USA Law and Practice Contributed by: Claudia Ray, Joseph Loy, Josh Berlowitz and Andrew (Keum Yong) Lee, Kirkland & Ellis LLP
New York In New York, a trade secret misappropriation must be brought within three years of the plaintiff first suffer - ing damages, which is generally the time when the misappropriation should reasonably have been dis - covered. See Continental Industries Grp. v Ustuntas , 181 N.Y.S.3d 527, 603 (1st Dep’t 2022). 5.3 Initiating a Lawsuit An owner of a trade secret may file a complaint under either the DTSA or state trade secret laws (most of which conform to the UTSA) in federal or state court. The DTSA’s jurisdictional element requires the assert - ed trade secret to be related to a product or service that is used or intended for use in interstate or foreign commerce (18 USC Section 1836 (b)(1)). The DTSA and most forms of the UTSA permit three theories of misappropriation: (i) unconsented use, (ii) acquisition, or (iii) disclosure of a trade secret by a party who used improper means to acquire the trade secret, or who knows or has reason to know that the trade secret was acquired by improper means (see Onyx Renewable Partners L.P. v Kao , 2023 WL 405019, at *4 (S.D.N.Y. Jan. 25, 2023)). New York law more narrowly requires that the defendant uses the trade secret in order for a claim to be established ( N. Atl. Instruments, Inc v Haber , 188 F.3d 38, 44 (2d Cir. 1999)). Another option is to bring a claim of trade secret mis - appropriation in the United States International Trade Commission (ITC) if products embodying a misap - propriated trade secret are imported into the USA. While the ITC cannot award damages for trade secret misappropriation, it does have the authority to exclude imported goods that are produced through the exploi - tation of misappropriated trade secrets as an “unfair method of competition” or “unfair acts” in violation of the Tariff Act (19 USC Section 1337). ITC investigations often proceed much faster than dis - trict court litigation, and trade secret owners should consider whether the benefit of securing a speedy remedy is offset by the constrained timeline in which to develop the evidence needed to support a finding of misappropriation.
employer, to put the new employer on notice that the former employee had access to the trade secret owner’s confidential information and remains under an obligation to maintain its secrecy. A complaint alleging trade secret misappropriation under the DTSA, like any pleading in federal court, requires the submitting attorney to conduct a rea - sonable inquiry before filing, and courts may impose sanctions if the pleading is found to have been pre - sented for an improper purpose, such as harassing the defendant, or if the factual contentions are unlikely to have evidentiary support after a reasonable oppor - tunity for further investigation or discovery; see Fed - eral Rules of Civil Procedure (FRCP) 11 (b). Most state courts impose similar obligations. 5.2 Limitations Period According to both the DTSA and the UTSA, a misap - propriation claim must be brought within three years after the misappropriation was discovered or should reasonably have been discovered (18 USC Section 1836 (d); UTSA Section 6). The particular facts that can put a trade secret owner on notice of a trade secret misappropriation claim vary, but generally, a trade secret owner should diligently investigate any objectively reasonable suspicions that its trade secrets have been disclosed improperly or used with - out consent. Another factor to consider when bringing DTSA claims is the timeline of the misappropriation and use of the trade secrets at issue. Although there is uncertainty in this area, some courts have found that pre-enactment misappropriation may still be redressed by the DTSA if there are instances of use of the trade secrets occurring after enactment. For example, the DTSA is likely still available if the theft of a trade secret occurred prior to 11 May 2016 but the use or disclosure of the misappropriated trade secret occurred after the effective date of the DTSA. See Syntel Sterling Best Shores Mauritius Ltd v TriZetto Grp , Inc, 2021 WL 1553926 (S.D.N.Y. Apr. 20, 2021). If all of the activity constituting the trade secret misap - propriation occurred prior to 11 May 2016, however, the trade secret plaintiff may be limited to bringing claims under state law.
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