New York Trade Secrets ' A Perspective On The Second Circuit Court Of Appeals

• Published date: 10 November 2022
• Subject Matter: Intellectual Property, Trade Secrets
• Law Firm: IR Global
• Author: IR Global

Recently, the Second Circuit Court of Appeals provided its first detailed treatment of the definition of trade secrets under the Defend Trade Secrets Act of 2016 (DTSA) in Turret Labs USA, Inc. v. CargoSprint, LLC, No. 21-952, 2022 WL 701161 (2d Cir. Mar. 9, 2022).

By way of background, the DTSA is modeled upon the Uniform Trade Secrets Act (UTSA), which has a two-prong test for identifying trade secrets that has been adopted in 49 states. Turret Labs is particularly significant for New York courts because New York is the only state that has not adopted the UTSA trade secret definition. As a result, New York courts have scant precedential authority when called upon to define trade secrets under the DTSA and many resorted to New York common law for guidance. See Zirvi v. Flatley, 433 F. Supp. 3d 448, 464 (S.D.N.Y.), aff'd, 838 F. App'x 582 (2d Cir. 2020), cert. denied, 142 S. Ct. 311, 211 L. Ed. 2d 147 (2021) ("Courts in the Southern District of New York often use New York state law cases when discussing misappropriation claims under the DTSA because the Second Circuit Court of Appeals has not yet addressed the DTSA...").

Turret Labs has two significant takeaways.

The first is its interpretation of "what constitutes 'reasonable measures' to keep information secret" - such "reasonable measures" are required under the second prong of the DTSA's trade secret definition. Turret Labs at *2. On that point, the court held that "what measures are 'reasonable' must depend in significant part on the nature of the trade secret at issue." Id. That holding heralds a new era of scrutiny toward the nature of trade secrets when evaluating the measures taken to...