Trade secret misappropriation

The unauthorized acquisition, use, or disclosure of a trade secret through improper means — including theft, breach of confidentiality obligation, or corporate espionage — giving rise to civil liability under state law and federal law (DTSA). Trade secret cases are among the most attractive to litigation funders in the IP space because they are not subject to IPR invalidity risk, they can involve large damages theories based on unjust enrichment or reasonable royalty, and the improper acquisition narrative often resonates with juries. However, the plaintiff must establish that the information qualified as a trade secret (i.e., was sufficiently secret and had commercial value) and that reasonable measures were taken to protect it — both elements subject to intensive fact discovery. Funders conducting diligence on trade secret claims focus on documentation of the alleged secret, the circumstances of misappropriation, and the defendant's competitive head start or unjust enrichment.

Trade secret claims are attractive relative to patent claims specifically because they carry no IPR-style invalidity gate, so funders underwriting these cases redirect diligence toward the two elements that actually decide the case — proof the information was in fact secret and that the defendant's acquisition was improper — rather than validity risk. The absence of a comparable administrative kill-switch is a meaningful part of the funder's return-multiple calculation relative to patent cases of similar claimed value, since it removes one of the largest binary loss scenarios patent funders must otherwise price.