On March 13, 2025, the U.S. District Court for the Eastern District of New York dismissed a trade secret misappropriation claim under the Defend Trade Secrets Act ("DTSA"), finding that the employer failed to plead it had taken reasonable measures to maintain the secrecy of its alleged trade secrets.
In Negative, Inc. v. McNamara, 2025 U.S.P.Q.2d 448, the employer alleged that McNamara, a freelance contractor, misappropriated its trade secrets, which included customer contact and sales information, costs and pricing information for its apparel, marketing and pricing strategies, and internal business plans. Negative alleged that it had taken reasonable secrecy measures—such as requiring "an intentional sign-in with multiple authentication factors," limiting access to the files McNamara accessed to a "need-to-know" basis, preventing certain of the files from being downloaded or printed, terminating the access of former employees or contractors, and when Negative became aware McNamara had downloaded the information, demanding its return.
However, the court disagreed that Negative's measures were sufficient. The court found that Negative had not alleged that it made any effort to communicate to McNamara that the information was confidential, nor required her to sign a confidentiality or non-disclosure agreement, or given her any formal instruction regarding the confidentiality of the materials she accessed. The court dismissed Negative's DTSA claim, holding that even drawing all reasonable inferences in Negative's favor, it had failed to adequately plead it took reasonable measures to keep its information secret.
This case underscores the importance of proactive and documented steps to protect confidential information.
Court Rejects DTSA Claim Over Inadequate Efforts To Protect Alleged Trade Secrets
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