United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
E. Chang United States District Judge.
Motor and Coil Corporation sued Nidec Motor Corporation for,
among other things, violation of the federal Defend Trade
Secrets Act of 2016, Pub. L. No. 114-153, 130 Stat. 376, and
the Illinois Trade Secrets Act, 765 ILCS 1065/1 et
seq. R. 64, Third Am. Compl. Molon contends that its
former Head of Quality Control, Manish Desai, copied
confidential data onto a portable data drive before taking up
a new job at Molon's competitor, Merkle-Korff (which
eventually became Nidec). Id. ¶¶ 58-65.
Molon further alleges that Nidec, a direct competitor, has
used and continues to make use of the secrets that Desai
downloaded. Id. ¶¶ 66-67. Nidec now moves
to dismiss the trade secrets claims (which are the only
remaining counts of the complaint),  arguing that there was
nothing unlawful about Desai copying the files while he was
still a Molon employee and that there is no plausible
allegation that Nidec has used the trade secrets contained on
the thumb drive. R. 68, Nidec's Mot. to Dismiss, at
1-2, 6-7. For the reasons stated below, Nidec's motion is
purposes of this motion, the Court accepts as true the
allegations in the Third Amended Complaint. Erickson v.
Pardus, 551 U.S. 89, 94 (2007). Nidec is the successor
corporation to Merkle-Korff Industries, Inc., which in 2016
merged with Nidec Kinetek Corporation. Third Am. Compl.
¶ 4. Nidec Kinetek then ultimately merged with Nidec
Motor Corporation, the defendant in this case. Id.
makes bespoke fractional and sub-fractional electric motors
and gearmotors for customers across various industries, such
as manufacturers of vending machines, refrigerator ice
makers, and breast pump motors. Third Am. Compl. ¶¶
55, 66. It also makes standardized, off-the-shelf motors that
are widely distributed. Id. ¶ 66. According to
Molon, Nidec competes in precisely the same industries,
battling for market share in both the custom and standardized
motor markets. Id.
June 2013, Manish Desai served as Molon's Head of Quality
Control. Third Am. Compl. ¶ 58. In this position, he
oversaw product liability testing, coordinated the production
of engineering data, and processed quality assurance test
results as well as other compliance paperwork. Id.
¶ 61. As a condition of getting that job, he signed an
employment agreement which included at least one restrictive
covenant banning the unauthorized use of company data.
Id. ¶¶ 57, 60. According to Molon,
Desai's job put him in a position to access “all of
Molon's trade secrets and confidential business
information” through his work computer. Id.
2013, Desai left Molon for Nidec. Third Am. Compl. ¶ 58.
But before leaving, he allegedly copied dozens of Molon's
engineering, design, and quality control files onto a
personal Kingston portable data drive. Id.
¶ 65; R. 65, Appendix to Third Am. Compl. Desai
downloaded motor design and engineering drawings, motor
production inspection protocols, data on motor production
tools, quality control test protocols, quality control
testing data and reports, and communication files with
customers. Appendix to Third Am. Compl.
making these data transfers to his own thumb drive, Desai
then moved to a new job at Merkle-Korff (Nidec's
predecessor), taking up responsibilities similar to those he
had at Molon. Third Am. Compl. ¶ 67. Without identifying
specific instances, Molon alleges (on information and belief)
that Desai “unlawfully disclosed” the trade
secrets he took from the memory stick to Nidec and that Nidec
used and continues to use that information. Id.
¶¶ 59, 67, 71, 79.
dismissal motion primarily argues that Molon has failed to
state a plausible claim because Desai's actions, even as
alleged, do not constitute “misappropriation”
under either the Illinois Trade Secrets Act or the Defend
Trade Secrets Act of 2016. Nidec's Mot. to Dismiss at
1-2, 6. Nidec goes on to contend that there is no ground for
inferring that it accessed or used any of the information
Desai pulled. Id. at 7-9. And finally, Nidec argues
that even if Desai did take trade secrets and gave them to
Nidec, all of that occurred before the effective date of the
Defend Trade Secrets Act, so at least the federal claim must
be dismissed. Id. at 9-10.
Standard of Review
Federal Rule of Civil Procedure 8(a)(2), a complaint
generally need only include “a short and plain
statement of the claim showing that the pleader is entitled
to relief.” Fed.R.Civ.P. 8(a)(2). This short and plain
statement must “give the defendant fair notice of what
the … claim is and the grounds upon which it
rests.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (alteration in original) (internal quotation
marks and citation omitted). The Seventh Circuit explained
that this rule “reflects a liberal notice pleading
regime, which is intended to ‘focus litigation on the
merits of a claim' rather than on technicalities that
might keep plaintiffs out of court.” Brooks v.
Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514
motion under Rule 12(b)(6) challenges the sufficiency of the
complaint to state a claim upon which relief may be
granted.” Hallinan v. Fraternal Order of Police of
Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009).
“[A] complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). These allegations
“must be enough to raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555.
Allegations that are entitled to the assumption of truth are
those that are factual, instead of mere legal conclusions.
Iqbal, 556 U.S. at 678-79.
Count 3 of its Third Amended Complaint, Molon accuses Nidec
of violating the federal Defend Trade Secrets Act of 2016.
Third Am. Compl. ¶¶ 55-72. And in Count 4, Molon
contends Nidec also ran afoul of the Illinois Trade Secrets
Act. Id. ¶¶ 73-81. For both of these
claims, Nidec says that the complaint does not adequately
allege (1) that Desai downloaded the information via
“improper means” under the relevant statute; or
(2) that Nidec has used the alleged trade secrets. The
federal and Illinois claims can be discussed together because
the pertinent definitions of the two acts overlap.
Defend Trade Secrets Act of 2016 allows “[a]n owner of
a trade secret that is misappropriated … [to] bring a
civil action … if the trade secret is related to a
product or service used in, or intended for use in,
interstate or foreign commerce.” 18 U.S.C. §
1836(b)(1). For the purposes of this Act,
“misappropriation” is either: “(A)
acquisition of a trade secret of another by a person who
knows or has reason to know that the trade secret was
acquired by improper means” or “(B) disclosure or
use of a trade secret of another without express or implied
consent” under certain conditions. Id.
§ 1839(5). “[I]mproper means, ” in turn, is
defined here as “theft, bribery, misrepresentation,
breach or inducement of a breach of a duty to maintain
secrecy, or espionage through electronic or other
means.” Id. § 1839(6).
the Illinois Trade Secrets Act authorizes a civil action for
“[a]ctual or threatened misappropriation[s]” of
trade secrets. The Illinois Act defines
“misappropriation, ” “improper means,
” and “trade secrets” very similarly, and
for purposes of this dismissal motion, the slight differences
are immaterial.” Compare 765 ILCS 1065/2(a),
(b), (d), with 18 U.S.C. § 1839(3), (5), (6).
For both the federal and the Illinois trade secret statutes,
then, the question is whether Molon has plausibly alleged
that (1) there are trade secrets (2) that were
misappropriated by Nidec.
purposes of the dismissal motion, Nidec does not directly
contest that what Desai allegedly put onto a thumb drive
could have contained trade secrets. Nidec acknowledges that,
in a sealed appendix to the Third Amended Complaint, Molon
has added details-file names and summaries-of the alleged
stolen trade secrets, but Nidec suggests that these additions
do not ultimately change the fact that there remains no
“plausible basis for alleging that [Nidec] accessed or
used any alleged trade secrets.” Nidec's Mot. to
Dismiss at 6.
not directly contested by Nidec, for the sake of
completeness, the Court notes that Molon did sufficiently
allege that the downloaded files do comprise trade secrets.
To be sure, alleging what trade secrets were misappropriated
does require some concreteness and specificity at this stage,
but the claims do not need to be as detailed as when the case
is going to trial. See AutoMed Techs., Inc. v.
Eller, 160 F.Supp.2d 915, 920-21 (N.D. Ill. 2001);
Mobile Mark, Inc. v. Pakosz, 2011 WL 3898032, at *1
(N.D. Ill. Sept. 6, 2011). Molon's Appendix to the Third
Amended Complaint-which lists out file names and summaries of
motor design and engineering drawings; protocols for motor
production inspection; production data; quality control
protocols and testing data; and customer
correspondence-provides more than enough detail to plausibly
allege that what was downloaded comprises trade secrets.
Appendix to Third Am. Compl. Beyond this, Nidec will be free
to demand more specifics in interrogatories, and additional
discovery will flesh out further facts. But at this
dismissal-motion stage, the allegations plausibly assert that
Manish Desai downloaded trade secrets.