[authors: James E. Malackowski and Cole Kartman]
Introduction
Established 25 years ago at the turn of the century by the World Intellectual Property Organization (WIPO), World IP Day celebrates the unique contributions made by global inventors and creators. Over the past half century, intangible asset value has skyrocketed from 17% of S&P 500 market value in 1975, to 68% in 1995, to more than 90% today. Ocean Tomo leadership and their predecessor firms have been an active participant in IP markets for decades and have seen this evolution firsthand.
In celebration of World IP Day on April 26th and the role that different types of IP rights play in encouraging innovation and creativity, we present a more recent review of trends across IP types over the last decade. Our review discusses and analyzes the evolution of Technology Rights Enforcement (TRE) specific to patents, trade secrets, and copyrights. As described by the WIPO, TRE is “a crucial legal mechanism [for businesses] to protect their investment and ensure fair competition.” Patents, trade secrets, and copyrights each provide a unique tool for a company’s TRE strategy. Patent protection lasts 20 years, copyright protection extends up to 70 years after the author’s death, and trade secrets have an indefinite life so long as they are not disclosed to the public. Between patents and trade secrets, IP owners must make the choice to disclose their inventions to the public in exchange for a 20-year monopoly, or to keep their inventions as trade secrets in hopes that competitors are unable to reverse engineer such innovation. A decade ago, we predicted that trade secrets would start to garner greater focus. We review the last ten years and update our view to now predict a greater balance between patent, trade secret, and copyright TRE.
Evolving Priorities in Intellectual Property
The past decade has witnessed significant transformation to the management of intellectual property (IP) as an asset, especially as it relates to monetization and enforcement of technology rights. Traditionally, organizations prioritized patents—investing heavily in their development, monetization, and enforcement. However, recent trends indicate a moderate decline in patent litigation filings, from approximately 5,800 case filings in 2015 to 3,800 in 2024.
In 2017, the TC Heartland decision impacted venue requirements and restricted patent owners’ discretion to file in the venue of their choice. This has resulted in many new cases being filed in Delaware where many entities are incorporated. Unable to choose their venue, patentees have been forced to adjust their case strategy or consider whether to file at all if a litigation strategy was dependent on filing in a specific venue where patent case schedules are expedited or judicial experience is seen to best fit the case at hand. Patent litigation filings saw a decline from approximately 4,500 case filings in 2016 to just under 4,000 in 2017, the year after the TC Heartland decision.
Feedback we receive from the market suggests that starting in 2018, shifts in judicial interpretations—particularly more restrictive decisions regarding patent eligibility, injunctions, and damages—led companies to reassess their IP strategies. It has become increasingly frequent to invalidate patents as abstract ideas under Section 101 of the Patent Act. Related to damages, in 2021, the US Court of Appeals for the Federal Circuit (CAFC) in Omega Patents, LLC v. CalAmp Corp. rejected a patentee’s licensing policy as a means of apportionment and imposed a stricter standard of accounting for the distinguishing facts between a license agreement and a contemplated hypothetical negotiation. More recently, in 2023, the CAFC in VLSI Technology LLC v. Intel Corp. vacated a USD1.5 billion jury verdict citing that VLSI had erred by estimating the benefits of the patented invention by performing testing of non-accused features. While other CAFC decisions during this same period were arguably favorable for patentees, others appear to have contributed to lower patent case filings since 2015.
Another factor we believe likely contributing to lower patent case filings is increased scrutiny over litigation transparency. Such heightened attention on who may be controlling a non-practicing entity (NPE) or litigation-funded plaintiff may discourage filings by plaintiffs not willing to disclose the existence or the identity of investors or ownership structure. Such transparency requirements have been prominent in the District of Delaware where Judge Connolly has issued a standing order ordering parties to disclose “the name of every owner, member, and partner of the party, proceeding up the chain of ownership until the name of every individual and corporation with direct or indirect interest in the party has been identified.” Should the “Litigation Transparency Act of 2025” make its way through Congress and become law, the future impact on patent case filings will likely be greater.
Looking further to the future, it is worth noting that consideration of the “RESTORE Patent Rights Act of 2024” pending in Congress may temper the decline in cases discussed above as this legislation is seeking to strengthen rights of patentees by instituting a rebuttable presumption of injunction for patent infringement. If passed, this bill would strengthen patent TRE position and may lead to a rebound in patent case filings.
Rise in Trade Secret Litigation
In response to the contemporary challenges associated with patent enforcement, many companies have begun to place greater focus on the protection and monetization of trade secrets. This shift is evident in the increasing number of trade secret litigation cases. According to data from Lex Machina, the enactment of the Defend Trade Secrets Act (DTSA) in 2016 resulted in a notable surge in federal trade secret cases, with filings consistently remaining above pre-DTSA levels. While there was a brief decline during the COVID-19 pandemic, the number of cases rebounded, with over 1,200 cases filed in 2023 and over 1,300 in 2024 compared to less than 1,100 in 2015.
Enactment of the DTSA provided greater protection for trade secrets and has arguably made it easier to establish the existence and misappropriation of trade secrets. The definition of a trade secret under DTSA is considered broad by many, allowing trade secret holders additional flexibility in what may be appropriately considered a trade secret, especially with respect to how trade secrets are defined for the purpose of litigation. In the first year following the enactment of the DTSA, trade secret case filings rose from less than 1,200 in 2016 to nearly 1,400 in 2017.
Certain circuits have now applied the DTSA to allow for damages on sales related to misappropriation occurring outside of the United States, contingent on if there was an “act in furtherance of the misappropriation in the US.” For example, in Motorola Solutions, Inc. v. Hytera Communications Corp., No. 1:17-cv-01973 (N.D. Ill.), a jury issued a verdict against Hytera ordering it to pay over USD765 million in damages for misappropriation of Motorola trade secrets. TRE considering foreign sales may lead to even further emphasis on the development, protection, and assertion of trade secrets. Large damage awards may also drive a rise in TRE via trade secret claims. As an example, in 2022, in Appian Corporation v. Pegasystems, Inc., No. 2020-07216 (Fairfax County Circuit Court), a jury found that Pegasystems misappropriated Appian’s trade secrets and issued a verdict for the largest non-biotech damages claim to date of over USD2 billion.
Emergence of Copyright Concerns in the AIML Domain
Traditional copyright cases have expanded in recent years to recognize the role copyrights play in providing data and content for training Artificial Intelligence and Machine Learning (AIML) technologies. These technologies often require vast amounts of data for training, raising concerns about the use of copyrighted material without authorization. This has led to a notable number of copyright infringement lawsuits against AI companies.
Over the last decade, annual filings of copyright cases have varied from year to year with approximately 5,200 in 2015, a low of approximately 3,400 in 2020 and a high of 7,650 in 2024 – more than double the 2020 figure. Notably, since May 2020, there has been a significant increase in lawsuits involving plaintiffs ranging from individual authors and visual artists to major media companies and music industry giants. Defendants include prominent AI developers like OpenAI, Meta, Microsoft, Google, Anthropic, and Nvidia. The outcomes of these cases may directly inform best practice for IP management within the AI industry as well as the broader digital information ecosystem.
While there has been a rise in AIML related litigation in recent years, this trend may not last. As AIML becomes more ubiquitous, the demand for training data and content will continue to rise, creating the need for AIML platforms to obtain content use rights to avoid copyright suits. To meet such needs, further development of an efficient and transparent, market-based transactional platform for licensing data and artistic content is likely. Such transactional platforms will continue to improve market transparency and efficiency, reduce transaction costs, and promote fair competition and pricing. Standardized markets for high quality data and content ensure content creators and data owners are fairly compensated for their contributions to AIML models and incentivize the creation of high-quality data and content for continued growth of AIML platforms. We expect that the recent rise in copyright cases for AIML will peak and then decline as markets for AIML licensing mature.
Conclusion
The IP landscape is continually evolving, influenced by technological advancements and changing legal interpretations. Organizations must remain agile, adapting their IP strategies to address emerging challenges and opportunities, particularly as AIML technologies become more prevalent and integrate into various sectors.
Our review confirms the accuracy of our past prediction that trade secrets would become more prominent in companies’ TRE strategies. Over the next decade, we predict companies will take a more balanced approach between patents, trade secrets, and copyrights, barring any significant legislative changes.
