A trade secret is business information that is valuable because competitors do not know it and that its owner takes reasonable steps to keep confidential. Source code, bidding models, pricing formulas, customer lists and training datasets can all qualify. Nothing is registered, and protection lasts as long as the secret holds. The law punishes taking such information by improper means, such as theft, bribery or an employee's breach of confidence, without giving anyone a monopoly over ideas others reach independently.

In advertising, much of the machinery deciding who wins an impression, and at what price, is guarded this way, so ad tech transparency disputes often become arguments about secrecy.

What the law protects

American and European tests are nearly identical. Under the federal Defend Trade Secrets Act (DTSA), information qualifies if its owner has taken reasonable measures to keep it secret and it derives independent economic value from not being generally known, according to 18 U.S.C. 1839. The European Union's Directive 2016/943 requires secrecy, commercial value arising from it, and reasonable steps to preserve it. The World Intellectual Property Organization (WIPO) lists software algorithms, supplier lists and advertising strategies among typical examples.

Two limits define the right. Secrecy is relative: sharing with staff or contractors bound by confidentiality does not destroy it. And protection runs only against improper acquisition; both regimes permit reverse engineering and independent discovery, so a rival that deduces a bidding strategy by testing a live product breaks no law.

How protection works

Protection starts inside the company, where classification, access limits, non-disclosure agreements and revoked credentials later become evidence. In a suit filed on January 20, 2026, SerpApi accused a former contractor of building a rival with its source code and customer lists, citing $47 million of development over eight years. The defendant replied that SerpApi had failed the reasonable-measures test, pointing to credentials emailed in plain text in 2020 and never revoked after the contractor left in 2021.

Misappropriation, the legal wrong, means acquiring a secret by improper means, or using or disclosing it in breach of a duty. Enforcement typically moves through four stages:

  • Demand. A cease-and-desist letter, often followed by negotiation.
  • Emergency relief. A temporary restraining order or preliminary injunction, since disclosure is harm money cannot undo. The DTSA also permits seizure without notice, but only in extraordinary circumstances.
  • Identification and discovery. California requires plaintiffs to identify the secret with reasonable particularity before discovery. Sensitive filings are routinely sealed or restricted to outside lawyers.
  • Remedies. Damages for actual loss and unjust enrichment, or a reasonable royalty, plus exemplary damages of up to twice that sum for wilful and malicious conduct. DTSA claims must be filed within three years of discovery; EU member states may allow up to six.

Two further DTSA rules protect individuals: courts cannot bar someone from a job merely because of what they know, and whistleblowers who disclose secrets in confidence to officials or lawyers are immune.

The Economic Espionage Act of 1996 adds prison terms of up to 15 years per count for theft benefiting a foreign government and ten for commercial theft. A jury convicted former Google engineer Linwei Ding of seven counts of each on January 29, 2026, after he took more than 2,000 pages on artificial intelligence (AI) chips and infrastructure, according to the Department of Justice. Judge Vince Chhabria called it "a systematic, brazen effort to steal Google's property" yet imposed 12 months less a day on September 1, against the 70 months prosecutors sought, according to Courthouse News Service.

Where secrets sit in the ad stack

Ad servers guard auction logic. In the Google ad tech case, the government wanted the final auction logic of DoubleClick for Publishers (DFP) open-sourced; Glenn Berntson, a Google engineering director, called the code at issue the "heart and soul of any ad server". Judge Leonie Brinkema accepted technical documentation instead, with a data file listing each ad's candidate prices and every adjustment.

Pricing is guarded too. The public version of the Federal Trade Commission (FTC) complaint against Amazon, filed on August 31, 2026, redacted average surcharge rates and reserve guardrails, leaving a $20 billion surcharge claim without its arithmetic. The allegation that Amazon charged advertisers their full bid 79% of the time in 2024 survived.

Supply relationships mark another boundary. The Interactive Advertising Bureau (IAB) Tech Lab's sellers.json specification, finalised in July 2019, publishes each seller's name and domain unless the exchange sets is_confidential to 1.

From jute mills to federal courts

An early foundation of American doctrine is Peabody v. Norfolk, in which the Massachusetts Supreme Judicial Court in 1868 enjoined a rival that hired an employee bound to secrecy over machinery for making gunny cloth from jute. The 1939 Restatement of Torts defined a trade secret as information giving its holder an advantage over competitors, with six factors courts still cite.

The Uniform Law Commission approved the Uniform Trade Secrets Act (UTSA) on August 9, 1979, amending it in 1985; every state except New York and North Carolina has adopted it. Congress made trade secret theft a federal crime on October 11, 1996, and civil claims went federal with the DTSA, which passed the Senate 87-0 and the House 410-2. President Barack Obama signed it on May 11, 2016, saying some competitors were trying "to steal these trade secrets".

Europe moved in the same season. Directive 2016/943, adopted on June 8, 2016, gave member states until June 9, 2018 to comply. Germany's Geschaeftsgeheimnisgesetz (GeschGehG) arrived late, on April 26, 2019, making appropriate secrecy measures a condition of protection.

More than 1,500 federal trade secret cases were filed in 2025, a record, and between 2023 and 2025 juries awarded more than $716 million in actual damages and more than $510 million in punitive damages, according to Lex Machina.

Why it matters for marketing

Many disputes follow people. xAI sued Xuechen Li on August 28, 2025, alleging that he took Grok technology after selling $6.9 million of stock and while preparing to join OpenAI. On July 10, 2026, Apple sued two former employees and OpenAI on four DTSA counts, by which point more than 400 former Apple staff worked at OpenAI.

Secrecy also shapes what advertisers can see. When Judge Amit Mehta ordered Google on September 2, 2025 to publicly disclose material changes to its search ad auctions, he required the disclosure parameters to avoid revealing Google's trade secrets. Lawmakers are drawing the same line for AI. xAI challenged California's Assembly Bill 2013 on December 29, 2025 as an uncompensated taking of its datasets, while the EU AI Act makes general-purpose model providers publish a training content summary but keeps trade secrets given to regulators confidential.

Limits and disputes

Proof is the first weakness. Judge Jesus G. Bernal refused xAI a preliminary injunction on March 4, 2026, finding its pleadings too general, at that stage, to show that its datasets qualified as trade secrets; xAI had acknowledged that competitors use overlapping data.

Privacy law narrows secrecy's reach over individuals. In Dun & Bradstreet Austria (C-203/22) on February 27, 2025, the Court of Justice of the European Union (CJEU) held that a company cannot refuse outright to explain an automated decision on trade secret grounds; it must give the contested information to a regulator or court, which weighs the competing interests. The Austrian Supreme Court rejected Meta's trade secret objections to a full data access request on November 26, 2025, and the Dutch data protection authority's draft guidance of April 25, 2026 says a general concern about economic interests is not enough to limit an explanation.

Competition enforcers are sceptical too. Under the Digital Markets Act (DMA), Google argued that rivals receiving its search data could imitate its algorithms; the European Commission rejected that argument and required anonymisation rather than withholding. Google also warned that detailing its spam filtering would help others defeat its anti-scraping protections, the standard case for secrecy: disclosure invites gaming.

Not the same as

Patent. A patent publishes an invention in exchange for exclusive rights, typically for 20 years, even against independent inventors. A trade secret needs no filing and can last indefinitely, but offers no protection against reverse engineering or independent discovery, according to WIPO.

Confidential information. A non-disclosure agreement covers whatever the parties choose, for as long as the contract says. SearchApi argues its contractual duties expired on July 23, 2024, which does not settle whether statutory protection survives.

Copyright. Copyright protects expression, such as the literal text of code, not the method it implements. SerpApi pleaded both, citing a copyright registration for its source code.

Non-compete clause. A contract barring work for a rival, whatever the employee knows. The FTC voted 3-1 on September 5, 2025 to abandon a rule banning most of them, leaving trade secret law and contracts as employers' main tools.

Recent developments

AppLovin filed an arbitration demand against Unity on September 27, 2026, including a claim under the California Uniform Trade Secrets Act, and sought interim relief from a San Francisco court. It alleges that Unity's Ad Quality software development kit (SDK) collected per-impression revenue from AppLovin MAX auctions, mediation waterfall data and screen-touch coordinates, and wants collection stopped within five business days. Unity denies collecting AppLovin's data. Judge Joseph M. Quinn is scheduled to hear the application today.

A joint proposed final judgment in the Google ad tech case, setting the format of the auction documentation, is due on October 2. xAI's appeal of the California ruling is pending before the Ninth Circuit, where 28 organisations have filed a brief supporting the law.

Timeline

  • 1868: The Massachusetts Supreme Judicial Court decides Peabody v. Norfolk, protecting a secret manufacturing process shared with an employee in confidence
  • 1939: The Restatement of Torts defines a trade secret and sets out six factors for identifying one
  • August 9, 1979: The Uniform Law Commission approves the Uniform Trade Secrets Act
  • August 8, 1985: The UTSA is amended
  • January 1, 1995: The TRIPS agreement, whose Article 39 requires protection of undisclosed information, takes effect
  • October 11, 1996: The Economic Espionage Act is signed
  • July 29, 2015: Senator Orrin Hatch introduces the Defend Trade Secrets Act
  • April 4, 2016: The Senate passes the DTSA 87-0
  • April 27, 2016: The House passes the DTSA 410-2
  • May 11, 2016: President Obama signs the DTSA
  • June 8, 2016: The EU adopts Directive 2016/943
  • June 9, 2018: Transposition deadline for the EU directive
  • October 1, 2018: Massachusetts' version of the UTSA takes effect
  • April 26, 2019: Germany's GeschGehG takes effect
  • July 2019: The IAB Tech Lab finalises sellers.json version 1.0, including the is_confidential field
  • February 27, 2025: The CJEU rules in Dun & Bradstreet Austria
  • August 28, 2025: xAI sues former engineer Xuechen Li
  • September 2, 2025: Judge Mehta issues search remedies requiring disclosure of auction changes without revealing trade secrets
  • September 5, 2025: The FTC votes 3-1 to accede to vacatur of its non-compete rule
  • November 26, 2025: The Austrian Supreme Court rejects Meta's trade secret objections to a data access request
  • December 29, 2025: xAI sues California over Assembly Bill 2013
  • January 20, 2026: SerpApi sues a former contractor and SearchApi
  • January 29, 2026: A jury convicts Linwei Ding of economic espionage and theft of trade secrets
  • March 4, 2026: Judge Bernal denies xAI a preliminary injunction
  • April 20, 2026: SearchApi moves to dismiss the SerpApi suit
  • April 25, 2026: The Dutch data protection authority opens consultation on explaining automated decisions
  • July 10, 2026: Apple sues two former employees and OpenAI
  • July 22, 2026: A coalition of 28 organisations files an amicus brief supporting AB 2013 at the Ninth Circuit
  • August 31, 2026: The FTC and 22 states sue Amazon over ad auction surcharges
  • September 1, 2026: Linwei Ding is sentenced to 12 months less a day
  • September 2, 2026: Judge Brinkema issues her ad tech remedies opinion under seal
  • September 27, 2026: AppLovin files an arbitration demand against Unity
  • September 30, 2026: A San Francisco court is scheduled to hear AppLovin's application
  • October 2, 2026: A joint proposed final judgment is due in the Google ad tech case

Summary

Who. Companies that hold valuable non-public information, including ad servers, exchanges, platforms, measurement vendors and AI developers; the employees, contractors and rivals accused of taking it; and the courts, prosecutors and regulators who enforce the law or override it in the name of transparency.

What. Information that is valuable because it is secret and that its owner takes reasonable steps to protect. The law punishes acquisition by improper means but allows reverse engineering and independent discovery.

When. Courts protected secret processes by 1868. The Restatement defined the concept in 1939, the UTSA codified it in 1979, federal criminal penalties followed in 1996, and the DTSA and the EU directive arrived in 2016. Disputes over AI talent, training data and ad auction transparency multiplied in 2025 and 2026.

Where. Mainly in United States state and federal courts and in EU member-state courts under national laws such as Germany's GeschGehG, with privacy regulators, competition authorities and the CJEU setting limits.

Why. Much of ad tech's value lies in bidding models, auction logic, pricing and data that cannot be patented or would lose value if published. Trade secret law protects those assets, and regulators increasingly decide when transparency outweighs them.