Another Motion to Dismiss Federal Defend Trade Secret Act Claim is Denied

Following a national trend, another Defend Trade Secrets Act (DTSA) claim has survived a motion to dismiss filed in a California district court. The DTSA enables trade secret owners to pursue trade secret misappropriation claims in federal court if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.

In the recent Volans-i, Inc. v. SpektreWorks, Inc. case, the parties both developed and built long-range high-payload aircrafts known as drones. Pursuant to a consulting agreement, the defendant allegedly assisted Volans-i with design, engineering, testing and other work related to Volans-i’s C-10 and C-20 drones and had access to Volans-i’s trade secrets related to the same. The consulting agreement allegedly prohibited SpektreWorks from using Volans-i’s confidential information or its consultant work product other than to provide consulting services to Volans-i.

Volans-i alleged that in violation of the DTSA and in breach of the parties’ agreement, the defendant sold a knockoff of its C-10 containing an avionics board which copied the design of Volans-i’s avionics board and utilized many identical components—thereby “copying plaintiff’s design and component choice[.]” 2019 U.S. Dist. LEXIS 90923, at *5. In its motion to dismiss, SpektreWorks argued that Volans-i failed to sufficiently define its trade secrets or properly allege misappropriation. The court rejected both arguments and declined to dismiss the DTSA claim.

The court ruled that Volans-i sufficiently defined its trade secrets as the specific combination and layout of the components on its avionics board; its flight and testing data; proprietary software; and design decisions. The court further noted that Volans-i alleged access to its trade secrets during the parties’ consulting relationship and numerous similarities between its C-10 drone and the defendant’s new product. This was sufficient to allege misappropriation at the pre-discovery stage.

Wendy R. Stein is a Director in the Gibbons Intellectual Property Department. She has secured restraints for trade secret owners pursuant to the DTSA and will be presenting a Continuing Legal Education (CLE) on “Hot Topics in DTSA Litigation” on www.lawline.com on October 24, 2019.
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