Long Island Businesses Face an Unprecedented Wave of Trade Secret Theft as Employee Mobility and Digital Vulnerabilities Create Perfect Storm for Corporate Espionage

The trade secret litigation landscape has exploded into what experts are calling a “perfect storm” for Long Island businesses in 2025. Since the Defend Trade Secrets Act (DTSA) passed in 2016, trade secret litigation has exploded. In 2024 alone, U.S. courts saw over 1,200 new filings—many involving hundreds of millions in claimed damages. For Nassau and Suffolk County businesses, this represents a critical threat to their most valuable intellectual property assets.

The Staggering Success Rate of Trade Secret Plaintiffs

The statistics paint a sobering picture for businesses facing potential trade secret theft. According to Stout’s 2024 report, plaintiffs have won 84% of federal trade secret trials since 2017, with damages awarded in nearly 80% of them. Since 2020, 118 verdicts have delivered nearly $1 billion to plaintiffs. These aren’t just numbers on a spreadsheet—they represent real businesses that lost their competitive edge through employee theft of confidential information.

Recent landmark cases demonstrate the devastating financial impact. The jury awarded $604.9 million in compensatory and $195 million in punitive damages—an $800 million total, among the largest trade secret verdicts in U.S. history in Propel Fuels Inc. v. Phillips 66 Company. Similarly, An Arkansas jury awarded $222 million after finding Walmart misappropriated Zest Labs’ produce-freshness technology. The unanimous verdict—one of the largest trade secret awards in state history—also included $150 million in punitive damages.

Why Long Island Businesses Are Particularly Vulnerable

Long Island’s diverse economy, spanning from healthcare and biotech innovation to manufacturing and professional services, creates unique vulnerabilities. The underlying conditions driving the boom include the growing mobility of the global workforce, the ease with which electronic data can be captured and moved, the emergence of nation-state actors participating in the theft of information in the global marketplace, and the time-limited benefits and uncertainties of patent litigation. Also fueling this rise are the federalization of trade secret laws with the Defend Trade Secrets Act (DTSA), the extraterritorial application of such laws to acts committed outside the U.S., and the availability of robust legal remedies in the U.S. for trade secret misappropriation.

The region’s proximity to New York City means employees frequently move between companies, taking valuable knowledge with them. When a Long Island manufacturing company loses a key engineer to a competitor, or a biotech firm sees researchers depart with proprietary formulations, the potential for trade secret misappropriation skyrockets.

The Digital Evidence Challenge

Trade secret litigation has entered the digital era. Once courtroom dramas, today’s disputes unfold in virtual forensics labs, where the evidence lives in AI training sets, source code, and cloud-based algorithms. For Long Island businesses, this means that protecting trade secrets requires more than traditional physical security measures.

Modern trade secret cases often involve sophisticated digital forensics to trace the movement of proprietary information. A Massachusetts jury concluded that EOFlow stole trade secrets to develop its EOPatch insulin pump. Forensic experts traced identical design files and algorithms from Insulet’s Omnipod system, while economist Dr. McLean’s “avoided-cost” model quantified the savings EOFlow gained by skipping R&D.

Legal Standards Are Tightening

While plaintiffs are winning more cases, courts are demanding higher standards of proof. Three recent federal court decisions overturned exceptionally large damages awards on the ground the plaintiff failed to prove causation between the proven misappropriation and the claimed damages. But plaintiffs should consider taking care to show the causal nexus between the claimed damages and the proven misappropriation at trial.

This trend means that Long Island businesses must be prepared to demonstrate not just that trade secrets were stolen, but exactly how that theft caused specific financial harm. The days of speculative damages awards are ending, requiring more sophisticated economic analysis and expert testimony.

Proactive Protection Strategies

The most effective defense against trade secret theft begins before any litigation. The court found that the plaintiff’s efforts to safeguard its trade secrets and other confidential documents — i.e., restricting the group of employees with access, including confidentiality directives in its employee handbook, requiring high-level employees to enter confidentiality agreements and storing information on a password protected drive — were reasonable. The court noted that “the DTSA does not require an entity to initially parse out its trade secrets from its more general confidential information and employ unique protections as to its trade secrets.”

Long Island businesses should implement comprehensive confidentiality programs that include:

• Robust non-disclosure agreements with employees, contractors, and business partners
• Clear identification and marking of confidential information
• Access controls limiting who can view sensitive data
• Regular training on information security protocols
• Digital monitoring systems to track access to proprietary information

When Prevention Fails: Swift Legal Action

When trade secret theft occurs, time is critical. The longer stolen information remains in unauthorized hands, the greater the potential damage to competitive advantage. This is where experienced legal counsel becomes essential. A skilled commercial litigation attorney long island can quickly assess the situation, gather evidence, and pursue both immediate injunctive relief and long-term damages recovery.

The Frank Law Firm P.C., located in Huntington and serving businesses throughout Long Island, understands the unique challenges facing local companies. The Frank Law Firm P.C. is a team of professional attorneys and support staff that provide legal services for businesses on Long Island, in New York City, and the surrounding areas. We offer a full range of legal services, from simple contract reviews to complex litigation matters. Their experience in commercial litigation positions them to handle the sophisticated legal and technical issues that arise in modern trade secret cases.

The Expanding Reach of Trade Secret Law

Recent developments have expanded the potential recovery in trade secret cases. In 2024, the Seventh Circuit held that the federal Defend Trade Secrets Act (DTSA) has extraterritorial reach. This was the first circuit court in the country to find this explicitly. In so holding, the Seventh Circuit affirmed a nine-figure compensatory damages award that consisted entirely of the defendant’s foreign sales. All that is necessary to obtain foreign damages is an “act in furtherance” of the misappropriation in the United States, such as advertising products at a trade show that make use of the misappropriated information.

This expansion means that Long Island businesses can potentially recover damages from global operations that benefit from stolen trade secrets, significantly increasing the stakes for both plaintiffs and defendants.

Preparing for 2025 and Beyond

As we move deeper into 2025, Long Island businesses must recognize that trade secret protection is no longer optional—it’s essential for survival. The combination of high plaintiff success rates, massive damage awards, and expanding legal reach creates an environment where a single incident of employee theft can threaten a company’s existence.

The most successful approach combines proactive protection measures with immediate access to experienced legal counsel when problems arise. Each of our lawyers is dedicated to providing top-notch legal representation with an eye on your long-term goals. When you hire our firm, we promise to do everything within our power to protect your interests and advance your objectives.

For Long Island businesses, the trade secret litigation explosion of 2025 represents both a threat and an opportunity. Those who take proactive steps to protect their intellectual property and maintain relationships with experienced commercial litigation attorneys will be best positioned to defend their competitive advantages and, when necessary, pursue justice against those who steal their most valuable assets.

The stakes have never been higher, but with proper preparation and expert legal guidance, Long Island businesses can navigate this challenging landscape and emerge stronger than ever.