In a post last year, I proposed a solution for a recurring problem in trade secret litigation–namely, the situation where a former employee takes information but quickly regrets their conduct and looks for a way to resolve the dispute. As readers will recall, I proposed a “safe harbor” that would allow that former employee to provide disclosures and an injunction to address their former employer’s legitimate concerns. After my post, several colleagues, including my friends and fellow trade secret travelers Russell Beck and Mark Klapow, noted a potential dilemma for a trade secret owner. They suggested that I should consider a similar protection for plaintiffs whose suspicions about trade secret misappropriation never fully materialize or who face litigation costs that outstrip that litigation’s utility. To afford protection to those trade secret owners, this post proposes an “off ramp” procedure early in a trade secret dispute that would hopefully alleviate those situations.

The sad story of the reluctant plaintiff. A plaintiff, usually a small business, learns that a former employee has joined a competitor and suspects they may be using its trade secrets to unfairly compete against it. The employer may have evidence that the employee emailed documents to their personal account, or it may have had a forensic analysis performed on the employee’s devices showing suspicious file-sharing or USB activity. Or the employer may be experiencing sudden customer departures that coincide with other suspicious activity of the former employee, or it may be witnessing a rival launch a competing product on an unrealistically fast timeline. Whatever the situation, the employer may be reluctant to initiate litigation, either because it does not feel it has enough evidence or because it does not want to be drawn into a costly litigation against a larger and better-funded competitor.

In these cases, the trade secret owner faces a difficult choice: initiate a potentially expensive litigation where it may be accused of a bad faith action if discovery does not bear out its suspicions or take no action at all.

Behold the Expedited “Off Ramp” Track. My “off ramp” proposal would help solve this problem by giving a plaintiff a choice to keep its case focused and narrow and allow it to get out early through a fast-track resolution mechanism under the DTSA. This is how the off-ramp would work:

1. To narrow the issues and further promote resolution, a plaintiff invoking this track would have to meet-and-confer with the defendant(s) and their counsel to try to resolve the dispute. The plaintiff would be required to specifically invoke this track under the DTSA during those negotiations to signal that the parties may be headed to litigation if they don’t work things out.
2. If those efforts are unsuccessful after 30 days, the plaintiff could then file a DTSA claim and proceed under a fast-track that provides for surgical discovery and potential forensic imaging of phones, laptops or storage devices. All of this could be done under the supervision of a Magistrate or Special Master, similar to some of the procedures established for the ex parte seizure order under the DTSA. That officer also would have the discretion to appoint a neutral forensic examiner and oversee discovery on an expedited but relatively narrow basis to keep costs down for both sides.
3. By electing to proceed under this track, the plaintiff would forego any claim for money damages or attorneys’ fees. Its sole remedy would be an injunction or other type of equitable relief such as remediation of the devices or systems at issue. But by electing the off-ramp track, it would be immune from a bad faith claim if discovery and forensics revealed minimal or no misappropriation.
4. The off-ramp track would require the consent of all parties, so there would have to be incentives for defendants to participate. To encourage defendants, the off-ramp would remove the risk of being on the hook for the plaintiffs’ attorneys’ fees or monetary damages; the potential equitable remedies outlined above would be their only exposure if the magistrate or special master found they had misappropriated the plaintiff’s trade secrets. But if the defendant rejected the off-ramp election, that defendant would forfeit any claim for a bad faith filing against the plaintiff and that decision could open the door to potential money damages and even attorneys’ fees if it is later found to have willfully misappropriated the plaintiff’s trade secrets.

The off-ramp will not solve all of a plaintiff’s problems. For example, if a plaintiff elects not to proceed under the off-ramp, but later learns its trade secrets case is not nearly as strong as it first believed, it may still find itself subject to a potential bad faith claim.

However, the off-ramp would provide an option for an expedited procedure that avoids exposure of a bad faith claim to plaintiffs with questions about their case. And it would remove an exacerbator that frequently inflames many trade secret cases–the parties’ potential claims for attorneys’ fees. Most importantly, the off-ramp would promote efforts to resolve trade secret disputes at an early stage and provide a mechanism for a less costly proceeding.