US Circuit Courts Refine DTSA Proof, Scope, and Specificity
Recent federal appellate decisions clarify the plaintiff's burden to prove secrets are not readily ascertainable, the specificity required to identify a secret, and the DTSA's extraterritorial reach.
Three US Courts of Appeals recently issued significant decisions interpreting the federal Defend Trade Secrets Act (DTSA). The Ninth Circuit reversed a $57 million judgment, holding that the trial court improperly placed the burden on the defendant to prove alleged secrets were "readily ascertainable." Under the DTSA, the court clarified, the plaintiff bears the burden of proving its information was not readily ascertainable by proper means. In another case, the Fourth Circuit affirmed a preliminary injunction against a Dutch company, holding that the DTSA applies extraterritorially to conduct outside the US so long as an act furthering the offense was committed in the United States. Finally, the Eighth Circuit affirmed summary judgment against a plaintiff for failing to identify its alleged trade secrets with sufficient particularity, reinforcing that vague references to "customer information" are inadequate.
These decisions provide critical guidance for litigating DTSA claims. Counsel must ensure pleadings and jury instructions correctly reflect the plaintiff's evidentiary burdens and that alleged secrets are identified with specificity from the outset. The Fourth Circuit's ruling also confirms the DTSA’s utility in disputes involving foreign competitors where a sufficient US nexus exists.