6-2 MOTION TO DISMISS THE COMPLAINT/PETITION

• Jurisdiction: United States

6-2 Motion to Dismiss the Complaint/Petition

After receiving the complaint or petition, the first step that a trade secret defendant should take is to assess whether the claim can be dismissed at the pleading stage. Challenging the legal basis for the suit immediately upon filing is typically the quickest and least expensive way for the defendant to avoid the burden of discovery and trial. But whether a motion to dismiss is a viable strategic choice depends on how the plaintiff has pleaded its claims as well as whether the plaintiff filed the lawsuit in state or federal court.

Further, apart from challenging the substance of the pleading through a motion to dismiss, a variety of other procedural motions could grant the trade secret defendant early dismissal or at least strategic advantage. These options include, among others, a motion to transfer venue or a motion to dismiss for lack of jurisdiction. Because these types of procedural motions typically hinge on idiosyncratic facts, such as the specific locations of the parties or the venue in which the plaintiff chose to bring the lawsuit, this section will not address those options. Rather, it will focus on the substantive pleading defects that may arise in a trade secret case.

6-2:1 Rule 12(b)(6) Motion to Dismiss (Federal Court)

In federal court, the defendant can file a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). Filing a motion under Rule 12(b)(6) carries no risk to the defendant of paying the other side's attorneys' fees if unsuccessful (unlike Texas Rule 91a, which is discussed below in section 6-2:2). Thus, all trade secret defendants should consider filing a Rule 12(b)(6) motion at the outset of the case if any potential legal ground for dismissal exists. For reasons discussed below, however, these types of motions do not often succeed in the trade secret context.

Rule 12(b)(6) permits the court to dismiss a complaint if the plaintiff's allegations "fail[] to state a claim upon which relief can be granted." To survive a challenge under Rule 12(b)(6), the allegations in the complaint must set forth "enough facts to state a claim to relief that is plausible on its face."¹ In ruling on such motions, courts must construe the pleaded facts "in the light most favorable to the plaintiffs, accepting their truth and drawing all reasonable inferences in plaintiffs' favor."² Though the complaint's allegations must be sufficient "to raise a right to relief above the speculative level," circuit courts have overturned dismissals where the lower court required too high a degree of specificity.³ As a general matter, courts do not require the plaintiff to provide "detailed factual allegations" to survive a Rule 12(b)(6) motion to dismiss.⁴

While the likelihood of success of each 12(b)(6) motion often hinges on the specific allegations of each case, Texas federal courts tend to deny such motions in the trade secret context given the inherently factual nature of trade secret allegations.⁵ In fact, one Texas federal court held that providing sufficient context to identify the specific trade secret at issue—without actually identifying it—alone may suffice to state a trade secret claim under Rule 12(b)(6).⁶

On the other hand, courts have dismissed trade secret claims at the pleading stage where, for instance, the limitations period has clearly passed.⁷ But even when there is an opportunity to grant the motion based on statute of limitations, some courts have hesitated to do so at the pleading stage.⁸ Other examples where courts have dismissed misappropriation claims at the pleading stage include the following cases:

• The plaintiff failed to allege sufficient facts to show that the defendant acquired the trade secrets through "improper means" because the plaintiff "willingly provided Defendant with the alleged trade secrets pursuant to" an agreement between the parties;⁹
• The plaintiff did not plead how the defendant acquired the trade secret, except to state the "formulaic recitation" that it was acquired by "improper means";¹⁰
• The plaintiff did not plead facts describing how the alleged trade secrets were obtained, what trade secrets were used, nor "allegations linking any particular conduct to any particular [trade secret]";¹¹
• The plaintiff's "own allegations show[ed] that he did not possess a trade secret or convey a protected idea in confidence" where he willingly sent information packets disclosing the trade secret to prospective investors;¹²
• The plaintiff's allegations lumped together a number of defendants, but did not specifically identify one defendant's involvement. The allegations also were "silent as to how [this individual defendant] supposedly acquired Plaintiffs' purported trade secrets, except for alleging that the data was acquired through improper means."¹³
• In a case involving three co-defendants: two individual employees (who had left the plaintiff to join a competitor) and their new-employer (the plaintiff's competitor), the court granted the motion as to one of the individual defendants, but denied it as to the other individual defendant and the co-defendant competitor.¹⁴ According to the court, the complaint "lack[ed] any factual content showing that [the victorious individual defendant] took specific information or took part in specific uses of information."¹⁵

6-2:2 Texas Rule of Civil Procedure 91a Motion to Dismiss (State Court)

Though not identical to its federal analogue, some courts have referred to Rule 91a as an approximation of a federal motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).¹⁶ Rule 91a went into effect on March 1, 2013, and applies to all cases filed or pending at that date.¹⁷ This rule allows a party to move for dismissal where a cause of action "has no basis in law or fact."¹⁸ The phrase "no basis in law" means the claimant would not be entitled to recover even if the court takes all of petitioner's allegations as true, "together with inferences reasonably drawn from them."¹⁹ "No basis in fact" exists if "no reasonable person could believe the facts pleaded."²⁰

For any motion...