In an April 16, 2020 ruling, the District Court for the District of Massachusetts re-affirmed that a plaintiff bringing a claim under the Defend Trade Secrets Act (DTSA) must allege “ownership of confidential information” to survive a motion to dismiss. The court in Focused Impressions, Inc. v. Sourcing Grp., LLC, No. 19-CV-11307-ADB, 2020 WL 1892062 (D. Mass. Apr. 16, 2020) granted a motion to dismiss a third-party complaint against a Plaintiff’s former COO where the third-party complaint failed to adequately allege ownership of confidential information.
Plaintiffs Focused Impressions, Inc. (FII) and Focused Impressions Technology, LLC (FIT) sued (among others) Lynn Smith, the former chief operating officer of FII and a former member of FIT, for violation of the DTSA. The third-party complaint alleged that Smith used confidential pricing information about FII’s clients, the Regal Press (Regal) and Wright Business Graphics, LLC (Wright). Smith moved to dismiss the complaint, arguing that Plaintiffs failed to allege ownership of confidential information, as required by the DTSA. The court agreed.
In its opinion, the court assumed that a price list could be trade secret information but found that FII failed to allege that it owned the relevant pricing information. While FII claimed that it “created and maintained trade secret information” in the form of pricing information, its subsequent allegations made clear that FII believed that the pricing information belonged to Regal and Wright rather than FII. For example, the complaint alleged that FII “became privy to Wright’s and Regal’s pricing information,” Smith needed to “maintain the confidentiality of FI’s suppliers,” and Smith misappropriated “Wright’s Trade Secret Information.”
The Focused Impressions decision confirms that a plaintiff bringing a claim under the DTSA must allege that it had “rightful legal or equitable title to, or license in” the information it alleges was a trade secret. Absent this essential element, a DTSA claim will be dismissed.