What does it take to sufficiently plead trade secret claims under the New Jersey Trade Secrets Act?
In Lard-Vid, LLC and Visual Image Display UK, Ltd. v. Ground Support Labs LLC et al., 2021 N.J. Super. Unpub. LEXIS 323, at *15 (N.J. Sup. Ct. Feb. 26, 2021), the Court addressed exactly this issue and dismissed plaintiffs’ trade secret claims for failure to allege facts sufficient to satisfy the elements of the New Jersey Trade Secrets Act.
Plaintiffs, two digital signage and consumer engagement companies, brought a variety of claims including for trade secret misappropriation against Defendants, who include several former employees who left and started their own businesses and the new companies. Plaintiffs generally alleged in the Complaint that Defendants used confidential and trade secret information to secure a $2.6 million contract for an unnamed client, sent emails from work email accounts to personal accounts prior to their departure, and deleted data belonging to Plaintiffs. The Court noted that the New Jersey Trade Secrets Act defines trade secrets as information that both: “(1) [d]erives independent economic value . . . from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use,” and “(2) [i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” However, according to the Court, Plaintiffs failed to explain exactly what data was taken or wrongfully used by Defendants, failed to alleged that Defendants used any of the information which was purportedly taken, and did not include information on how Plaintiffs were damaged as a result. Further, with respect to the unnamed client that was allegedly taken from Plaintiffs, the Complaint did not allege that Defendants used any trade secrets or other information to compete with Plaintiffs. Taken together, the Court found the trade secret claims could not survive a motion to dismiss.
This case is a good reminder not to ignore common pitfalls when pleading general claims and to ensure that trade secret claims are pled with sufficient specificity to comply with the applicable trade secret statutes.