MD District Court Interprets Defend Trade Secrets Act

Friday, August 10, 2018

In what appears to be the first decision by the U.S. District Court for the District of Maryland interpreting the Defend Trade Secrets Act (DTSA), Judge Catherine C. Blake denied a motion to dismiss a plaintiff’s DTSA claim as to one defendant (a former employee) while granting the motion to dismiss of the other defendants. Judge Blake found that the plaintiff sufficiently alleged that business records (consisting of the buying habits of over 69,000 customers) the former employee allegedly misappropriated were trade secrets, whose confidentiality the plaintiff took reasonable steps to protect by storing the records on encrypted servers protected by firewalls.  The complaint also alleged that the defendant had misappropriated the trade secrets by copying the business records into a Dropbox account while he was employed by the plaintiff, and repeatedly accessing the files after he left the plaintiff’s employment to start a competing business.  However, the motion was granted with respect to the other defendants because the complaint failed to allege, in non-conclusory terms, how those defendants ever used the trade secrets.  Albert S. Smyth Co. v. Motes, No. CCB-17-677, 2018 WL 3635024 (D. Md. July 31, 2018).