Rule 12(b)(6) Inappropriate for Resolving Fact-Intensive Trade Secret Claims

ABB Turbo Sys. AG v. TurboUSA, Inc., ___ F.3d ___ (December 17, 2014)
(Prost, Newman, TARANTO) (S.D. Fla.: Moore) (2 of 5 stars)
Federal Circuit reverses dismissal of trade secret misappropriation claims under FRCP 12(b)(6) and remands for further proceedings.
The Federal Circuit first held dismissal on timeliness grounds inappropriate, noting that "[d]ismissal at the pleading stage on statute-of-limitations grounds ordinarily is improper unless it is 'apparent from the face of the complaint that the claim is time-barred.'" Slip op. at 8-9. The district court was wrong to think that ABB should have known about the alleged misappropriation before the statute of limitations ran, simply because it was alleged to be massive and occur over a long time period. The court "exceed[ed] the limits on factual assessments appropriate when ruling on a motion to dismiss." Id. at 9. The district court also erred in ruling that ABB had not established adequate safeguards as evidenced by the fact that the secrets were stolen. The Federal Circuit noted "the complaint stage is not well-suited to determining what precautions are reasonable in a given context." Id. at 11. The Federal Circuit declined to consider, though provided some guidance regarding, TurboUSA's additional arguments for dismissal under Iqbal/Twombley that the district court had not addressed.

Authors: Chris W. Dryer, Michael C. Tyler