NEWS & INSIGHTS

Understanding Legal Standards and Practical Steps for Protecting Proprietary Information in 2026

Introduction: The Strategic Value of Trade Secrets and Recent Legal Developments

In today’s knowledge-driven economy, trade secrets have become one of the most valuable assets for businesses across all industries. As competition intensifies and information becomes easier to copy or misappropriate, the legal landscape surrounding trade secrets is evolving to provide clearer guidance and stronger protections. In 2026, pivotal court decisions such as those in the NEXT Payment Solutions, Inc. v. CLEAResult Consulting, Inc., 24-1377 (7th Cir. Jan. 13, 2026) and Applied Predictive Technologies, Inc. v. MarketDial, Inc., No. 24-4064 (10th Cir. Jan. 28, 2026) cases have clarified the “reasonable particularity” standard for identifying trade secrets, a crucial requirement for legal protection and enforcement. 

Importantly, courts have made it clear that it is not sufficient for plaintiffs to simply submit volumes of expert reports, technical documents, or other materials and expect the court to sift through and piece together the alleged trade secret from a mass of information. Instead, plaintiffs must proactively identify and articulate the specific information they are claiming as a trade secret, explaining with concrete reasons how and why this information derives economic value from not being generally known or readily accessible to others.

Broad descriptions and jargon-laden terminology should be avoided; the information must be described with clarity and specificity. For instance, if the alleged secret involves a process, it is not enough to state the end result or what is visible to the public—the plaintiff must detail how the process is performed and what makes it unique. Moreover, the plaintiff should disclose why and how the information is not generally known within the relevant industry or ascertainable without improper means, reinforcing the necessity for a precise and thorough identification of the trade secret at the outset of litigation.

Understanding these developments—and how they interact with both the Pennsylvania Uniform Trade Secrets Act (PUTSA) and the federal Defend Trade Secrets Act (DTSA)—is essential for business leaders and legal professionals seeking to safeguard their organizations’ proprietary information.

What Are Trade Secrets?

A trade secret is any confidential business information that provides a company with a competitive edge. Classic examples include formulas, recipes, manufacturing processes, algorithms, customer lists, and marketing strategies. For information to qualify as a trade secret under U.S. law, it must (1) derive independent economic value from not being generally known or readily ascertainable, and (2) be subject to reasonable efforts to maintain its secrecy.

Legal protection for trade secrets is distinct from patents or copyrights: it does not require registration, but hinges on ongoing secrecy and the steps a business takes to protect that secrecy. Both state and federal laws provide remedies for trade secret misappropriation, but the precise requirements and standards can vary.

The Reasonable Particularity Standard in 2026: Insights from the NEXT and API Cases

Recent decisions in the 2026 NEXT and API cases have underscored the importance of articulating trade secrets with “reasonable particularity” during litigation. This standard requires that a trade secret claimant describe the alleged secret clearly enough that the court and the opposing party understand what is being protected and litigated. Vague or overly broad descriptions—such as “business know-how” or “customer relationships”—are insufficient.

The NEXT and API cases clarified that the “reasonable particularity” standard is not satisfied by generic descriptions. Instead, plaintiffs must specify particular documents, processes, or data, often down to unique combinations or configurations that are not publicly known. The courts emphasized that this clarity is necessary at the outset of litigation, particularly before discovery proceeds, to prevent fishing expeditions and to ensure fair notice to the defendant.

• Key Takeaway: The bar for identifying trade secrets has been raised; businesses must be prepared to define their secrets with specificity and provide evidence that these secrets are not generally known or easily discoverable.

PUTSA vs. DTSA: Comparing State and Federal Trade Secret Standards

 
Similarities: Both PUTSA and DTSA require that trade secrets be described with reasonable particularity, and both allow for summary judgment if the claimant cannot meet this standard. Their definitions of “trade secret” are nearly identical, and both require that businesses take reasonable measures to keep their information secret.

Differences: The DTSA provides access to federal courts and includes special remedies like seizure orders. Federal courts may apply the particularity standard differently, sometimes demanding a higher level of detail before discovery. Additionally, DTSA does not preempt state law, so companies may need to comply with both standards in parallel litigation.

Best Practices for Identifying and Maintaining Trade Secrets

Given the heightened scrutiny on particularity, continuous identification and protection of trade secrets is not just a legal obligation, but a sound business strategy. The following best practices can help companies avoid costly litigation pitfalls and maximize the value of their proprietary information:

Continuous Identification and Documentation

• Maintain an up-to-date inventory of all trade secrets, documenting their nature, location, and value to the business.
• Regularly review and update this inventory as technology, personnel, and business strategies evolve.
• Clearly distinguish between confidential information and true trade secrets.

Employee Protocols and Training

• Implement robust onboarding and offboarding procedures, including signed confidentiality and non-compete agreements where permissible.
• Train employees regularly on what constitutes a trade secret and their obligations to protect it.
• Limit access to trade secrets on a need-to-know basis, using IT controls and physical security as appropriate.

Disclosures in Business Partnerships

• Use non-disclosure agreements (NDAs) with all external partners, vendors, and consultants.
• Identify and mark trade secrets before sharing them, and limit disclosure to only what is necessary for the business purpose.
• Document all disclosures and keep records of who accessed sensitive information, when, and why.

Considerations During Business Sales, Mergers, or Acquisitions

• Conduct thorough due diligence to identify all trade secrets involved in the transaction.
• Structure deal documents to address the handling and transition of trade secrets, including post-closing confidentiality obligations.
• Ensure that departing executives or employees involved in a transaction are reminded of their ongoing duties to maintain secrecy.

Conclusion: Key Takeaways and Recommendations

The evolving “reasonable particularity” standard, as clarified by the NEXT and API cases in 2026, raises the bar for businesses seeking trade secret protection under both PUTSA and DTSA. Success in litigation—and, more importantly, in safeguarding valuable information—now depends on a company’s ability to identify, describe, and control its trade secrets with clarity and rigor. By embedding continuous identification, robust employee protocols, careful partnership disclosures, and thoughtful M&A strategies into daily operations, business leaders can not only ensure legal compliance but also maximize the strategic value of their proprietary assets.

Business leaders and legal professionals are encouraged to review their trade secret practices in light of these developments, seek legal counsel as needed, and foster a culture of vigilance and respect for confidentiality throughout their organizations.