Claim For Misappropriation Of Trade Secrets Must Plead Specific Facts

On December 10, 2015, Justice Ramos of the New York County Commercial Division, issued a decision in Reva Capital Markets LLC, v. Northend Energy, Ltd., 2015 NY Slip Op. 51809(U), which, inter alia, dismissed a trade secrets claim on the pleadings.

Plaintiff brought this action against a number of defendants, alleging that they breached various agreements and made use of its work product (banking/investment advice). This post focuses on the plaintiff's trade secrets claim.

Justice Ramos held as follows:

Finally, the claim for misappropriation of trade secrets must also be dismissed. In order to adequately plead this claim, Reva must allege that it possesses a trade secret, and that defendant is using that trade secret in breach of an agreement, confidence or duty, or as a result of discovery by improper means. The Court of Appeals has adopted the definition of trade secrets set forth in the Restatement of Torts as "any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know how to use it."

In the complaint, Reva alleges that the AAOG parties and Cappello disclosed Reva's confidential and proprietary information to Cappello and others without Reva"s permission or consent. The Complaint does not identify what information or property comprise the trade secrets. Moreover, notwithstanding the confidentiality provisions contained in the Engagement Letter [protecting defendants' confidences but not Reva's], Reva fails to allege that it took steps to guard the secrecy of any material it disclosed. The plaintiff also fails to allege the value of the information to its business, or how it gives Reva an edge over its competitors. In short, Reva fails to allege a protectable trade secret.

(Internal citations omitted.)

This decision illustrates both that a trade secrets claim must be plead what the trade secrets are and also that a party must take care to ensure that its work product is clearly protected by confidentiality agreements.

NOTE: Schlam Stone & Dolan LLP is counsel of record to the AAOG parties in this action.