A trade secret derives its value by being kept secret, yet a trade secret owner is required to identify its trade secret at some point during litigation to apprise the defendant as to what information was allegedly misappropriated. This creates an inherent tension between secrecy and disclosure that is not found in litigating other types of intellectual property rights (particularly patents). Neither the Uniform Trade Secrets Act ("UTSA")—on which most state trade secret laws are based— nor the federal Defend Trade Secrets Act ("DTSA") includes specific procedural requirements for the timing or scope of disclosure. Instead, the timing and scope of trade secret identification often varies by jurisdiction, and even by judge in the same jurisdiction. Timing can range from before the opening of formal discovery to throughout fact discovery. And the scope of disclosure deemed sufficient varies as well, with some jurisdictions providing a codified scope standard, whereas others have no working definition of what constitutes sufficient scope. Even with the passage of the DTSA in 2016, there is not a unified approach to the timing and scope of trade secret disclosure in federal courts. Thus, parties should carefully consider trade secret disclosure requirements generally followed in a jurisdiction, both before a case is filed and during litigation.
INTRODUCTION
The nature of a trade secret—which by definition derives its value from being kept secret—creates a tension between disclosure and secrecy that is not found in litigating other types of intellectual property rights. More specifically, what must a trade secret plaintiff disclose regarding its trade secret to its adversary and when?
A trade secret is information that provides an economic or competitive advantage over one's competitor and has been maintained in secrecy. But unlike patents, which have a publicly defined scope, trade secrets must be kept from public view to maintain protection. Courts have wrestled with the timing and scope of trade secret disclosure, along with competing policy concerns that impact these issues, for many years. As a result, the timing and the scope of the identification of trade secrets in litigation generally varies by jurisdiction, and even by judge in the same jurisdiction.
This White Paper explores a sample of cases from various jurisdictions to highlight the spectrum of trade secret identification requirements. While most of the cited cases are from federal courts, we note that federal courts may analyze both federal and state law in certain circumstances, as federal cases will often involve both federal and state trade secret misappropriation claims.
STATE AND FEDERAL TRADE SECRET LAW
Trade secret misappropriation cases may be brought under state law (usually a state's version of the Uniform Trade Secrets Act ("UTSA")) and under the newer Defend Trade Secrets Act ("DTSA"), which created a federal cause of action for trade secret misappropriation in 2016.
The UTSA was originally published in 1979 by the Uniform Law Commission in an effort to standardize trade secret law across states. To date, 49 states and the District of Columbia have adopted their own version of the UTSA. The desire to have a uniform federal law led Congress to pass the DTSA in 2016.1 Because the DTSA does not preempt state law, the majority of trade secret claims allege misappropriation under both the state's trade secret law and the DTSA.
Neither the UTSA nor the DTSA includes provisions governing the timing and scope of trade secret disclosure in litigation. Many courts view the DTSA as substantially similar to the UTSA, and therefore tend to enforce the same timing and scope requirements under both the state and federal claim.2 Indeed, a district court in New Jersey recently stated, "courts in this district fold the DTSA analysis into the NJTSA review ... [and] consider[] the two claims together."3 Thus, although the DTSA created a federal cause of action, the application of the federal cause of action generally appears to be consistent with claims brought under state trade secret law.
TIMING OF TRADE SECRET DISCLOSURE VARIES ACROSS JURISDICTIONS
While a plaintiff is required to allege in its complaint at least the general nature of the trade secrets that were misappropriated to survive a motion to dismiss, the plaintiff must later identify the asserted trade secrets with more specificity at some point after a protective order has been issued. Some courts have required a special procedure by which the plaintiff must identify the trade secrets before discovery commences or at the inception of fact discovery, whereas others simply rely on the written discovery requirements in the Federal Rules of Civil Procedure. Federal courts are often influenced by their home state's approach. There is no unified approach to the timing and scope of trade secret identification in litigation.4
The California and Massachusetts state legislatures have codified a procedure for state court actions that requires a trade secret plaintiff to disclose its trade secret prior to the onset of discovery, once a protective order has been entered.5 Judges in some other state and federal courts have chosen to impose a similar requirement.6
In some courts, however, early identification is not required. In those venues, plaintiffs typically identify the asserted trade secrets during discovery through interrogatory responses and supplements thereto.7
Federal courts that do not follow the California and Massachusetts approach generally analyze the issue under the discovery principles in Rule 26 of the Federal Rules of Civil Procedure. In doing so, courts have noted competing policy concerns about whether to require a plaintiff to identify its trade secrets prior to discovery.
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Footnotes
1. See S. REP. No. 114-529, at 2-6 (2016).
2. See, e.g., Fla. Beauty Flora Inc. v. Pro Intermodal LLC, No. 20-20966-CIV-ALTONAGA, 2021 WL 1945821, at * 10 n.8 (S.D. Fla. May 14, 2021) (addressing the DTSA and FUTSA claims together because they are essentially the same); MACOM Tech. Sols., Inc. v. Litrinium, Inc., No. SACV 19-220 JVS (JDEx), 2019 WL 4282906, at *8–9 (C.D. Cal. June 3, 2019) (not distinguishing between the DTSA and CUTSA in analyzing the misappropriation claim); Source Prod. & Equip. Co. v. Schehr, No. 16-17528, 2019 WL 4752058, at *5 (E.D. La. Sept. 30, 2019) (stating the DTSA and LUTSA are substantially similar).
3. Peoplestrategy, Inc. v. Emp'r Servs., Inc., No. 3:20-cv-02640-BRMDEA, 2020 WL 7869214, at *4 (D.N.J. Aug. 28, 2020).
4. See e.g., Edgewell Personal Care Co. v. O'Malley, No. X08FSTCV176038381S, 2019 WL 7425133, at *5 (Conn. Super. Ct. Nov. 15, 2019) (denying defendant's motion for pre-discovery identification of trade secrets); Par Pharm., Inc. v. QuVa Pharm, Inc., No. 17-6115 (BRM), 2019 WL 959700, at * 3 (D.N.J. Feb. 27, 2019) (allowing discovery prior to plaintiff disclosing all its trade secrets); Kalencom Corp. v. Shulman, No. 17-5453, 2018 WL 1806037, at *5 (E.D. La. Apr. 17, 2018) (requiring plaintiff to identify its trade secrets pre-discovery); DMS Dyneema, LLC v. Thagard, No. 13 CVS 1686, 2014 WL 5317770, at *6 (N.C. Super. Ct. Oct. 17, 2014) (requiring prediscovery disclosure of plaintiff's trade secrets).
5. See CAL. CIV. PROC. CODE § 2019.210 (West 2021); MASS. GEN. LAWS ch. 93, § 42D(b) (2018).
6. See, e.g., Vention Med. Advanced Components, Inc. v. Pappas, 188 A.3d 261, 273 n.1 (N.H. 2018) (assuming a requirement under New Hampshire law to disclose trade secrets prior to discovery); DynCorp Int'l v. AAR Airlift Grp., Inc., 664 F. App'x 844, 848 (11th Cir. 2016) (noting Florida courts adjudicating FUTSA cases require plaintiffs to identify trade secrets with reasonable particularity prior to discovery).
7. See, e.g., Huawei Techs. Co. v. Huang, No. 4:17-CV-00893, 2018 WL 3862061, at *4 (E.D. Tex. Aug. 14, 2018) (denying defendant's motion for the plaintiff to more specifically identify its alleged trade secret during early discovery).
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