Tagged: DTSA

New Decision on Asserting the Defend Trade Secrets Act Against Foreign Entities

New Decision on Asserting the Defend Trade Secrets Act Against Foreign Entities

A recent federal court decision concluding that a Defend Trade Secrets Act (“DTSA”) claim could go forward against a UK-based defendant should be read both by foreign entities doing business in the United States and by U.S.-based entities that work with foreign affiliates. The case highlights the DTSA’s strong reach over both activity and actors residing outside the United States. In vPersonalize Inc. v. Magnetize Consultants Ltd., Civ. No. 18-CV-01836-BJR, 2020 U.S. Dist. LEXIS 18491 (W.D. Wash. Feb. 3, 2020), a UK-based defendant moved to dismiss a DTSA claim arguing that the Economic Espionage Act’s extraterritorial provision should not apply to private civil actions under the DTSA, should not apply to a foreign entity, and should not apply unless a foreign defendant is alleged to have committed “an act in furtherance” of the violation. The court rejected these arguments and declined to dismiss the DTSA claim. The dispute centers on the relationship between 18 U.S.C. § 1837 entitled, “Applicability to conduct outside the United States” and 18 U.S.C. § 1836, which provides a private right of action under the DTSA. Section 1837 states that “this chapter” (which includes sections 1831-1839 of Title 18) applies to conduct outside the U.S. if...

Ninth Circuit Reverses Fee Award in DTSA Case

Ninth Circuit Reverses Fee Award in DTSA Case

The Ninth Circuit recently added to the small body of appellate court precedent interpreting the Defend Trade Secrets Act (DTSA), reversing an attorney fee award which had been granted by a district court in Washington. The reversal stemmed from the appellate court’s de novo determination that no circumstances existed to support a finding that the suit was brought and maintained in bad faith. In RJB Wholesale, Inc. v. Castleberry, the plaintiff sued a former sales representative for violation of the DTSA, claiming misappropriation of a customer list and company cell phone programmed with customer contact information. After the close of discovery, the defendant moved for summary judgment that the plaintiff had not proven any damages caused by the alleged misappropriation. The district court granted the motion, and the Ninth Circuit affirmed. The Ninth Circuit reversed, however, the district court’s fee award to the prevailing defendant. The decision follows on the heels of a decision from the Fourth Circuit, Akira Technologies, Inc. v. Conceptant, Inc., affirming the denial of attorney fees where the plaintiff “had at least some chance of success” on its DTSA claim and the Fifth Circuit in Dunster Live, LLC v. Lonestar Logos Mgmt. Co., LLC, where the...

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

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...

Is Employer to Whom Trade Secrets are Allegedly Disclosed a Necessary Party in DTSA Claim Against Former Employee?

Is Employer to Whom Trade Secrets are Allegedly Disclosed a Necessary Party in DTSA Claim Against Former Employee?

Given increased employee mobility, claims under the Federal Defend Trade Secrets Act (DTSA) are on the rise. The DTSA provides a federal cause of action for misappropriation of a trade secret related to a product or service used in, or intended for use in, interstate or foreign commerce. See 18 U.S.C. § 1836(b). When considering a complaint against a former employee for violations under the DTSA, is the new employer to whom information is allegedly disclosed a necessary and indispensable party? A Massachusetts district court recently said no. In Phio Pharms. Corp. v. Khvorova, the plaintiff Phio Pharmaceuticals Corporation (PPC) sued the defendant—the company’s former Chief Scientific Officer—for misappropriation under the DTSA. PPC alleged that the defendant assigned to U Mass Medical School (defendant’s new employer and competitor of PPC) a patent application describing a class of molecules that PPC and the defendant allegedly investigated while the defendant was working for PPC. PPC sought the return of all trade secret information allegedly in the defendant’s possession and an injunction against further use or disclosure of its confidential information. The defendant moved to dismiss claiming that U Mass was an indispensable party under Federal Rule of Civil Procedure 19. The court...

Another District Court Addresses Viability of “Continuing Misappropriation” Under the Federal Defend Trade Secrets Act

Another District Court Addresses Viability of “Continuing Misappropriation” Under the Federal Defend Trade Secrets Act

The Federal Defend Trade Secrets Act (DTSA) provides a federal cause of action for misappropriation of a trade secret related to a product or service used in, or intended for use in, interstate or foreign commerce. See 18 U.S.C. § 1836(b). The DTSA applies to any trade secret misappropriation for which any act occurred “on or after the date of the enactment” of the DTSA. See P.L. 114-153 § 2(e). A Missouri district court recently held that the DTSA applies to trade secret misappropriation that continues after the DTSA enactment date (May 11, 2016)—even if the misappropriation began before the enactment date, see Roeslein & Assocs. v. Elgin, Civ. No. 17-1351(JMB), 2019 U.S. Dist. LEXIS 6981, at *36 (E.D. Mo. Jan. 15, 2019), adding to mounting precedent concluding the same. In Roeslein, developers of energy production facilities sued one individual (a former employee) and three corporate defendants for violation of the DTSA, among other claims. The corporate defendants moved to dismiss claims asserted against them under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing that the plaintiffs’ DTSA claims were not cognizable because the plaintiffs failed to allege misappropriation on or after the DTSA’s enactment date. The court granted-in-part...