The Invisible Epidemic: Unprosecuted Trade Secret Theft and the Path to Protection

In a recent LinkedIn post that sparked discussion among IP experts and entrepreneurs, Tim Londergan, CEO and Founder of Tangibly, posed a provocative question: With approximately 1,400 trade secret misappropriation cases filed annually in the U.S., how many more incidents go undetected or unprosecuted? Is the true scale 2x, 10x, or 100x the visible filings?

Drawing from daily conversations with clients, Londergan highlighted stark realities: small companies lack the funds for costly litigation, third-party financiers back only 1% of potential cases, and even established firms often operate without basic trade secret policies, leaving them blind to theft. His gut estimate is at least 100x.

This is not hyperbole. It reflects a massive, underreported crisis. Trade secrets, including proprietary formulas, processes, and know-how that fuel innovation, represent the bulk of a company’s intangible value, yet they often evade the protections and visibility that patents or copyrights receive. Unprosecuted theft is not just a legal footnote. It is an economic black hole draining billions from U.S. businesses.

To proxy the potential volume, consider breach of contract lawsuits, many of which underpin trade secret claims through violated NDAs or noncompetes. In 2023, state courts processed about 13 million civil filings, with contract disputes accounting for 46%, roughly 6 million cases, while federal district courts added another 30,000. If even 1–5% of these matters involve undetected trade secret misappropriation, the multiplier on filed trade secret cases jumps to roughly 4,000x–20,000x.

Amid this gloom, emerging tools like specialized insurance offer a path forward. The rest of this piece looks at the scale, the barriers, and practical solutions.

The Tip of the Iceberg: Quantifying the Unseen

Federal data shows rising awareness but limited action. Since the 2016 Defend Trade Secrets Act (DTSA), which harmonized state laws and eased federal filings, trade secret cases have hovered around 1,200 to 1,400 per year in U.S. courts. A 2024 analysis of over 9,600 federal cases underscores the trend: post-DTSA filings surged 25–30% initially, dipped slightly during the pandemic, then rebounded to over 1,200 in 2023. These numbers capture only the disputes that escalate to court, often after years of quiet suspicion.

The unreported underbelly is staggering. Estimates peg annual U.S. losses from trade secret theft at $180–540 billion, equivalent to 1–3% of GDP. A 2017 update to the IP Commission Report, citing FBI data, sets a minimum of $180 billion, with cyber-enabled theft as a primary vector. Translating dollars into incident counts is harder. A 1990s survey of high-tech firms found 48% had suffered theft at some point, but modern extrapolations are scarce.

Commenters on Londergan’s post add color. Serial founder Doug Pittman pushes the multiplier to “100,000x,” citing countless small entities crushed by David vs. Goliath dynamics where infringers bank on victims’ financial paralysis. John Boruvka, an IP strategist, concurs with at least 100x and notes that trade secrets now comprise most intangible assets in many companies.

Why the disconnect? Detection is the Achilles’ heel, as Mike Pellegrino notes: “If one cannot detect the theft… one cannot sue.” Unlike patent infringements, which leave public trails, trade secrets live in secrecy. A stolen algorithm might power a competitor’s product for years before red flags appear. By then, proving misappropriation demands forensic work and extensive evidence. The breach of contract proxy amplifies this: with millions of such filings annually, the subset involving trade secrets likely dwarfs the 1,400 prosecuted cases, suggesting a vast reservoir of unlitigated harms.

Barriers to Justice: Cost, Risk, and Blind Spots

Londergan’s breakdown of litigation economics is blunt. Filing a case can cost $50,000–$250,000 upfront, depending on counsel. Reaching trial or a serious settlement can run $1–5 million and in high-stakes battles can reach $25 million or more. Awards can be massive, including hundreds of millions in damages and “avoided costs” that strip wrongdoers’ profits, but plaintiffs carry the initial burden. For bootstrapped innovators, this is a nonstarter.

Litigation finance, which Londergan likens to Series D venture money, narrows access further. Funders greenlight only about 1% of pitches, prioritizing slam-dunks with strong evidence and clear damages. The rest are rejected for risk, leaving 99% of victims in limbo. This “catch me if you can” environment, as Pittman describes it, emboldens thieves who know small players will not fight.

Many companies also do not know they have been hit. Londergan’s surprise at “GREAT companies” that lack trade secret policies is widely shared. Without identifying assets through audits, NDAs, or access controls, firms cannot spot breaches. A 2021 DCSA report warns that lax practices fuel IP leakage, costing the economy hundreds of billions per year and stifling R&D. In globalized supply chains, theft often traces to insiders or overseas actors, which makes enforcement even more challenging.

A Call for Systemic Change

Londergan’s post surfaced raw, first-hand views. Pittman laments “massive infringement… ignored” due to cost and calls out “broken laws” that favor IP gatekeepers. Boruvka reinforces the 100x scale and urges better valuation of these “hidden gems.” Pellegrino’s focus on detection explains why statistics lag reality.

Mary Guzman, Founder and CEO of Crown Jewel Insurance, adds a different lens. She compares the status quo to “a killer who goes unpunished because the funds (or evidence) aren’t there.” Crown Jewel positions itself as the first dedicated trade secret insurer for trillions in unprotected assets. Its model starts with rigorous due diligence, then funds forensics and enforcement for every policyholder. If injunctions fail, they indemnify losses and subrogate claims, shifting the burden from David to the insurer. If recoveries exceed payouts and costs, the excess goes back to the insured.

This creates a win-win-win structure that democratizes enforcement in asymmetric disputes.

Guzman’s work highlights a nascent but growing market. Trade secret insurance, once niche, is expanding as firms recognize the primacy of TSAs (trade secret assets) in IP portfolios. By valuing secrets before theft and building in proactive advisory, this type of coverage shifts insurance from reactive payout to strategic shield.

Practical Steps for Protection

How do businesses bridge the gap between the visible docket and the true scale of misappropriation?

Start with the basics. Implement a trade secret policy. Define key assets, use NDAs, limit access, and train staff. Tools like Tangibly’s platform can help automate identification, documentation, and monitoring, turning intuition into structured intelligence.

On funding, explore litigation financiers early, but do not rely on them alone. Trade secret insurance is emerging as a complementary tool. Guzman’s model is not the only one. Carriers are piloting IP riders in cyber policies and other products aimed at theft in the $225–600 billion loss range. Policymakers can support this shift by strengthening the DTSA with detection incentives, such as tax credits for audits, and by promoting international cooperation on cross-border theft.

Londergan’s 100x guess looks conservative against the data, especially when you proxy via millions of annual contract breaches. As 2025 unfolds, with AI accelerating the risk of secret sharing and leakage, the unprosecuted epidemic demands urgency. Businesses cannot afford complacency. Thieves certainly will not slow down.