If You’re Going to File a Trade-Secret Lawsuit, You Better be Able to Identify the Trade Secret

Sometimes a big problem for plaintiffs in trade-secret lawsuits is identifying precisely what was stolen.  In a recent case out of California, a plaintiff employer sued a former employee who was hired by a competitor for misappropriation of trade secrets.  The employee had backed up his company laptop on a hard drive, and he did not return the hard drive after switching jobs.  The hard drive contained over 4,000 files that the employer alleged contained trade secrets.  The employee moved for summary judgment to have the trade-secret claim dismissed.  In response, the employer argued that all 4,000 files contained its trade secrets, but it didn’t say what in each file was a trade secret.  The court dismissed the claim against the employee because the employer did not meet the requirement under California law that a trade secret be identified “with sufficient particularity” to separate trade secrets from public information or the general knowledge of those skilled in the trade.  Massachusetts law on this issue is the same.  See Sutra, Inc. v. Iceland Express, ehf, C.A. No. 04-11360-DPW, 2008 WL 2705580, *4 (D. Mass. July 10, 2008) (unpublished) (“A plaintiff has no cognizable trade secret claim until it has adequately identified the specific trade secrets that are at issue.” (quotation omitted)) (interpreting Massachusetts law).

This requirement can be a real challenge for employers when they know that an employee took something, but they just don’t know what.  It’s particularly difficult when there’s not a lot of time for an employer to investigate what the employee did, which frequently is the case in trade-secret cases.  (An employer will often file a lawsuit and move to have the former employee and his new employer enjoined from using any of its trade secrets right away, to prevent harm to its business.)  Nevertheless, it is a requirement, so employers need to describe what’s at issue with specificity up front or run the risk of having their claims dismissed.

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