Identifying Trade Secrets Under the DTSA: The Critical Requirement of ‘Reasonable Particularity’

Whether the plaintiff has adequately identified the trade secrets that have allegedly been misappropriated is a commonly litigated and critical issue under the Defend Trade Secrets Act (DTSA). Unlike other types of intellectual property—such as patents, copyrights, and trademarks—where the property has already been identified and registered, trade secrets by definition are secret and cannot be identified publicly without destroying the subject matter of the plaintiff’s legal claim. Yet defendants still need to know what secrets they have allegedly misappropriated, and the court needs to know what the case is about. Even more fundamentally, the plaintiff must establish that the information claimed to be a trade secret is in fact a trade secret. This has become an important issue with courts increasingly focusing on whether the plaintiff has met its burden concerning this issue. The Seventh Circuit’s decision in NEXT Payment Solutions, Inc. v. CLEAResult Consulting, Inc., and other decisions that dismissed DTSA claims for the plaintiff’s failure to identify the trade secrets in question with the required “reasonable particularity” highlight the importance of this issue in trade secret misappropriation litigation.

The Legal Standard for Identifying Trade Secrets

The burden is on the party alleging misappropriation to identify the trade secrets it claims have been misappropriated. However, at the federal level, neither the Economic Espionage Act nor the DTSA expressly addresses identification requirements. At the state level, only California and Massachusetts have statutes that define certain, but not all, aspects of identification.

Notably, the Ninth Circuit recently held in Quintara Biosciences, Inc. v. Ruifeng Biztech, Inc. that the California Uniform Trade Secrets Act does not bind federal courts adjudicating DTSA claims. Accordingly, plaintiffs in California asserting only DTSA misappropriation claims before discovery are required only to identify their trade secrets with “sufficient particularity” to separate them from matters of general knowledge in the trade or of special knowledge of those persons skilled in the trade, rather than meeting the more stringent “reasonable particularity” standard under Cal. Civ. Proc. Code § 2019.210.

Identification of trade secrets poses special challenges in litigation because what a plaintiff alleges as its trade secrets is typically not the entirety of the plaintiff’s technology and business information. Businesses may employ a mix of secret and non-secret information, with different types of information covered by one or more types of protection (e.g., patent, copyright, and trade secret). Especially in technology cases, the information may include trade secrets, public information, information licensed to the defendant, patentable subject matter, and copyrighted expression, all at the same time. Further, many companies don’t maintain a list of their trade secrets, so it is common for trade secrets not to be expressly identified in writing until the commencement of litigation, where they are first alleged.

There is growing agreement that a sufficient identification is one that achieves two goals: (1) it puts the defendant on notice of the nature of the plaintiff’s claims, and (2) it enables the defendant to determine the relevancy of any requested discovery concerning the trade secrets. The phrase most often used as shorthand for a sufficient identification is “reasonable particularity.” The degree of specificity depends on the circumstances of the case, with trade secrets related to technology often requiring greater specificity than those concerning business information.

NEXT Payments Solution Decision

The defendant in NEXT Payments claimed that the plaintiff had failed to describe its trade secrets with enough specificity to support a DTSA claim. In the Seventh Circuit, a plaintiff is required to describe trade secrets with “a high level of specificity” and “must show concrete secrets rather than broad areas of technology.” This means, according to the NEXT court, that depending on the circumstances of each case, “the plaintiff must present enough specifics for the fact finder to distinguish between information that is generally known and information that is not readily ascertainable and thus qualifies as a statutory trade secret.”

NEXT claimed that 34 modules and five combination modules of its “FAST Tool” program constituted trade secrets. However, according to the court, while NEXT provided a title and description of what each feature does and its purpose, “the descriptions face a fundamental problem: NEXT only ever tells us the end result of what its software does, and not how it does it.” The court further stated, “NEXT does not identify any specific algorithms, source code, or methodologies underlying the FAST Tool’s functionality. Instead, NEXT defines its modules in vague, generic language that describes the software’s functionality. This lack of detail makes it impossible to distinguish between the aspects of the FAST Tool that are generally known and ascertainable, and those which NEXT contends are secret and derive value from being kept as such.” The court provided specific examples illustrating this conclusion: “Put another way, NEXT does exactly what we have said a trade secret plaintiff cannot do: it points to broad areas of software technology and asks us to sort out what aspects of that technology may or may not meet the statutory requirements for protection. But the onus is on NEXT to identify concrete secrets.”

In short, the Seventh Circuit agreed with the district court’s statement that “describing the software functions without disclosing the underlying methods is like saying someone stole your top secret apple pie recipe, but never identifying the secret recipe itself.” According to the Seventh Circuit, NEXT’s failure to adequately identify the processes “underlying its software makes it impossible for a fact finder to determine whether the functions the FAST Tool performs are protectable trade secrets.” Thus, the district court properly entered summary judgment on the claim of misappropriation of trade secrets.

What Constitutes Sufficient Specificity

The Seventh Circuit also provided helpful guidance to plaintiffs on what it considers sufficient specificity for a trade secret claim under the DTSA, citing Syntel Sterling Best Shores Mauritius Ltd. v. TriZetto Grp., Inc. In that case, unlike NEXT, the Second Circuit found that the asserted trade secrets were described with adequate specificity to allow a reasonable jury to determine that they were, in fact, trade secrets. In particular, the Second Circuit cited plaintiff’s witnesses, especially its expert witnesses, who provided “extensive testimony” identifying each trade secret and explaining “how the secret was developed,” “the value of the secret” to plaintiff, and how it was maintained as confidential. In short, the NEXT court stated that Syntel Sterling “described its software trade secrets with sufficient particularity where it provided documentation identifying the underlying source code and architecture behind the claimed software trade secrets.”

The Growing Judicial Focus on Identification

The question of whether the plaintiff in a DTSA case has identified its trade secrets with “reasonable particularity” is increasingly a focus, and a possible trend is emerging for courts to scrutinize whether the plaintiff has met its burden on this issue. For example, the Federal Circuit in Coda Development s.r.o. v. Goodyear Tire & Rubber Company agreed with the district court that plaintiff had failed to identify its trade secrets with “sufficient particularity.” With regard to a certain individual trade secret, the court found that the plaintiff had failed to identify this trade secret “with sufficient specificity to separate the purported trade secret from the other information that was known to the trade.”

Importantly, the court also rejected the plaintiff’s attempt to introduce additional specific evidence at trial. In other words, according to the court, a plaintiff should not be permitted to alter the definition of the alleged trade secrets once the litigation reaches the merits stage. Accordingly, it is critical that plaintiffs identify their trade secrets with “reasonable particularity” before the litigation reaches summary judgment or trial. With regard to a second set of trade secrets, the Federal Circuit also agreed with the district court that the plaintiff had failed to meet its specificity burden. As with NEXT, the Federal Circuit stated that the descriptions of these trade secrets “merely describe the functions that can be performed by the final product created by the knowledge in that trade secret” and thus were not entitled to trade secret protection. Further, according to the court, “the listed functions are described in vague terms with no detail regarding how those functions are carried out.”

Takeaway

The identification of trade secrets with “reasonable particularity” is emerging as a critical threshold requirement for DTSA claims. Courts are  holding plaintiffs to a demanding standard that requires them to identify the “how” behind their technology—the specific algorithms, methodologies, source code, or processes—rather than merely describing what the technology does. This heightened scrutiny serves important purposes: it ensures defendants receive adequate notice to mount a defense, prevents plaintiffs from improperly claiming protection over broad areas of technology, and allows courts to distinguish truly protectable secrets from information that is generally known or readily ascertainable.

The contrasting outcomes in NEXT Payment Solutions and Syntel Sterling illustrate that success requires more than listing features or functions. Plaintiffs must provide concrete details, supported by documentation and expert testimony, that explain how their trade secrets were developed, why they have value, and how they were maintained as confidential. Moreover, as Coda Development demonstrates, plaintiffs cannot cure deficient identifications by adding specificity at later stages of litigation. The lesson is clear: trade secret identification must be thorough and precise from the outset, before a case reaches summary judgment or trial. Failure to meet this burden will result in the dismissal of DTSA claims, regardless of whether misappropriation actually occurred.