Possession is not 9/10ths of the Law in Continuing Use Misappropriation Under DTSA

When Congress enacted the DTSA on May 11, 2016, it left open the issue of whether the DTSA would apply to misappropriation that occurred prior.  As we previously reported, many federal district courts have since found that it does apply if there were continuing acts of misappropriation after enactment of the statute.  Now, the 10th Circuit Court of Appeals has weighed in, upholding a district court’s dismissal of a DTSA claim where the plaintiff failed to allege a continued act of misappropriation after the date of enactment.

In Leslie Camick v. Harry Holladay, et. al., Camick appealed the district court’s dismissal of his amended complaint.  In his amended complaint, he alleged that the defendants violated the DTSA by misappropriating his trade secrets in July 2011 and continuing to possess them after the DTSA’s enactment.  The court of appeals recognized that district courts have interpreted the DTSA to apply to misappropriation that continues after it was enacted, but distinguished the case at hand.  Allegations of mere continued possession of a trade secret are not the same as alleging an act of misappropriation.

Where allegations are not merely conclusory, courts seem inclined to permit DTSA claims alleging trade secrets were acquired prior to May 11, 2016 based on continued misappropriation through use and sometimes disclosure – just not possession, at least not yet.