LET'S TALK SPORTS LAW

[Author: Krish Bihani, Law Student at Jindal Global Law School, India]

---

INTRODUCTION

A team’s success is often hidden in its data, and protecting that data is as crucial as guarding the goal line. Trade secrets are in essence a competitive advantage of any business, manifested in many forms such as recipes, business practices, technology, etc. As long as this secrecy is maintained, the commercial value of the trade secret and consequently the value of the business remains intact. 

Defining Trade Secrets

The Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) provides for the protection of ‘undisclosed information’ such as trade secrets and know-how, disclosed without the consent of the person lawfully in control of such information. Under  Article 39.2 of TRIPS such ‘undisclosed information’ is afforded protection if it passes the following three-pronged test: 

• The information cannot be common knowledge within the particular industry, i.e., it should be a secret;
• The information should have commercial value mainly because of its secrecy, i.e., its value would vanish if the information were made available to the whole public. A prime example is the formula for Coca-Cola, which has economic value due to its limited public knowledge; and
• The person lawfully in control of the information should have taken reasonable steps to keep it a secret. 

Another key element for protection of trade secrets under TRIPS is that the disclosure of such secret without lawful consent should be ‘in a manner contrary to honest commercial practices’, i.e., practices such as breach of contract, breach of confidence and inducement to breach, acquisition of undisclosed information by third parties who knew, or were grossly negligent in failing to know, that such dishonest practices were involved in the acquisition of the information.

LEGAL FRAMEWORK SURROUNDING TRADE SECRETS

Along with the TRIPS Agreement, at the national level, countries like the United Kingdom and the United States of America have developed the most robust frameworks for protection of trade secrets.

United States

The Defend Trade Secrets Act (“DTSA”), Economic Espionage Act (“EEA”), and Uniform Trade Secrets Act (“UTSA”) all influence the U.S. trade secret protection system. The EEA criminalises trade secret theft and imposes harsh penalties, including up to 10 years in jail and $10 million in fines for corporate violators. UTSA, a model statute, sought to eliminate inconsistencies across state-level trade secret legislations and harmonise the same by way of a single model statute, and has been adopted in various states. Largely similar to the UTSA, the DTSA, enacted in 2016, gives owners of trade secrets the ability to resort to federal civil actions and offers remedies such as ex parte seizure orders, reparations, and injunctions to stop the spread of their secrets. The definition of trade secrets under these laws aligns with the TRIPS Agreement, ensuring protection for information that has commercial value, is not publicly known, and is subject to reasonable secrecy measures. 

While the EEA primarily addresses criminal liability, the DTSA and UTSA provide civil remedies for trade secret misappropriation, including cases of unauthorized acquisition, disclosure, or use. The DTSA enhances enforcement by granting trade secret owners the ability to pursue legal action in federal courts, expanding their options beyond state-level protections. With a combination of criminal and civil enforcement measures, U.S. trade secret laws offer strong safeguards against economic and corporate espionage, as well as unfair competition, reinforcing their significance within the broader framework of intellectual property law.

United Kingdom

The United Kingdom, on the other hand, relies heavily on common law, such as the doctrine of breach of confidence, which allows sports teams to take action against the unauthorized use of confidential information. The Trade Secrets (Enforcement, etc.) Regulations 2018 (“UK Regulations”) implement the EU Trade Secrets Directive and provide statutory mechanisms for the protection of undisclosed know-how and trade secrets. The UK Regulations adopt the definition of trade secrets set out under the TRIPS Agreement and grant wider protection to the holder of trade secrets. Courts may order the temporary prohibition of use of trade secrets or disclosure of the same, and/ or restrict the production, sale, import, or export of infringing goods, including their seizure to prevent market circulation, etc. 

IMPORTANCE OF TRADE SECRETS IN SPORTS

Sports organisations today extensively rely on proprietary data and procedures that may provide considerable benefits, ranging from individual performance measurements to creative game strategies. For example, dating back to as early as the late 1800s, the importance of data in sports was realised, and at present professional sports teams rely heavily on statistical data for various purposes. Today, Professional basketball teams are constantly developing their own proprietary methods to create competitive advantage that can be derived from precise statistical measurements. 

On field advantages 

Trade secrets provide sports teams with a competitive edge. These unique strategies become of utmost importance at a time when matches are won or lost based on close differences. With the rise of sports analytics, teams utilize proprietary algorithms and machine learning models to analyze player performance and predict opponents’ tactics. Leaking such data and processes could allow rivals to anticipate strategies and counter them effectively. This might even lead to other teams utilising this secret and improving it, without the initial team having any recourse or protection, effectively rendering the point of the trade secret useless. 

Another huge importance to teams comes in the form of use of wearable technology to track players’ physical conditions. Teams have novel ways to assess this data giving them the edge in maintaining fitness of these players, treating muscles susceptible to injuries beforehand, etc.. If such data was misused or accessed by competitors, it could undermine a team’s ability to manage player fitness effectively, potentially affecting performance and strategic decisions due to the other teams’ knowledge of the same. 

Off field advantages 

Apart from the on-field benefits of trade secrets, there also exist off the field benefits of trade secrets, including impact on business value. For example, proprietary scouting reports can influence negotiations for the players’ acquisitions, salary etc. Leaking such data undermines the team’s position. 

Another example includes the use of AI-driven analytics to gather data, which sponsors find valuable for marketing purposes, such as technology used for highlighting player endurance and dissecting player performance. Formula 1 employs sophisticated race data analytics to provide real-time insights into car performance, driver metrics, and audience engagement. 

Further, teams leverage trade secrets to create personalized fan engagement strategies, including AI-driven ticket pricing and targeted marketing campaigns, which play a crucial role in revenue generation. For instance, Manchester United utilizes AI-powered data analytics to tailor interactions and enhance fan loyalty. Safeguarding this proprietary information is essential for preserving their competitive market position. 

Obviously, protecting trade secrets has become essential. The legal frameworks surrounding intellectual property and trade secrets play an essential role in implementing this protection, given the intangible nature of information, the heavy burden of proving misappropriation and the varied laws on the subject across geographies. This begs the question, do sports teams effectively protect their trade secrets, and are the current legal frameworks the most effective in safeguarding proprietary data and methodologies?

Formula One

The “Spygate” Scandal

One of the most prominent usages of trade secrets in sports is in formula one, which is organised under the auspices of the Fédération Internationale de l’Automobile (FIA). The 2007 “Spygate” scandal involved McLaren’s chief designer, Mike Coughlan, who received a 780-page dossier of Ferrari’s confidential technical data, including weight distribution, aerodynamics, and assembly designs. Ferrari caught light of these acts by McLaren and prompted an investigation by the FIA. With no desirable outcome, Ferrari then invoked its civil right in the UK and brought criminal charges in Italy. 

(A) Ruling for Spygate

This led an investigation into McLaren once again where the World Motor Sport Council (WMSC) confirmed that a violation of Article 151(c) of the FIA International Sporting Code (amended to article 12.2.1.c of the 2025 International Sporting code) had taken place, which is any act done prejudicial to motor sport. Based on the available evidence, it concluded that “some degree of sporting advantage was obtained, although it may never be possible to quantify that advantage in precise terms.” This conclusion prompted the WMSC to assess the severity of McLaren’s breach and the FIA imposed severe penalties on McLaren, including a $100 million fine and disqualification from the Constructors’ Championship. 

(B) Renault’s involvement

An interesting argument by McLaren was that this kind of ‘theft’ is common practice and was in fact happening to them by another competitor at the same time, Renault. McLaren’s claim underscores the widespread issue of trade secret misappropriation in Formula One, bringing into question the effectiveness of current protective measures. Although Renault acknowledged violating Article 151(c), the WMSC exercised discretion in not imposing a penalty citing the lack of impact on the championship. This does not indicate that a competitive advantage is required to establish a violation but rather that the FIA’s enforcement approach may weigh proportionality over strict deterrence 

This outcome appears to conflict with the expansive reading of Article 151(c), which classifies infractions as any fraudulent conduct detrimental to motorsport, suggesting that proving a competitive advantage should not be a prerequisite for establishing a violation. Scholarly discussions on trade secrets, including Reichman’s examination of intellectual property enforcement, indicate that regulatory authorities frequently face challenges in maintaining a balance between deterrence and proportionality when imposing sanctions. Likewise, Lemley argues that trade secret laws primarily aim to prevent unjust enrichment rather than punish mere acquisition. The FIA’s handling of the Renault case reflects this perspective, acknowledging a violation but refraining from imposing penalties in the absence of definitive proof of competitive harm.

(C) Ruling for Renault

Article 39 of the TRIPS Agreement, establishes that the misappropriation of confidential information is subject to action regardless of whether it has been used. Article 1.3.3 of the 2025 FIA International Sporting Code, for instance, makes it clear that one cannot justify breaking technical requirements by arguing that no performance benefit was obtained. This differs from the FIA’s enforcement strategy, which seems to consider the competitive impact before imposing penalties. 

Challenges in Protection and the Need for Improved Protection

Fundamentally speaking, as unfair competition rules are designed to stop unfair behaviours rather than merely unjust results, evidence of usage or benefit accrued should not be required in order to protect trade secrets and other undisclosed information. Although the FIA’s legal framework allows for penalizing trade secret breaches without the need to demonstrate a competitive advantage, its enforcement suggests hesitancy in the absence of clear consequences. Such an approach underscores the difficulty of effectively protecting trade secrets in Formula One, where regulatory action is often more reactive than preventive. 

This weakens the effectiveness of trade secret protection in Formula One, as teams may see espionage or ‘theft’ of trade secrets as a calculated risk rather than a strictly punishable offense. Strengthening trade secret enforcement through uniform penalties, proactive monitoring, and clearer investigative procedures is essential to maintaining fairness in motorsports.

Baseball

Sabermetrics and Trade Secret Protection

Baseball is another great illustration of how sports teams rely on legal frameworks to protect sensitive data and trade secrets in analytics. Major League Baseball (MLB) clubs have historically depended on statistical analysis, and the introduction of sabermetrics has completely changed the way that players are evaluated. Teams have a competitive advantage because they preserve proprietary information like statistical models, trade negotiations, and scouting reports as trade secrets. This became well-known after Michael Lewis’ book “Moneyball” was released in 2003 which described how the Oakland Athletics utilised sabermetric concepts to take advantage of inefficiencies in player valuation and prioritise on-base percentage above other statistics, allowing them to field competitive teams despite having a small payroll.  This fuelled the need for trade secret protection in Baseball. 

The Correa Hacking Case

The case of Cristopher Correa, a former St. Louis Cardinals employee, is key when discussing trade secret protection in sports. Correa hacked into the Houston Astros internal server to obtain the team’s proprietary information, including their scouting reports, statistical analytics and trade discussions. The classification of such information as a trade secret depends on its confidentiality and the efforts made to conceal this from the public. For instance, the survey results presented in a paper authored by Lara and Nathaniel Grow seem to indicate that teams are generally taking adequate precautions to protect their trade secrets, in fact, the widespread usage of NDAs with personnel who are most likely to have access to intellectual or commercially sensitive information, along with the universal adoption of computer security procedures, suggest that the teams are taking appropriate actions to safeguard their undisclosed data. Teams would usually be able to conceal trade secrets from the public if they routinely restrict access to their proprietary information on a need-to-know basis.

Despite the clear misappropriation of proprietary information in the Correa Case, he was charged under the Computer Fraud and Abuse Act (CFAA) rather than the Economic Espionage Act (EEA), which carries stricter penalties for trade secret theft. This decision highlights a critical limitation in the existing legal framework, namely, the non-accrual of direct economic benefits by Correa. The EEA requires proof that the stolen information qualifies as a trade secret and that its theft was intended for economic benefit. This mens rea makes its application more complex in professional sports, where unauthorized access is often motivated by competitive advantage rather than direct financial gain. As a result, the CFAA, which focuses on unauthorized computer access rather than trade secret misappropriation, was a more straightforward legal avenue for prosecution.

Challenges in Protection and the Need for Improved Protection

The justifications for the poor protection of trade secrets in sports include the constantly changing nature of the sports sector, the frequent movement of employees in sports which raises the risk of this proprietary information being transferred, etc. The MLB’s centralized governance and their preference for internal arbitration over litigation enforces uniform policies and internal dispute resolution, reducing public litigation risks that could expose trade secrets. Additionally, given the rare antitrust exemption enjoyed by MLB, which influences contractual and labour practices, the exemption “removes from antitrust scrutiny restraints on trade that are the product of a collective bargaining agreement between labor and management.”

Compared to civil remedies, The EEA provides stronger deterrence through criminal penalties. However, its application is limited by the requirement to prove intent, that the theft was committed to benefit another entity. This burden of proof makes it difficult to prosecute trade secret misappropriation in professional sports, where the motivations behind data breaches are not always clear-cut. 

As sports analytics advance with the integration of biometric data and real-time performance tracking, the threat of trade secret theft continues to grow. Without stronger legal protections, teams face increased risks of unauthorized access and exploitation of their proprietary information. Implementing specific statutory provisions for sports analytics and other trade secrets related to sports across geographies more consistently is crucial to safeguarding competitive fairness and fostering innovation in professional sports. Strengthening legal safeguards will help prevent unfair advantages, uphold fair competition, and promote ongoing advancements in data-driven strategies.

WAY FORWARD

The ‘spy gate’ scandal and MLB laws underscored the vulnerability of the protection of trade secrets. While the penalties aimed to address the breach, they did not fully resolve the underlying issue of how teams can effectively protect their intellectual property from similar threats in the future. It prompted a broader discussion on this protection and acted as a warning to sports leagues, highlighting the fact that protecting trade secrets is not only required by law but also strategically imperative. Teams may effectively traverse the obstacles presented by an increasingly competitive marketplace by cultivating a culture of secrecy and compliance. This will safeguard their unique knowledge and enable them to sustain their competitive advantage in terms of performance and creativity.

A comprehensive strategy including contractual, legal, technical, and regulatory tactics is necessary to protect trade secrets in sports. To this end, a three-step approach must be adopted. 

Preventive Measures through Stringent Regulations

The first step would be to implement sport-specific regulatory frameworks that are designed to address the particular difficulties in safeguarding analytics, player performance data, and game strategy. This must be done in collaboration with the governing body of the sport and international standards. 

To effectively develop this strategy, there must be an implementation of a combination of robust internal practices within the sport and enforcement of legal frameworks crafted around laws such as the DTSA or the EEA. The key aspects of this framework must include exact definitions of ‘trade secrets in sports’ rather than relying on an international law definition of trade secrets in general. Establishing this framework could help clarify the confusion surrounding actions qualifying as ‘theft’. There must be clear differences between what common knowledge is and what would amount to trade secrets. This would include establishing criteria for proprietary data, for example, player biomechanics, play calling algorithms, particular engineering of a car to improve speed, etc. This must be verified by a panel of experts on the same basis on what constitutes misappropriation, unauthorized use, and illegal dissemination of trade secrets, ensuring clarity in enforcement. One example of such ambiguity is the fact that reverse engineering in most cases is left out of the ambit of theft. 

Teams must establish legally enforced security standards requiring them to implement strict safeguards for protecting trade secrets. It involves setting clear guidelines on data protection, cybersecurity, and restricted access to proprietary information. By mandating compliance, governing bodies can ensure teams take necessary precautions to prevent leaks and unauthorized use of sensitive data, which may ultimately also impact players. 

Remedial Measures: Enforcement and Consequences

When addressing the burden of proof in cases of alleged misuse of confidential information, it is crucial for teams to define clearly what constitutes actual use versus mere possession. If a breach requires both possession and actual use of confidential information, the burden of proof regarding that use typically falls on the alleging party. However, proving actual use is inherently challenging, particularly if competitors have taken measures to conceal their actions. 

Therefore, teams can benefit from governing bodies establishing a presumption that possession of proprietary data implies potential use, shifting the burden to the accused party while allowing them to rebut this presumption by demonstrating that they did not utilize the information to gain any advantage. The responsibility of proving claims can be distributed using data auditing tools that monitor access, changes, and transfers, ensuring reliable records of access to the information. These methods ease the evidentiary burden on claimants while promoting accountability among entities. Ultimately, this creates a more balanced and transparent dispute resolution process.

Strong penalties, including fines, suspensions, and bans, should be implemented for those who violate trade secrets protection. Sanctions should be proportionate to the severity of the breach, including, monetary fines proportional to the value of the misappropriated information, temporary suspensions or bans for teams or individuals involved in trade secret theft and contractual repercussions, including termination of contracts with individuals found guilty of unauthorized disclosure.

Best Practices for Sports Entities

One of the most important ways of protecting trade secrets is the implementation of stringent confidentiality/ non-disclosure agreements for employees, contractors, and partners, with provisions extending beyond their tenure with the team. These contracts should explicitly state what cannot be revealed to anyone outside the organisation and outline consequences of disclosing proprietary data without permission. Moreover, proper exit interviews should be conducted to guarantee the return of all confidential information and its destruction when required. One way to implement such measures is by mandating that team members use only employer-provided devices to regulate data access and flow (as used by the Mercedes F1 team).

On the technology front, with the advent of biometric data, putting in place sophisticated cybersecurity measures like access restriction, encryption, and real-time data monitoring would help shield confidential data from unwanted access. Teams such as the Philadelphia 76ers have even started investigating blockchain technology to build data transaction ledgers that are impenetrable. There must be multi factor authentication for important proprietary data and teams could adopt a decentralised access system where sensitive information can be limited to the view of senior officials. Additionally, requiring the reporting of breaches involving trade secrets to a single regulatory agency will encourage responsibility and openness throughout the sector. There could also be a facet of regular audits to ensure the trade secret has not fallen in the wrong hands. 

CONCLUSION

In conclusion, the efficacy of trade secret protections in sports varies depending on the jurisdiction and the sporting body. Sports teams have made their attempt at implementing strong internal strategies and using current legal frameworks to safeguard their trade secrets in analytics. However, while international and domestic legal frameworks offer some guidance, their actual application in sports is still complicated. 

While teams can use NDAs, confidentiality clauses, and internal security practices to protect proprietary data, as demonstrated by Formula One, Major League Baseball, and other sports, there are vulnerabilities in the ever-evolving sports industry due to personnel changes, technological advancements in this sector, and the lack of cohesion among the laws within sporting bodies and international standards. 

To protect proprietary strategies, performance data, and innovative methodologies, sports leagues and governing bodies must implement regulations specifically designed for the complexities of sports-related trade secrets. Enhancing enforcement measures, such as shifting the burden of proof in misappropriation cases, imposing standardized penalties for violations, and utilizing advanced security technologies can serve as a stronger deterrent against trade secret theft and unfair competitive practices. 

Furthermore, the creation of specialized dispute resolution mechanisms can offer faster and more confidential resolutions for trade secret disputes. Effective collaboration between legal professionals, technology experts, and sports organizations is essential to developing frameworks that strike a balance between transparency and confidentiality. A well-defined regulatory system will not only safeguard fair competition but also drive continued advancements in sports analytics and strategic innovations. 

[For feedback or query, please reach out to the Author at kkrishbihani@gmail.com]

*DISCLAIMER- The opinions and views expressed in this article are that of the Author(s) and not of SLRI- the expressed opinions do not, in any way whatsoever, reflect the views of any third party, including any institution/organisation that the Author(s) is/are currently associated to or was/were associated to in the past. Furthermore, the expressions are solely for informational and educational purposes, and must not be deemed to constitute any kind of advice. The hyperlinks in this blog might take you to webpages operated by third parties- SLRI does not guarantee or endorse the accuracy or reliability of any information, data, opinions, advice, statements, etc. on these webpages.

Preferred Citation: Krish Bihani, “Behind the Curtain: Trade Secret Protection in Sports” Sports Law Review India, available at: https://sportslawreviewindia.blog/2025/03/23/behind-the-curtain-trade-secret-protection-in-sports/ Published on 23 March 2025.