Tenth Circuit Affirms Summary Judgment Due to Plaintiff’s Failure to Sufficiently Establish Existence of Trade Secrets

The Tenth Circuit’s  recent decision in Double Eagle Alloys, Inc. v. Hooper, __F.4th __ (10th Cir. Apr. 22, 2025), provides a cautionary tale regarding the necessity of identifying trade secrets with particularity and offering evidence of secrecy.  The case involved allegations that an employee violated the Defend Trade Secrets Act (DTSA) and Oklahoma’s trade secret law when he left his employer for a competitor and took with him notes and 2,660 digital files containing financial, technical, and business information. 

The district court analyzed four factors in evaluating plaintiff’s claim: “(1) whether [the plaintiff] has sufficiently identified the allegedly misappropriated trade secrets and business information; (2) whether [the plaintiff] has taken reasonable measures to maintain the secrecy of the identified trade secrets; (3) whether the identified trade secrets derive independent economic value from not being generally known or ascertainable through proper means; and (4) whether the allegedly misappropriated business information is of a secret or confidential character.” Granting summary judgment to the former employee and his new employer, the district court found that the plaintiff “failed to identify its alleged trade secrets with sufficient particularity and clarity.” 

The Tenth Circuit affirmed the district court’s decision, holding that the plaintiff did not satisfy the requirements identified by the district court. First, the Tenth Circuit stated:  “To qualify as a trade secret, (1) the owner must have ‘taken reasonable measures to keep such information secret,’ and (2) the information must derive ‘independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information[.]’” In addition, the court stated, the plaintiff must “describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade,” noting that “[i]t is inadequate for plaintiffs to cite and incorporate by reference hundreds of documents that purportedly reference or reflect the trade secret information.”

Applying these requirements, the court focused on three categories of alleged trade secrets: specifications for various materials, pricing, and customer drawings. As to the first category, the Tenth Circuit found that the plaintiff did not introduce evidence that its material specifications were subject to specific protection, were known only to a few people, were not readily ascertainable, or were valuable because they were not widely known. In fact, the court found, the undisputed evidence revealed that the plaintiff publicly posted certain aspects of its material specification on its website.  There was no evidence describing the significance of the plaintiff’s specifications, the time and effort required to create the specifications, the competitive advantage that these specifications afforded the plaintiff, or the uniqueness of the specifications compared to other distributors.

As to prices, the Tenth Circuit noted that “[a]s a general matter, confidential data regarding operating and pricing policies can qualify as trade secrets…. But the plaintiff must provide evidence that the pricing structure conferred some type of competitive advantage or economic value to the information’s owner.”  In this regard, the court provided examples of cases in which pricing information was found to be a trade secret where the plaintiff offered evidence that it spent significant time and resources developing the information, which was not readily ascertainable and gave the competitor a substantial business advantage.  The court also described “potential evidence” that pricing information is a trade secret, including testimony that the plaintiff has compiled a pricing history of its products compared to its competitors; testimony about a proprietary formula for calculating prices; or testimony about the efficiencies that its pricing model offers. In this case, the court found, the plaintiff failed to provide any of this information.  Moreover, among other things, the plaintiff shared its prices with customers and did not prevent its customers from sharing those prices. 

Finally, as to customer drawings, the court found the plaintiff did not own the drawings, which came from and belonged to the customers and therefore could not be the plaintiff corporation’s trade secrets. “[T]his fact alone dooms the DTSA claim, which requires that the party filing suit own the trade secret,” the court held.

The Tenth Circuit opinion provides a helpful reminder of the particularity and specificity requirements to prevail in a trade secrets claim. The opinion also underscores the importance of employers’ taking adequate steps to protect the secrecy of their trade secret information. Employers are encouraged to consult with counsel to evaluate the strength of their trade secret protection programs.