EXTRATERRITORIALITY NOT A BASIS FOR DISMISSAL OF TRADE SECRET MISAPPROPRIATION CLAIM

Parties alleging state law trade secret misappropriation often feel compelled to identify a specific state statute as the basis for their claim, but that identification is unnecessary in the Delaware courts. The Delaware Court of Chancery has recently made clear that a claimant asserting a state law trade secret misappropriation claim need not identify the specific state law or statute that was allegedly violated.

In Dow Chem. Co. v. Organik Kimya Holding A.S., C.A. No. 12090-VCG (Del. Ch. May 25, 2018), the Court denied a motion to dismiss a claim under the Delaware Uniform Trade Secret Act (“DUTSA”) where the plaintiff  alleged a violation of DUTSA, but did not allege any acts in Delaware related to the misappropriation. Plaintiff Dow accused defendant Organik of hiring former Dow employees in order to steal Dow trade secrets concerning formulas and methods for the production of highly opaque paint, particularly the use of opaque polymers in the paint. Dow specifically alleged in its complaint that Organik violated “DUTSA” by misappropriating Dow’s trade secrets. Organik moved to dismiss the claim pursuant to Rule 12(b)(6) on the ground that Dow had not alleged any Delaware-based conduct, and DUTSA does not apply extraterritorially such that the conduct alleged in the complaint to have occurred outside Delaware could not possibly violate DUTSA. Organik argued that the claim under DUTSA was therefore void and should be dismissed. The Court disagreed.

Vice Chancellor Glasscock explained that “Organik’s extraterritoriality argument is really a choice-of-law argument in disguise,” and that Delaware’s notice pleading standard, which mirrors the federal standard, does not require that a party plead the law – “the plaintiff is not required to cite statutes, caselaw or any other legal materials in her pleading.” Finding that Dow had alleged all the elements of misappropriation under any state’s trade secret law, the Court concluded that the choice-of-law analysis was not appropriate at the pleadings stage and denied Organik’s motion to dismiss.

This decision makes clear that so long as a claimant successfully alleges all elements of any state misappropriation law that could apply to its claim, there is no requirement in Delaware that the claimant identify the specific state law under which it asserts trade secret misappropriation.

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