Understanding the Three Accrual Standards Applied by Courts for Trade Secret Misappropriation

Several recent federal appellate and district court decisions underscore that companies must promptly investigate and act on suspected trade secret theft. Delay can cost a trade secret owner an otherwise meritorious claim. The risk is compounded by uncertainty over when the Defend Trade Secrets Act’s (DTSA) three-year limitations period begins. Courts currently apply three different approaches: First, there is the majority “knew or should have known” standard, applied by most courts (including those in the Second and Eighth Circuits), which courts have equated with inquiry notice. The Merck discovery rule, adopted by some courts, rejects inquiry notice and starts the clock only upon actual or constructive discovery of the violation itself. The Federal Circuit’s “access-plus-similarity” test, under which the clock starts once the plaintiff knows of both the defendant’s access to the trade secrets and substantial similarity in the defendant’s product. Plaintiffs must therefore understand which test applies in their forum and the facts a court will examine in deciding whether the limitations period has expired.

The Statutory Framework

A civil action under the DTSA must be commenced no later than three years after the date on which the misappropriation is discovered or, by the exercise of reasonable diligence, should have been discovered. The trigger is discovery of misappropriation, which the DTSA defines as either: acquisition of a trade secret by a person who knows or has reason to know that it was acquired by improper means; or Disclosure or use of a trade secret without consent by a person who: used improper means to acquire it; knew or had reason to know it was improperly acquired; or knew or had reason to know it was a trade secret acquired by accident or mistake.

Three Competing Accrual Standards

The three tests differ mainly in how much a plaintiff must know before the clock starts: a reason to investigate under the majority rule, the facts of the violation itself under Merck, and access plus substantial similarity under the Federal Circuit’s approach. Each is discussed below.

1. The Majority Rule: ‘Knew or Should Have Known’

Under the discovery rule generally, the limitations period is tolled until the injured party knows, or in the exercise of reasonable care should know, the fact and cause of the injury. The ultimate question is whether the plaintiff was aware that a problem existed. Once on inquiry notice, a plaintiff has a duty to investigate. It is charged with what a reasonably diligent investigation would have disclosed, regardless of what it actually knew. Most federal courts, including district courts in the Second Circuit (see e.g., Zirvi v. Flatley, 433 F. Supp. 3d 448 (S.D.N.Y. 2020) and the Eighth Circuit in Trinseo Eur. GmbH v. Kellogg Brown & Root, L.L.C., 165 F.4th 399 (5th Cir. 2026) apply this formulation to the DTSA: the period runs from the date the plaintiff knew or should have known that its trade secrets were wrongfully acquired, disclosed, or used.

The Eighth Circuit provided the most analytically precise appellate guidance on what a plaintiff must discover to trigger accrual, holding that the plaintiff must have discovered the “misappropriation,” as that term is defined in the DTSA; the plaintiff must have discovered facts indicating that a specific person acquired, disclosed, or used the trade secret while knowing or having reason to know of the improper acquisition. Finally, misappropriation is “discovered” only when there is a discoverable act — actual use of the trade secret.

Courts have found that a range of events can start the clock. A published patent application or issued patent puts parties on notice of its contents, and evidence that the defendant “cloned” part of a design from a device the parties developed together has likewise been held sufficient. By contrast, courts have held that the limitations period did not begin to run where the defendant concealed the misappropriation, or where nothing indicated that the defendant could have developed its technology only by using the plaintiff’s trade secrets. Similarly, the clock does not where the plaintiff learned only that unidentified former employees might be operating outside confidentiality boundaries, that a former employee had mentioned consulting work without identifying the misappropriator or facts establishing misappropriation, or simply that a former employee had joined a competitor. And the period could not begin before the plaintiff learned of the underlying sale that allegedly involved its trade secrets.

2. The Merck Discovery Rule: Rejecting Inquiry Notice

Some courts reject inquiry notice in favor of the stricter rule announced by the Supreme Court in Merck & Co. v. Reynolds, 559 U.S. 633 (2010). Merck held that the limitations period begins only when the plaintiff actually discovers, or a reasonably diligent plaintiff would have discovered, the facts constituting the violation — not when the plaintiff has enough information to prompt further investigation. The Court expressly rejected the view that the clock starts when a plaintiff possesses a quantum of information sufficiently suggestive of wrongdoing that it should investigate further. Under this approach, the defendant must first show that the plaintiff had enough information about possible wrongdoing to be on notice of its claim. The burden then shifts to the plaintiff to show that it exercised reasonable diligence and still could not discover its injury.

Merck was a securities fraud case and does not bind courts on the DTSA. Courts adopting it reason that the two limitations provisions are substantially similar and should be read alike. On that view, a DTSA claim accrues only when the misappropriation is (1) actually discovered or (2) should have been discovered through reasonable diligence; a mere cause for concern is not enough. Applying this rule, one court held that a company’s internal emails expressing concern that a competitor had “cloned” its product did not, as a matter of law, start the clock. Genuine factual disputes remained about when a reasonably diligent company would have discovered the actual misappropriation.

3. The Federal Circuit’s Access-Plus-Similarity Test

The Federal Circuit in Insulet Corp. v. EOFlow, Co., 176 F.4th 1347 (Fed. Cir. 2026) recently declined to choose between inquiry notice and Merck. It held instead that the plaintiff’s claim was time-barred even under the more demanding Merck standard the district court had applied. The court applied an “access-plus-similarity” test, under which the limitations period begins once the plaintiff knows both that the alleged misappropriator had access to the trade secrets, such as through a former employee, and that the trade secrets and the alleged misappropriator’s competing product are substantially similar. Because the standard is substantial similarity — not exact duplication — the court rejected plaintiff’s argument that it could not have discovered the misappropriation without knowing the precise nominal dimensions of defendant’s designs. Detailed knowledge of all underlying facts is not required to plead a trade secret misappropriation claim.

The relevant question is whether the plaintiff knew enough to plead a misappropriation claim, not whether it had enough evidence to prove one at trial. A plaintiff therefore need not have detailed technical knowledge of which trade secrets were taken or exactly how.

Continuing Misappropriation: One Claim, One Clock

The Federal Circuit also confirmed that the DTSA follows the “relationship” approach. The first discovered (or discoverable) misappropriation starts the limitations period, and all later related misappropriations are part of the same single claim. The practical consequence is significant. A plaintiff that discovers an initial misappropriation but waits more than three years cannot revive its claim by pointing to later acts in the same continuing course of conduct. Nor can it treat its suspicions about different trade secrets as separate claims; as the court put it, that would let a plaintiff “don blinders” to avoid accrual of related claims. The rule applies defendant by defendant. Discovering one defendant’s misappropriation does not start the clock on a different defendant’s later misappropriation.

Practical Tips

The choice of standard can decide whether a claim survives. Under Merck, a plaintiff that suspects misappropriation but cannot yet identify the misappropriator or the specific trade secrets has more time to investigate — important in complex technical cases where the plaintiff must obtain and analyze a competitor’s product. Under the majority inquiry-notice standard, the clock may start as soon as the plaintiff has enough information to prompt a reasonable investigation, even if that investigation would not immediately reveal the full scope of the misappropriation.

The Federal Circuit’s test supplies a useful benchmark regardless of forum: if a plaintiff knows that a former employee with access to its trade secrets now works for a competitor, and that the competitor’s product is substantially similar, the period has likely begun to run under any standard.

For Trade Secret Owners

Trade secret owners should first determine whether their likely forum applies inquiry notice, Merck, or access-plus-similarity before deciding how long they can afford to investigate. Where the forum is uncertain, the safer course is to assume the clock started at the earliest plausible trigger. Red flags, such as a key employee’s departure to a competitor followed by a similar competing product, call for immediate investigation, and owners should not wait for technical proof: the question is whether they can plead a claim, not whether they can prove it.

Owners should also document their investigation, recording when concerns arose, what steps were taken, and what each step revealed, because under Merck the plaintiff must show reasonable diligence once the defendant makes its initial showing. They should be careful about what they put in writing, since internal emails voicing suspicion, for example, that a competitor “cloned” a product, may later be offered as evidence of notice. Monitoring competitors’ patent applications, issued patents, product launches, and sales is equally important, as each can start the clock. Finally, owners should treat the first discovery as the start of the period for all related acts by the same defendant, which will not restart it, while assessing each defendant separately, since the clock runs independently for each.

Even if a civil claim is time-barred under the DTSA’s three-year limitations period, a victim may still be able to obtain redress by referring the matter to federal authorities for possible investigation and prosecution under the Economic Espionage Act. Criminal violations are subject to the general five-year federal statute of limitations, which may leave the government time to act after the civil window has closed. Victims should not assume the criminal period will always outlast the civil one, however. Unlike the DTSA’s discovery-based civil period, the criminal limitations period generally runs from the commission of the offense, regardless of when the victim learns of it, and for a conspiracy from the last overt act in furtherance of it. A victim that discovers a theft years after it occurred may therefore find both avenues narrowing, which is one more reason to act promptly.

For Accused Misappropriators

Defendants, for their part, should raise limitations early by investigating when the plaintiff first learned of the defendant’s access and of the similarity between the products. Public patent filings, product releases, and the plaintiff’s own internal communications may establish an earlier accrual date. Defendants should also invoke the relationship approach, arguing that any later alleged misappropriations belong to a single claim that accrued with the first discoverable act.

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