§ 6.04 Defenses
| Jurisdiction | United States |
| Publication year | 2020 |
§ 6.04 Defenses
[1] Statute of Limitations
The statute of limitations for violations of the DTSA is three years "after the date on which the misappropriation with respect to which the action would relate is discovered or by the exercise of reasonable diligence could be discovered."367 Statutes of limitations accrue for misappropriation claims when the defendant first discloses the trade secret or when the defendant first makes use of the plaintiff's ideas.368 In comparison, for example, under the California Uniform Trade Secrets Act, "a plaintiff's action against the same defendant, the continued improper use or disclosure of a trade secret after defendant's initial misappropriation is viewed under the [CUTSA] as part of a single claim of 'continuing misappropriation' accruing at the time of the initial misappropriation."369
As with most causes of action, there is nothing to prevent the plaintiff from arguing that the statute of limitations should be tolled on the basis that the party could not have discovered the acts earlier through reasonable diligent inquiry.370 Further, since the applicability of the statute of limitations often depends on matters outside the pleadings, "it is rarely appropriate to grant a Rule(b)(6) motion to dismiss."371 "The existence of a patent application or a public patent puts parties on notice of their existence and therefore starts the clock on the limitations period."372 The Eighth Circuit affirmed summary judgment defendant on the ground that the plaintiff failed to assert a timely claim under the three-year statute of limitations.373 The court determined that while a defendant has the burden of proving the statute of limitations bars the action, the plaintiff has burden of proving the Iowa discovery rule tolls application of the statutory bar and failed to do so therein where the defendant made no efforts to conceal its activities which would have put the plaintiff "on inquiry notice that a problem with possible misappropriation of its trade secrets might well exist" much earlier.374 "At point [plaintiff was on notice there was a possible problem, it had a duty to investigate, regardless of its exact knowledge."375
In comparison, the statute of limitations under the criminal provisions of the EEA is five years, which means that the government could theoretically prosecute a case criminally, even where the civil statute of limitations has run.
[2] Independent Derivation
One of the most important ways in which trade secret law is different from patent law is that, unlike patents, trade secrets do not confer a monopoly on the owner. Everyone may independently develop or derive the trade secret. Thus, the DTSA does not in any way prohibit companies, manufacturers, or inventors from using their skills, knowledge, and experience to solve a problem or invent a product they know someone else is working on. This does not mean, however, that "'the theoretical ability of others to ascertain the invention through proper means is a defense to where the defendant has acquired the trade secret through improper means.'"376
[3] Reverse Engineering
Reverse engineering is the process of taking something apart to determine how it was made or manufactured in order that it may be copied. The EEA's legislative history suggests that the focus on whether a trade secret was lawfully reverse engineered should be on "whether the accused has committed one of the prohibited acts of this statute rather than whether he or she has 'reverse engineered.' If someone has lawfully gained access to a trade secret and can replicate it without violating copyright, patent, or this law, then that form of 'reverse engineering' should be fine."377
However, is not a defense to an EEA charge that the defendant could have reverse engineered the trade secret but did not. In other words, the fact that a particular secret might have been reverse engineered after a time-consuming and expensive laboratory process does not provide a defense for someone who avoided the time and effort to do so by stealing the trade secret. If this were not so, almost any defendant could successfully defeat a prosecution by claiming that he could have reverse engineered the trade secret.
[4] Other Lawful Means of Acquisition
The EEA's legislative history makes clear that the statute does not apply to individuals who seek to capitalize on their lawfully developed knowledge, skill, or abilities.378 Thus, "[a] prosecution that attempts to tie skill and experience to a particular trade secret should not succeed unless [the government] can show that the particular material was stolen or misappropriated."379 At least one criminal defendant in an EEA prosecution has successfully asserted that the...
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