United States: Court Reverses Premature Dismissal Of Trade Secret Misappropriation Claims At The Complaint Stage

ABB Turbo Systems AG and ABB Inc. v. TurboUSA, Inc., No. 2014-1356, (Fed. Cir. Dec. 17, 2014) (Taranto, J.). Click Here for a copy of the opinion.

ABB Turbo Systems AG and ABB Inc. (collectively ABB) filed a complaint accusing TurboUSA of infringing two of ABB's turbocharger-related patents.  After filing the original complaint, ABB received information suggesting that TurboUSA had misappropriated ABB's trade secrets in collaboration with a former ABB employee.  ABB amended its complaint to add state claims for trade secret misappropriation.  TurboUSA filed a 12(b)(6) motion to dismiss these allegations for failure to state a claim on which relief can be granted.  The district court granted the motion based on statute-of-limitations grounds and on insufficient allegations of facts to show that ABB reasonably protected its trade secrets according to Florida trade secret statute requirements.  ABB appealed.

The Federal Circuit reversed, finding that the district court was premature and relied on judgments about the merits that go beyond what is authorized at the complaint stage.  Specifically, the Court found that dismissing a complaint at the pleading stage on statute-of-limitations grounds is ordinarily improper unless it is "apparent from the face of the complaint that the claim is time-barred."  ABB's amended complaint, however, provided no basis to conclude that it had notice of an actual case or controversy before the three-year statute-of-limitations period.  Further, the Court found that ABB's specific factual allegations of its measures to protect its trade secrets were enough to survive the motion to dismiss, even if the actual proof of those alleged facts seems improbable.  The Court concluded that, at the complaint stage, "it is simply not implausible that adequate protections [of ABB's trade secrets] were in place and yet a series of misappropriations occurred without ABB's detection."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.