Third Circuit Illuminates Several Issues In Trade Secret Litigation

• Published date: 23 May 2022
• Subject Matter: Intellectual Property, Trade Secrets
• Law Firm: Holland & Knight
• Author: Mr Steven Gordon

Two recent decisions by the U.S. Court of Appeals for the Third Circuit shed light on several recurrent issues that arise in trade secret litigation under the federal Defend Trade Secrets Act (DTSA) and related state acts.¹ This post will summarize the guidance provided by the appellate court on each of these issues.

What Constitutes Sufficient Identification of the Trade Secret?

Whether the trade secret owner has sufficiently identified the alleged trade secret(s) is a frequent (often early) battleground in trade secret litigation. Previous posts on this blog (Nov. 20, 2018 and Feb. 7, 2019) have addressed this issue. The Third Circuit discussed this issue in two different contexts.

One decision addressed the sufficiency of a complaint to withstand a motion to dismiss. The court said that "information alleged to be a misappropriated trade secret must be identified with enough specificity to place a defendant on notice of the bases for the claim being made against it."² The court acknowledged that this is a fact-specific question to be decided on a case-by-case basis and noted that resolution of this question can be difficult.

The court found that the complaint at issue, which had been amended several times to add details, identified the alleged trade secrets more than adequately. The plaintiff alleged its trade secrets to be the information laying out its design, research and development, test methods and results, manufacturing processes, quality assurance, marketing strategies and regulatory compliance related to its development of a microsphere system for drug delivery, as well as the variables that affect the development of the plaintiff's microsphere products. While these categories of information were broad, they were all tied to a specific set of products. Further, the complaint specifically identified a particular document that the plaintiff had disclosed to the defendant under a confidentiality agreement as containing trade secrets and attached other documents specifying in detail secrets that it accused the defendants of taking and using.³

In contrast, the other decision by the Third Circuit held that the plaintiff had failed to sufficiently identify the trade secrets in a case where the district court had granted a preliminary injunction to protect those alleged secrets. The court commented that "[w]e cannot evaluate whether a plaintiff is likely to succeed on any element of a trade secret misappropriation claim until the plaintiff has...