Who can bring a civil action for misappropriation under the DTSA? And what does the trade secret have to be related to?
- The owner of the trade secret.
- A product or service that is used in - or intended for use in - interstate or foreign commerce.
18 U.S.C. 1836(b)
What remedies are available in a private cause of action under the DTSA?
- an injunction to prevent the actual or threatened misappropriation of a trade secret;
- damages for actual loss caused by the misappropriation of the trade secret;
- damages for unjust enrichment caused by the misappropriation of the trade secret that is not addressed by the damages for actual loss;
- (in lieu of damages measured by other methods): impose liability for a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret;
- if the trade secret is willfully and maliciously misappropriated: award exemplary damages in an amount not more than 2x the damages award for actual loss/unjust enrichment/royalties.
- attorneys’ fees (in certain circumstances).
18 U.S.C. 1836(b)(3).
What is the statute of limitations for a claim under the DTSA?
Must file the lawsuit within three years after the misappropriation is discovered or should have been discovered. 18 U.S.C. 1836(d).
What are the elements of a trade secret misappropriation claim under the DTSA?
(1) the existence of a trade secret, defined generally as information with independent economic value that the owner has taken reasonable measures to keep secret; (2) that is related to a product for service used in, or intended for use in, interstate or foreign commerce; and (3) the misappropriation of that trade secret, defined broadly as the knowing improper acquisition, or use or disclosure of the secret. 18 U.S.C. § 1836, 1839; Mallet, 16 F.4th at 380; Oakwood Labs LLC v. Thanoo, 999 F.3d 892, 905 (3d Cir. 2021). Each of these elements is predicated on an adequate identification of what the plaintiff contends to be its trade secret. Mallet, 16 F.4th at 380.
Can a plaintiff recover attorneys’ fees under the DTSA?
Yes - if a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or opposed in bad faith, or the trade secret was willfully and maliciously mis-appropriated, the court may award reasonable attorneys’ fees to the prevailing party. 18 U.S.C. § 1836(b)(3)(D).
What affirmative defenses are available in a DTSA action?
*alleged trade secret is not a trade secret;
* defendant had a legal right to do what it did and violated no duty owed to plaintiff.
* Independent development;
* Authorized activity (example: licensing agreement)
* Reverse engineering
* No detriment (example: plaintiff no longer in business or has supplanted the alleged trade secret technology with superior technology; or, the defendant merely possessed the trade secret and did not use it).
* Laches: the plaintiff delayed in seeking injunctive relief.
* Unclean hands
Does a plaintiff have to exhaust any administrative remedies before bringing a DTSA claim?
No - can file directly in court.
If there are material facts in dispute, can a preliminary injunction be issued?
No - see JRM Const. Mgmt., LLC v. Pleascia, No. 23-cv-932, 2023 U.S. Dist. LEXIS 59380 (D.N.J. Apr. 4, 2023) (citing Collick v. Weeks Marine, Inc., 397 Fed. App’x 762 (3d Cir. 2010).
What two threshold elements must be established to obtain a preliminary injunction?
(1) They are reasonably likely to prevail eventually in the litigation; and
(2) They are likely to suffer irreparable injury without relief.
Par Pharm., Inc. v. Quva Pharma, Inc., 764 Fed. Appx. 273, 277 (3d Cir. 2019)
If the first two threshold elements of a preliminary injunction are met, what are the final two elements?
(3) Whether an injunction would harm the defendant more than denying relief would harm the plaintiffs; and
(4) Whether granting relief would serve the public interest.
Par Pharm., Inc. v. Quva Pharma, Inc., 764 Fed. Appx. 273, 277 (3d Cir. 2019); Huntington Learning Ctrs., Inc. v. Kearns-Jones, 2:17-CV-01174-CRE, 2017 U.S. Dist. LEXIS 185270 (W.D. Pa. Nov. 7, 2017).
Do all four factors in a preliminary injunction assessment always have the same weight?
No - The relative strength of the four factors will vary; some may weigh more heavily than others in the trial court’s assess-ment of whether relief is warranted. Fresco Sys. USA v. Haw-kins, 690 Fed. Appx. 72, 75 (3d Cir. 2017).
Can a moving party obtain a preliminary injunction if it fails to satisfy all four elements?
No - A party’s failure to establish any element in its favor renders a preliminary injunction inappropriate. Ace Am. Ins. Co. v. Wa-chovia Ins. Agency Inc., 306 Fed. Appx. 727, 732 (3d Cir. 2009)
Does a moving party have to show that the defendant has misappropriated its trade secrets to obtain a preliminary injunction?
No - An actual misappropriation of trade secrets is not required for injunctive relief to be granted; threatened misappropriation can be sufficient. Id. at 76; see also Pittsburgh Logistics Sys. v. LaserShip, Inc., 2:18-cv-1382, 2019 U.S. Dist. LEXIS 98470 (W.D. Pa. June 12, 2019)
Does a trial court have to hold a hearing before ruling on a motion for a preliminary injunction?
No - The Third Circuit does not require a trial court to hold a hearing before ruling on a preliminary injunction but has sug-gested that a trial court should conduct an evidentiary hearing when “consideration of the injunction motion was influenced in some significant degree by credibility issues and factual dis-putes.” Fres-co Sys. USA v. Hawkins, 690 Fed. Appx. 72, 80 (3d Cir. 2017).
To obtain a preliminary injunction, does the plaintiff have to identify the trade secrets that were allegedly misappropriated?
Yes - trial courts cannot evaluate if a plaintiff is likely to succeed on any element of their claim until the plaintiff has sufficiently described the trade secrets that were allegedly misappropriated. Mallet & Co. v. La-cayo, 16 F.4th 364, 381 (3d Cir. 2021).
What does a plaintiff have to prove to establish that it would suffer an irreparable injury if the court declines to enter a preliminary injunction?
The potential harm can’t be redressed by a legal or equitable remedy after a trial. A preliminary injunction is the only way to protect the moving party from harm.
Campbell Soup, 977 F.2d at 91 (quoting Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 801 (3d Cir. 1989)
What types of harm are sufficient in a trade secret case to show that a plaintiff would suffer “irreparable harm” if the court fails to enter a preliminary injunction?
- Decreases in future sales of product that are currently in development;
- Harm to the plaintiff’s reputation and attractiveness to investors;
- Loss of control of reputation;
- Loss of trade;
- Loss of goodwill.
Par Pharm, 764 Fed. Appx. at 280; Huntington Learning Ctrs., Inc. v. Kearns-Jones, 2:17-CV-01174-CRE, 2017 U.S. Dist. LEXIS 185270 (W.D. Pa. Nov. 7, 2017)
How long should a preliminary injunction remain in place in a trade secret case?
The Third Circuit has endorsed the use of “lead time” injunc-tions “whereby the trade secret injunction lasts only so long as is necessary to negate the advantage the misappropriators would otherwise obtain by foregoing independent development.” Par Pharm, 764 Fed. Appx. at 280.
What must be established before a plaintiff can prove the three elements of a trade secret misappropriation claim?
the plaintiff must adequately identify what it contends to be its trade secret. Mallet, 16 F.4th at 380; Arconic Inc. v. Novelis Inc., No. 17-1434, 2020 U.S. Dist. LEXIS 231531 (W.D. Pa. Dec. 9, 2020)
How does the DTSA define a “trade secret?”
The DTSA defines a trade secret as information that “the owner thereof has taken reasonable measures to keep…secret” and that “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.” 18 U.S.C. § 1839(d); Mallet, 16 F.4th at 381; Synthes, Inc. v. Emerge Med., Inc., 25 F. Supp. 3d 617 (E.D. Pa. 2014)
Do trade secrets have to be technical in nature to be protected under the DTSA?
Trade secrets do not have to be technical in nature to be fully protected by Pennsylvania law. Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102 (3d Cir. 2010); Wound Care Ctrs., Inc. v. Catalane, 2011 U.S. Dist. LEXIS 12084 (W.D. Pa. 2011); Den-Tal-Ez, Inc. v. Siemens Capital Corp., 566 A.2d 1214, 1228 (Pa. Super. Ct. 1989) (en banc)
Does a company’s decision to designate certain information as confidential or protected determine if it qualifies as a trade secret?
No - A company’s decision to designate information as confidential or protected is not conclusive in determining if it qualifies as a trade secret; information can be contractually protected from use or disclosure and not be a trade secret. Mallet, 16 F.4th at n.21; Iron Age Corp. v. Dvorak, 880 A.2d 657 (Pa. Super. 2005)
What are the two most important factors in evaluating if something counts as a trade secret?
(1) substantial secrecy, and (2) competitive value to the owner. Warman v. Local Yokels Fudge, LLC, Civil Action No. 19-1224, 2022 U.S. Dist. LEXIS 233312 (W.D. Pa. Dec. 27, 2022); Synthes, Inc. v. Emerge Med., Inc., 25 F. Supp. 3d 617 (E.D. Pa. 2014)
Will information always be deprived of trade secret protection because it is publicly available?
Information will not necessarily be deprived of protection as a trade secret because it is publicly available. A confidential compilation and organization of public information can amount to a trade secret. Warman v. Local Yokels Fudge, LLC, Civil Ac-tion No. 19-1224, 2022 U.S. Dist. LEXIS 233312 (W.D. Pa. Dec. 27, 2022).
