Series: Defend Trade Secrets Act | Pleading A Claim Under the DTSA

by Fish & Richardson

Courts have had over a year to address the pleading requirements under the federal Defend Trade Secrets Act (“DTSA”), after it took effect in May 2016.  The general pleading standard remains the plausibility test under the Supreme Court’s Twombly/Iqbal decisions.  The specific pleading requirements come from the scope and definitions of the DTSA and have been tested over the past fifteen months.  In short, the plaintiff needs to allege “(1) that the plaintiff owned a trade secret; (2) that the defendant acquired, disclosed, or used that trade secret through improper means; and (3) that the defendant’’ actions harmed the plaintiff.”  E.D.C. Techs., Inc. v. Siedel, No. 16-CV-03316-SI, 2016 WL 4549132 at *7 (N.D. Cal. 2016).

Identification of trade secret:

The DTSA defines trade secrets broadly:  “All forms and types of financial, business, scientific, technical, economic, or engineering information,” “whether tangible or intangible,” and “whether or how stored.”  18 U.S.C. § 1839(3)(A)(B).

One issue is how much detail to plead to support the existence of a trade secret without risking to disclose the secret, particularly if the outcome of a motion to seal is uncertain.  The DTSA does not contain any requirement for identifying the trade secret with any particularity, whether at the pleading stage or during discovery.  A lot of courts accept a fairly general description of trade secrets under the DTSA in public pleadings.

At least one court found the identification sufficient because it permitted the defendant to prepare a defense and enabled the court to craft limits on discovery.  See Space Data Corp. v. X, No. 16-CV-03260-BLF, 2017 WL 3007078, at *3 (N.D. Cal. July 14, 2017).  This language echoes the case law that interpreted the “reasonable particularity” requirement for the identification of trade secrets under California Civil Code § 2019.210.  Although the requirement stems from the discovery provisions of the California Uniform Trade Secret Act (“CUTSA”), which is state law, it was adopted by a large enough number of federal courts when dealing with CUTSA claims.  There do not appear to be any publicly available decisions specifically on the interplay between § 2019.210 and pleading requirements under the DTSA.

The Complaint must also allege that the trade secret owner “has taken reasonable measures to keep such information secret,” and that the “information derives independent economic value, actual or potential, from not being generally known” or “ascertainable through proper means.”  For example, a trade secret claim based on misappropriation of a customer list may be dismissed where the plaintiff argues that the “full” list of customers is kept secret but admits that some of the customer relationships are publicized.  Veronica Foods Co. v. Ecklin, No. 16-CV-07223-JCS, 2017 WL 2806706, at *14 (N.D. Cal. June 29, 2017).  In this situation, the scope of the alleged trade secret may need to be tailored to reflect the information that has been maintained as confidential.

Relation to interstate or foreign commerce:

DTSA imposes an additional requirement—the trade secret must be “related to a product or service used in, or intended for use in, interstate or foreign commerce.”  18 U.S.C. § 1836(b)(1).  This requirement needs to be remembered as a matter of jurisdiction but does not appear to present any difficulty in pleading.


DTSA provides for three theories of liability for misappropriation: improper acquisition, disclosure, or use.  18 U.S.C. § 1839(5).  Courts have also treated these theories as alternative.  “Nothing suggests that the DTSA forecloses a use-based theory simply because the trade secret being used was misappropriated before the DTSA’s enactment. Cave Consulting Grp., Inc. v. Truven Health Analytics Inc., No. 15-CV-02177-SI, 2017 WL 1436044, at *4 (N.D. Cal. Apr. 24, 2017).

Timing of misappropriation claim and applicability of the DTSA:

The above issue of what constituted the specific instance of misappropriation—acquisition, disclosure, or use—often comes up in connection with whether the conduct falls under the DTSA.  The DTSA was enacted on May 11, 2016, and covers only acts occurring “on or after the date of the enactment of this Act.”

Under the DTSA, “a continuing misappropriation constitutes a single claim of misappropriation.”  18 U.S.C. § 1836(d).  In addition, Congress omitted from DTSA the following language from Section 11 of the Uniform Trade Secret Act: “With respect to a continuing misappropriation that began prior to the effective date, the [Act] also does not apply to the continuing misappropriation that occurs after the effective date.”  Adams Arms, LLC v. Unified Weapon Sys., Inc., 16-1503, 2016 WL 5391394, at *6 (M.D. Fla. Sept. 27, 2016). Therefore the applicability of the DTSA will depend on when the misappropriation began.

Importantly, the acquisition and disclosure or use of the same trade secret may provide separate bases for a trade secret claim.  For example, a misappropriation claim based on the acquisition of a trade secret that occurred before the DTSA effective date will not be viable.  But a claim based on the use or disclosure of the same secret that occurred after the effective date, even though the acquisition may have occurred before, should be viable.

It is also important to remember that a trade secret, by definition, may be disclosed only once.  At least one court dismissed a plaintiff’s attempt to allege that the same trade secret was disclosed once before the effective date of the DTSA and “disclosed again” after the effective date: “Simply alleging that the same information was disclosed ‘again’ is not sufficient to avoid this result as ‘disclosure,’ by definition, implies that the information was previously secret.”  Avago Techs. U.S. Inc. v. Nanoprecision Prod., Inc., No. 16-CV-03737-JCS, 2017 WL 412524, at *9 (N.D. Cal. Jan. 31, 2017).

[View source.]


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fish & Richardson | Attorney Advertising

Written by:

Fish & Richardson

Fish & Richardson on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.