Trade secrets when an entire engineering team leaves

The trade secret cases that reach litigation are almost never about a document. They are about a group of people who worked together for years, developed a shared understanding of how a difficult thing is done, and then went to work for a competitor at the same time.

That is a harder case to bring and a harder case to defend, and both sides tend to prepare for the wrong one.

What the claimant has to establish

The threshold question in most jurisdictions is not whether the information is valuable. It is whether the company treated it as secret before it left.

Companies routinely discover, in the first week of a case, that the material they now describe as their most sensitive asset was accessible to two hundred employees, stored without restriction, and shared with suppliers under agreements that expired years ago. That discovery is usually fatal, and it is entirely a matter of pre-dispute hygiene.

What the defendant has to establish

On the other side, the defendant's problem is that innocence is difficult to demonstrate after the fact. An engineer who joined a competitor and has been productive is, on the face of it, doing something. Establishing that what they are doing is drawn from general skill rather than from the former employer's specific know-how requires records that only exist if someone created them.

The companies that defend these cases most cheaply are those with a documented onboarding procedure for hires from competitors: a written scope of what the new employee will not work on for a defined period, a clean-device attestation, and a contemporaneous record of the design decisions made after their arrival.

The first eleven days

Whichever side you are on, forensic evidence degrades. Devices are reimaged, cloud logs roll off, and personal accounts are cleaned in ways that are usually innocent and always look deliberate.

Preservation should be the first step, before the legal theory is settled and before anyone has decided whether to sue. In our experience the practical window is under two weeks, after which the argument shifts from what happened to what was destroyed, which is a worse argument for everyone.

• Issue preservation notices to the departing individuals and to the receiving employer immediately.
• Preserve access logs and repository history before routine retention periods expire.
• Record, in writing, what the company considers the protected subject matter to be — before litigation counsel is tempted to define it broadly.
• Resist the urge to define the trade secret expansively. A narrow, well-evidenced secret survives; a broad one invites a specificity challenge.

The case usually settles on a relationship

In sectors where the parties are also each other's suppliers or customers — which is most industrial and device sectors — the eventual resolution is commercial. A cross-license, a supply arrangement, a defined non-solicitation period.

That should shape the litigation from the start. Strategies that make the eventual commercial resolution harder to reach are expensive twice.