Posts in Trade Secrets

Yesterday, the U.S. Court of Appeals for the Second Circuit reversed and remanded the Southern District of New York’s dismissal of trade secret misappropriation claims filed against fintech company Arcesium by rival SS&C Technologies. Deciding that a broad definition of “use” under the Defend Trade Secrets Act (DTSA) was consistent with Second Circuit case law, the appellate court held that the district court erred in finding no misappropriation of SS&C’s alleged trade secrets and improperly credited Arcesium’s explanation of emails attached to SS&C’s complaint at the motion to dismiss stage.

For most of professional history, experience could not be separated from the professional who acquired it. Forms, manuals, and software captured portions of professional judgment, but the judgment itself remained human. That practical limitation preserved two distinctions the law depends on: the distinction between an employer’s property and an employee’s knowledge and skill, and the distinction between one client’s confidences and the next client’s matter. However, modern artificial intelligence (AI) removes this limitation.

For companies in many industries, their most valuable trade secrets reside not in a single formula or document, but in years of accumulated data, coordinated processes, and combinations of technical and commercial information from various internal sources. Engineering know-how (including negative know-how), integrated software features, and customer databases can reflect years of investment and work effort and give competitors a shortcut if acquired improperly and used. Compilation and combination trade secret protection helps safeguard that collective value, even when some individual components are publicly known or unprotectable standing alone.

One possible framework for protecting trade secrets while regulating AI is an International AI Assurance and Access Compact, organized around “verifiable reciprocity.” Participating jurisdictions would recognize defined compliance findings in exchange for comparable verification obligations, alongside commitments to fund regulatory capacity. This is a proposed arrangement, not existing law. Its consequences for intellectual property (IP) turn on what evidence travels across borders and what rights remain unaffected.

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued a decision today in Truinject Corp. v. Galderma S.A., affirming a U.S. District Court for the District of Delaware judgment for Galderma S.A. on tortious interference, breach of contract, and trade secret misappropriation claims. The CAFC held that Truinject Corporation forfeited its arguments on appeal about the dismissal of its tortious interference claim and the summary judgment of no damages.

The U.S. Court of Appeals for the Ninth Circuit yesterday rejected Boeing’s bid to revisit its August 2025 ruling in favor of electric-aircraft startup Zunum Aero, holding that Boeing’s patent-inventorship counterclaims did not strip the Ninth Circuit of jurisdiction over the trade secret dispute. The Ninth Circuit panel denied Boeing’s petition for panel rehearing after concluding that its patent counterclaims were “permissive” rather than “compulsory”, and therefore not subject to the exclusive jurisdiction of the U.S. Court of Appeals for the Federal Circuit.

U.S. companies planning to enter Nigeria typically build a careful playbook for market research, distribution, hiring, and regulatory compliance. Intellectual property is often the item furthest down that list, treated as paperwork to handle once commercial activity is already underway. That sequencing is backwards, and it is worth understanding why.

Yesterday, U.S. Magistrate Judge David Horan of the Northern District of Texas entered a report and recommendation urging the district court to deny motions for dismissal or a more definitive statement filed by German software giant SAP in a trade secret case brought by Texas-based enterprise AI developer o9 Solutions. While acknowledging that either side’s theory of the case might ultimately win, Judge Horan found that the burdens associated with SAP’s motions ultimately led to the conclusion that o9’s misappropriation case over supply chain management software should proceed.

Trade secrets occupy a unique position among the major forms of intellectual property. Patents, copyrights, and trademarks are, by design, defined and publicly registered, and can be consulted to determine exactly what is claimed. In contrast, trade secrets depend on their being undisclosed. This creates a structural problem the moment a trade secret owner goes to court. Because they are secret, they cannot be identified in public filings without destroying the very subject matter of the plaintiff’s claim. On the other hand, defendants must understand what the secrets are and what they’ve allegedly misappropriated. In addition, the court needs to know what the case is about to manage it.

As an expert witness on intellectual property litigations, I have noticed over the past few years parties with poor arguments in software copyright and software trade secret cases, both plaintiffs and defendants, have been taking advantage of technologically outdated protective orders to gain an unfair advantage. The U.S. District Court for the Northern District of California, where probably the majority of software IP cases take place, has a Model Protective Order for Litigation Involving Patents, Highly Sensitive Confidential Information and/or Trade Secrets that has become a de facto standard for software IP cases around the country. It is antiquated and needs to be updated.

Alden Abbott recently captured Europe’s digital-policy contradiction with a memorable image: Brussels says it wants technology champions, but when a champion emerges, it makes the winner share the trophy. The European Commission’s July 16 binding specification measures (BSMs) against Google turn that metaphor into an administrative program. One measure requires Google to provide eligible search engines—including AI chatbots with search functions—access to anonymized ranking, query, click, and view data. The other requires “free and effective” interoperability with 11 categories of Android functionality, including device sensors, app context, app and operating-system control, on-device AI models, and background execution. Google must furnish documentation and technical assistance and extend access to covered future functionality when it becomes available to its own services.

The U.S. Court of Appeals for the Ninth Circuit in Comet Technologies USA, Inc. v. XP Power, LLC, overturned Comet Technologies’ $40 million trade secret verdict against XP Power and ordered a new trial, finding that the district court erroneously instructed the jury that the defendant bore the burden of proving that Comet’s trade secrets were readily ascertainable by proper means. The court held that the error was not harmless because the instructions were not accurate as a whole, and nothing in the jury’s verdict shed light on how it would have ruled under a correct instruction. The case is notable both for clarifying what “readily ascertainable” means and for spotlighting a burden-of-proof distinction between the Defend Trade Secrets Act (DTSA) and the California Uniform Trade Secrets Act (CUTSA) that practitioners should not overlook.

An inventor pastes an unfiled disclosure into a chatbot to clean up the wording. An associate runs a draft specification through an AI tool to pressure-test claim support. A client forwards the analysis an AI gave them about their own case. All routine now, and each has produced a warning that AI quietly destroys patent rights: the prompt becomes prior art, novelty is lost, inventorship is corrupted, the application turns suspect. Some of those warnings are real. Most misidentify what went wrong.

On June 15, 2026, a federal court in San Francisco dismissed xAI’s trade secret claims against OpenAI with prejudice. The dismissal came with prejudice for a reason that sits at the heart of this article: xAI had sought to keep the case alive long enough to obtain, in discovery, the evidence it lacked at filing. The court refused, holding that a plaintiff “was required to have completed its investigation of its claims before filing suit, not after.” Put differently: the court did not treat a job interview as a trade secret extraction ceremony.