Key Takeaway

• Concepts or ideas not protectible as trade secrets under New York common law may still constitute protectible trade secrets under the federal Defend Trade Secrets Act.

A mere idea may constitute a trade secret under the Defend Trade Secrets Act (“DTSA”). In Vogel v. TakeOne Network Corp., No. 22-cv-3991, 2024 WL 870442 (S.D.N.Y. Feb. 29, 2024), the federal district court in New York City denied a motion to dismiss a claim under the DTSA, holding sufficient plaintiff’s claim that his idea for “Tradekraft” – a software that would manage hiring, payroll, budgeting, and expenses in the television and film industries – might have independent economic value from not being generally known to the public. The Court distinguished between the (federal) DTSA, which requires only that an idea have value from not being publicly known, and New York state law, which requires in addition that the alleged trade secret would remain secret even after it used in the market.

In this case, plaintiff Vogel alleged that he entered into a partnership and shared with his partners his Tradekraft idea, along with other alleged trade secrets (such as marketing material, business plans, and source code). Vogel alleged that his partners later improperly removed him as a founder of the partnership, essentially dissolved the partnership, and started a new company without him –  but using all of his trade secrets.

Vogel sued for trade secret misappropriation, claiming that defendants misappropriated two categories of trade secrets: “Vogel Proprietary Information,” which included business ideas, and “Tradekraft Proprietary Information.” Defendants moved to dismiss, arguing that Vogel’s general business ideas did not constitute a trade secret.

The court noted that Vogel’s claim would not survive under New York law because a “product idea, plan, or design that will be evident to the public once marketed cannot meet” the trade secret standard. Under the federal DTSA, however, trade secret information is defined by statute as information that “derives 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 other words, this definition “suggests that a new, confidential product idea can be a trade secret if it has potential economic value from not being disclosed.” Given that Vogel alleged as much in his complaint, the court allowed his claim to proceed.

It remains to be seen whether Vogel will ultimately prevail. But for now, at least one court has allowed a DTSA claim to proceed based on a concept or idea rather than a tangible product or business, which is a marked diversion from previous holdings in this field.

If you have any questions regarding the information covered in this blog, please contact John Baranello, Valeria Castanaro, Michelle Cho, or your primary attorney at Moses Singer.