10-11 MOTIONS TO DISMISS

• Jurisdiction: United States

10-11 Motions to Dismiss

Only a few federal courts have addressed a Rule 12(b)(6) motion for failure to state a claim under the DTSA. Though the law is far from developed, at least two practical lessons can be learned from these cases. First, under the DTSA, a plaintiff that does not own a trade secret in the first place has no right to bring a claim against another for misappropriation of the trade secret.⁵³ Indeed, one clarifying aspect of the DTSA is that it includes its own separate definition for the "owner" of a trade secret.⁵⁴ Second, the court granted the defendant's motion to dismiss in a DTSA case where the plaintiff failed to take reasonable steps to protect its trade secret.⁵⁵ Finally, one unique argument to dismiss a DTSA claim under Rule 12(b)(6) rested on the defendant's claim that his retention of documents containing the trade secret was protected by the DTSA's whistleblower immunity provisions in 18 U.S.C. § 1833(b) because he turned those documents over to his attorney to report and investigate a violation of law.⁵⁶ Despite its creativity, the court rejected this argument because the record lacked evidence to support the defendant's affirmative defense at the pleading stage. In particular, the defendant had not filed any potential lawsuit supported by the allegedly trade secret information in those documents.⁵⁷

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Notes:

^[53] 18 U.S.C. § 1836(b)(1); Healthbanc Int'l, LLC v. Synergy Worldwide, Inc., No. 2:16-cv-00135-JNP-PMW, 2016 208 F.Supp. 3d. 1193 (D. Utah Sept. 22, 2016) (dismissing federal and state trade secret claims where the defendant "did not use or disclose the trade secret 'of another'" because the defendant itself had ownership rights to the trade secret).

^[54] 18 U.S.C. § 1839(4) ("[T]he term 'owner', with respect to a trade secret, means the person or entity in whom or in which rightful l egal or equitable title to, or license in, the trade secret is reposed."); Gluten Free Baking Co. Ltd. Liab. Co. v. Canyon Bakehouse Holdings, Ltd. Liab. Co., No. 3:17-cv-00146-MO, 2018 U.S. Dist. LEXIS...