In Insulet Corp. v. EOFlow, Co. Ltd., the Federal Circuit decided the fascinating question of when the statute of limitations begins to run on a trade secret case. In this case, the court found that Insulet had a basis to file suit beginning in 2019 when it knew its former employees had joined EOFlow, was working on a competing adhesive, insulin patch pump, and that Insulet had reason to believe that the competing product was substantially similar to its at least one of its own trade secrets because Insulet had seen EOFlow's product at a 2019 trade show. Because Insulet had waited until 2023 to file a lawsuit, allegedly because it was still obtaining technical details about EOFlow's products, the Federal Circuit reversed a $59.4 million damages award and jury verdict and found that Insulet's claims are time-barred.

This decision emphasizes that a trade secret holder can file a lawsuit once it has a reasonable basis to allege there was access to its trade secrets and that there is substantial similarity between a product and at least one trade secret. The panel concluded that a trade secret holder does not have to wait until it has amassed the evidence to prove misappropriation to file suit. Indeed, here, Insulet arguably waited too long to file suit because it was accumulating evidence to prove misappropriation, rather than just relying on access and substantial similarity.

The one important area that this panel failed to address is whether the clock for statute of limitations under the Defend Trade Secrets Act (DTSA) starts when a reasonably diligent plaintiff begins investigating a potential claim (called the “inquiry notice rule”) or when the plaintiff knew or should have discovered the alleged misappropriation (called the “discovery rule”). In Insulet, the panel stated that Insulet's claim was time-barred under either test. But one can easily imagine scenarios where this difference in when the clock starts could make the difference between a claim being timely or time-barred.

The majority opinion rejected Insulet's argument that it needed detailed technical information to bring suit, holding that a plaintiff can plead trade secret misappropriation based on evidence of access and substantial similarity alone, without knowing every underlying design detail.

"The relevant question is ultimately whether Insulet had sufficient knowledge to state a claim for trade secret misappropriation before the critical date, not whether it had sufficient evidence to prove misappropriation of its trade secrets," U.S. Circuit Judge Timothy B. Dyk wrote in the majority opinion.

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