Welcome to WilmerHale’s bulletin on recent trade secret case law and relevant news items. We’ve affectionately nicknamed it “Readily Ascertainable” because, unlike a trade secret, it should be easy to figure out. If you have any questions about these cases or the legal questions they implicate, our trade secret team would be delighted to answer them.
This month’s cases involve a cert petition to the U.S. Supreme Court on the extraterritorial application of the federal Defend Trade Secrets Act, a matter of first impression before the Court of Federal Claims, and a reminder that the discovery rule can trigger the clock on the statute of limitations even on suspicion of trade secret misappropriation.
Hytera Commc’ns Corp. v. Motorola Sols., Inc. et al., No. 24-725 (S. Ct. Jan. 2, 2025):
Hytera asks SCOTUS to reject DTSA extraterritorial application.
Hytera petitioned the U.S. Supreme Court to review a Seventh Circuit decision affirming a $407.4 million damages award to Motorola for Hytera’s alleged misappropriation of trade secrets related to two-way radio systems. The dispute arose from a group of Malaysia-based engineers’ alleged misappropriation of confidential documents and source code from their then-employer Motorola, which Motorola has asserted helped Hytera to develop “functionally indistinguishable” digital mobile radio (DMR) products.
The Seventh Circuit applied the two-step inquiry from RJR Nabisco, Inc. v. European Community, 579 U.S. 325, 335–38 (2016), to reach its conclusion that the DTSA rebuts the presumption against extraterritorial application—meaning that Motorola could receive damages from conduct outside the United States. Hytera’s petition asks the Supreme Court to find that the DTSA does not rebut the presumption. Hytera argues, among other points, that the DTSA does not expressly allow extraterritorial conduct to form the basis of a misappropriation claim. Hytera argues that this statutory silence is significant because another portion of federal trade secret law (the Economic Espionage Act, which governs criminal conduct) does expressly extend to extraterritorial conduct, suggesting Congress knew how to extend a trade secret’s reach beyond the United States if it wanted to do so.
Vanda Pharms., Inc. v. United States, 2025 WL 260709 (Fed. Cl. Jan. 22, 2025):
Court of Federal Claims rejects use of Takings Clause in trade secret dispute.
The Court of Federal Claims rejected Vanda’s attempt to use the Fifth Amendment’s Takings Clause to hold the federal government liable for allegedly disclosing Vanda’s trade secrets to its competitors. Specifically, Vanda alleged that the U.S. Food and Drug Administration (FDA) improperly disclosed dissolution specifications, impurities testing, and micronization information that the FDA learned in evaluating Vanda’s new drug applications (NDAs) for Fanapt® (a schizophrenia drug) and Hetlioz® (a treatment for “sleep-wake disorder”).
On January 22, 2025, the Court of Federal Claims concluded Vanda could not state a Takings Claim because none of the information disclosed was a viable trade secret. As to the dissolution rates Vanda claimed as a property interest, they were “were not developed by Vanda or submitted to the FDA . . . they were generated by the FDA and proposed to and accepted by Vanda during the NDA process in order to secure approval to market.” Accordingly, Vanda did not have possession for purposes of stating a trade secret claim. And as to the impurities testing and micronization information the FDA disclosed to Vanda’s generic competitors, that information was “already in the public domain at the time of the agency’s alleged disclosures,” meaning Vanda could have no protectable trade secret interest in it.
Elite Semiconductor v. Anchor Semiconductor et al., 2025 WL 82217 (N.D. Cal. Jan. 13, 2025):
The “Discovery Rule” can trigger the clock on the statute of limitations even on suspicion of trade secret misappropriation.
This dispute involves a semiconductor technology known as Local Critical Area Analysis (“Local CAA”) that Elite claims it developed in April 2010. Sometime in 2010, Anchor allegedly stole the source code for Local CAA to incorporate into its own products. Elite did not file suit against Anchor until September 2020, claiming it had not become aware of Anchor’s alleged misappropriation until 2019, when it reviewed a patent application Anchor filed in 2011 that disclosed the Local CAA trade secrets.
Anchor moved for summary judgment on a statute of limitations defense, arguing that because Elite received a copy of an Anchor patent application containing the Local CAA trade secrets in May 2013, the limitations period lapsed. The court agreed, holding that Elite’s claims needed to be filed by May 2016 because “any reasonable company confronted with a patent application so similar to its trade secrets would be suspicious enough to investigate further” and “there is nothing unfair about requiring Elite to investigate further after it actually sees a patent application reflecting its trade secrets.”
Silverthorne Seismic v. Sterling Seismic Servs., 2025 WL 25413 (5th Cir. Jan. 3, 2025):
Setting the standard for a reasonable royalty as a remedy for trade secret misappropriation is not a controlling question of law for purposes of an interlocutory appeal.
The Fifth Circuit dismissed an interlocutory appeal under 28 U.S.C. § 1292(b) involving the standard for determining a reasonable royalty under the federal Defend Trade Secrets Act. To appeal under 28 U.S.C. § 1292(b), an appellant must show that the decision being appealed involves a controlling question of law, a substantial ground for difference of opinion, and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.
Although the Fifth Circuit’s rotating motions panel initially concluded that § 1292(b)’s requirements were satisfied, a majority of the merits panel disagreed. That majority concluded that the district court’s holding that the determination of a reasonable-royalty standard is a controlling question of law was erroneous because it “would not immediately or materially affect the outcome of litigation in the district court.” This was because “[i]f [the court] adopted Silverthorne’s standard, Silverthorne may nonetheless fail to establish a reasonable royalty, and if [the court] affirmed the district court’s interpretation, Silverthorne could nonetheless find a way to prove damages.”
Judge Stephen A. Higginson dissented, explaining that § 1292(b) “was framed in broad language” and should be interpreted accordingly. Judge Higginson stated that “[t]he question here not only affects the scope of the evidence but has a much more direct and immediate effect on the litigation …[because] [i]t is undisputed that the district court’s standard for reasonable royalty damages forecloses the principal theory upon which Silverthorne’s [damages] witness has foundation to opine.” The case is now remanded to the district court for further proceedings.
