analysis to courts, regulators, and others – is fundamental to Secretariat’s expertise.

Construction Delay

When projects are delayed, owners, contractors, designers, insurers, governmental agencies, and law firms across the globe trust Secretariat’s leading experts to provide their independent and rigorous analysis to help avoid, pursue, or defend costly disputes. Secretariat stands apart in how we articulate clear and concise opinions for even the most complex analyses.

Construction Quantum

Assessing the cost impacts and complex challenges of major international construction and engineering projects requires unique experience and knowledge. No team excels in this arena like Secretariat.

Damages & Valuations

With proven skills in complex cases and exceptional strength in analytics, Secretariat experts provided extensive guidance on domestic and international matters involving commercial damages and disputes.

Data Analytics & Strategy

Secretariat’s experts and advisors address complex data challenges involved in disputes, investigations, and litigation.

Digital Forensics & eDiscovery

Our industry-leading expertise in digital forensics and eDiscovery delivers thorough analysis and seamless solutions for data-intensive legal and investigative needs.

Forensic Accounting

Secretariat’s highly experienced forensic accounting experts uncover financial misconduct and help resolve disputes with the investigative techniques necessary to analyze complex financial data, trace assets, and provide comprehensive reports and expert testimony, ensuring swift action with effective communication.

Intellectual Property

Secretariat’s experts have an unparalleled depth of experience providing analysis, opinions, and testimony in high-stakes patent litigation, proceedings at the International Trade Commission, and strategic advisory engagements. Our expertise in patents extends beyond litigation and disputes, to advising clients on licensing negotiations, valuation, patent monetization strategies, product forecasting, and launch analyses.

International Arbitration

Continuously ranked at the top of Global Arbitration Review’s Expert Witness Firms’ Power Index, Secretariat’s experts have a long history of providing the kind of insightful, objective analysis and highly persuasive testimony trusted in some of the highest value arbitrations across the globe.

Investigations & Compliance

Suspicions or allegations of corporate misdeeds can cause tremendous harm and disruption to any organization. At Secretariat, our decades of experience drilling down to the facts can provide the confidence to know risks can be managed and challenges addressed and overcome.

Labor & Employment

Parties in labor and employment disputes – in cases brought by individuals or as class actions – depend on independent and verifiable economic analyses to support their positions. The experts at Secretariat have decades of experience analyzing claims, valuing damages, and turning large volumes of data into litigation support that clients and courts can readily understand and trust.

Mergers & Acquisitions

M&A transactions are among the most complex business activities from every perspective: financial, competitive, regulatory, and beyond. The bigger the parties, the more exponentially complex the transactions. From providing objective valuations and economic clarity to helping clients navigate regulatory investigations, Secretariat has a long history of advising both buyers and sellers in many industries in the U.S. and across the globe in some of the largest and most complex M&A transactions.

Regulatory & Public Policy

From telecommunications to energy issues, Secretariat’s economists and experts regularly advise companies and individuals navigating the world of complex regulations, enforcement, and rule-making.

Securities & Finance

At Secretariat, our adept Securities and Finance professionals craft pragmatic strategies and rigorous financial and economic analyses tailored for law firms, financial institutions, corporations, and government agencies enmeshed in consequential legal battles.

Talk to Our Insightful Experts