Does it matter where you file your trade secrets claim?
Where a plaintiff files its trade-secret claim can impact its litigation strategy. The claims available may depend on both the location of the court and whether the business chooses state or federal court.
One of the first considerations with trade secrets litigation is whether to file the complaint in state court or federal court. To proceed in federal court, a complaint must ordinarily allege a claim arising under federal law, principally a violation of the federal Defend Trade Secrets Act. If a business presents at least one federal claim, it can also pursue claims under state law. Every state has enacted a trade-secret statute, and the vast majority have adopted the Uniform Trade Secrets Act, with small variations. Lawsuits in state court, in contrast, generally do not allege federal claims because doing so would permit the defendant to override the plaintiff’s choice and proceed in federal court.
Location is also a key consideration. Generally, defendants can be sued in a particular state only if they have “minimum contacts” and proceeding there would not be unfair. Suit is often brought where the plaintiff’s business is headquartered. Other times, cases proceed where the alleged theft of trade secrets occurred, where the defendant resides, or in a place to which the parties agreed by contract. While the location of the suit does not necessarily determine what state’s law applies, it can play a role. The determination of applicable law can, in turn, effect whether other state tort claims can be filed with a trade-secrets claim. For example, some states’ trade-secret statutes have preemption provisions, while others do not. If a state statute has a preemption provision, then plaintiffs will likely be prevented from filing other state law tort claims that depend on the misappropriation of trade secrets.
Finally, some jurisdictions have more experience with trade-secret litigation than others. California, for example, has a substantial body of case law on trade secrets. Other states see far fewer trade-secret cases, which can mean that the courts in those jurisdictions are less familiar with the law and facts typically presented by such claims.
The location of a trade-secret suit can impact the claims that are available, the law that applies, and the court’s experience with trade-secret litigation. Each of these considerations will influence litigation strategy. Businesses considering pursuit of trade-secret claims should thus consult experienced counsel about what jurisdiction to choose.
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