Welcome to WilmerHale's bulletin on recent trade secret case law and relevant news items. We've affectionately nicknamed it "Readily Ascertainable" because, unlike a trade secret, it should be easy to figure out. If you have any questions about these cases or the legal questions they implicate, our trade secret experts would be delighted to answer them.
This month's cases involve denial of two previously reported-on cert petitions to the U.S. Supreme Court regarding the scope of the federal Defend Trade Secrets Act, clarification from the Fifth Circuit about when a previously filed case can constitute notice that plaintiff considers information to be trade secret, and a report on a recently filed case presenting interesting questions as to the particularity requirements for defining trade secrets.
Hytera Commc'ns Corp. v. Motorola Sols., Inc. et al., No. 24-725 (S. Ct. Feb. 24, 2025)
Binyomin Rutstein v. Compulife Software Inc. et al., No. 24-634 (S. Ct. Feb. 24, 2025)
SCOTUS denies two notable cert petitions asking the Court to interpret the DTSA.
In the nearly 10 years since the federal Defend Trade Secrets Act ("DTSA") was enacted, the U.S. Supreme Court has yet to show any interest in taking up a case involving its interpretation. That trend continued earlier this month when the Court denied review in two cases posing novel questions about the scope of the DTSA.
First, as reported in our January bulletin, Hytera Communications had asked the Court to consider whether a DTSA plaintiff can receive damages from conduct outside of the United States. Hytera had argued, among other things, that the DTSA's silence as to extraterritoriality is an indication that such damages are not available—particularly when compared to another federal trade secret law (the Economic Espionage Act) that expressly reaches conduct outside of the United States. The Court's denial of review leaves in place the Seventh Circuit's holding that extraterritorial damages are available.
Second, as reported in our November/December bulletin, Binyomin Rutstein had asked the Court to decide "whether an action that is not unlawful under the federal Defend Trade Secrets Act ('DTSA') when performed manually by a human (or humans) is unlawful when performed by a computer robot." The Court's denial of review means that the Eleventh Circuit's decision, which held that automated data scraping constitutes improper means of accessing confidential information, will stay in place.
Notably, the denials of certiorari in Hytera and Binyomin do not mean that the questions regarding the availability of extraterritorial damages and the legality of data scraping have been definitively resolved. Further petitions for writ of certiorari are to be expected as more circuits weigh in on these recurring issues and—particularly if a circuit split develops—the Court may express more interest in the future.
Pie Dev., L.L.C. v. Pie Carrier Holdings, Inc., -- F. 4th --, 2025 WL 368721 (5th Cir. Feb. 3, 2025)
Fifth Circuit holds that knowledge of allegations in dismissed trade secret litigation does not establish the requisite mens rea for a new trade secret claim.
Plaintiff Pie Development, which was "formed to develop a software application that would streamline the process for purchasing workers compensation insurance," brought suit against inter alia a rival company (Pie Carrier Holdings) and two individuals under inter alia the DTSA and Mississippi trade secret law. The first iteration of the litigation was dismissed at the 12(b)(6) stage. While an appeal was pending, Pie Development filed a separate action in the same district court making the same basic allegations. The district court dismissed the claims against the two individuals on the grounds that the complaint failed to allege that the individuals knew or had reason to know the information at issue was a trade secret.
On appeal, Pie Development argued that the Fifth Circuit could infer the requisite mens rea because the two individuals were aware of the first, unsuccessful lawsuit. The Fifth Circuit rejected this argument, adopting the district court's reasoning that mere knowledge of allegations of trade secret misappropriation that "have been found as a matter of law to be insufficient" cannot establish that the two individuals had the required knowledge. In so ruling, the Fifth Circuit distinguished its own prior precedent, holding that knowledge of allegations in ongoing trade secret litigation can suffice to establish mens rea. The Fifth Circuit reasoned that the individuals in the Pie Development litigation were "entitled to rely on our decision that no protectible trade secret existed."
OpenEvidence Inc. v. Pathway Medical, Inc. et al., No. 1:25-cv-10471 (D. Mass. Feb. 26, 2025)
D. Mass. court has the opportunity to clarify whether collection of outputs from generative artificial intelligence software will be seen as permissible "reverse engineering" or impermissible "misappropriation."
On February 26, 2025, OpenEvidence Inc. filed suit against Pathway Medical, Inc., alleging that Pathway reverse engineered at least the "system prompt" from OpenEvidence's generative AI system for providing medical decision support to healthcare providers. A "system prompt" is the underlying set of instructions that guide the AI model on how to react to a user input, typically in a chat-feature environment.
OpenEvidence's complaint alleges that Pathway carried out dozens of improper "prompt injection" attacks in order to manipulate the generative AI model into disclosing the underlying sensitive and proprietary information that define OpenEvidence's "system prompt." Notably, OpenEvidence is open to the general public for free, but general public users only get two questions per week. Meanwhile, licensed medical professionals can get unlimited access, upon proving their license number and attesting—through a terms-of-use agreement—to be a licensed medical professional.
Because the sufficiency of OpenEvidence's complaint has not yet been adjudicated, it is difficult to draw any conclusions about the strength of its arguments at this stage. Readily Ascertainable will continue to monitor this case as it unfolds.
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