Labor & Employment Law Daily Wrap Up, TRADE SECRETS—D. Del.: Praxis's trade secret misappropriation claims against former chairperson will proceed, (Sep 10, 2026)

By Sherri M. Schroeder, J.D.

The court denied the former chairman's 12(b)(1) and 12(b)(6) challenges because Praxis had sufficiently pleaded its claims for trade secret misappropriation and breach of contract.

A Delaware district court has allowed the claims made by Praxis Precision Medicines, Inc. against its former Lead Scientific Founder and Chairman of its Scientific Advisory Board (former chairman) and Actio Biosciences, Inc. (Actio), the former chairman’s new company, to proceed. After working with Praxis on its potential therapies for KCNT1-related epilepsies for more than seven years, Praxis alleged that its former chairman resigned and formed a competing company—Actio—using trade secrets misappropriated from Praxis in violation of a Master Advisory Agreement (MAA) between the parties. When the former chairman and Actio moved to dismiss the complaints against them under Federal Rules of Civil Procedures 12(b)(1) and 12(b)(6), the court denied the motion. The court found that, at this preliminary stage of the proceedings, dismissal was not proper because Praxis had established the existence of trade secrets entitled to protection, identified the trade secrets with the required specificity and particularity, sufficiently outlined its efforts to maintain the confidentiality of its trade secrets and misappropriation of those trade secrets, and plausibly pleaded the existence of a contract between Praxis and the former chairman and breach of that contract. Therefore, the court allowed Praxis’s claims to proceed (Praxis Precision Medicines, Inc. v. Goldstein, No. 1:25-cv-01256-JCG (D. Del. Sep. 3, 2026)).

Misappropriation. The former chairman and Actio first challenged Praxis’s claim for trade secret misappropriation under the Defend Trade Secrets Act (DTSA) under Rule 12(b)(1), claiming that Praxis had no trade secret claim because the alleged KCNAT1 trade secrets were readily ascertainable from compounds Praxis publicly disclosed in an article and patent application. Here, the court concluded that whether Praxis’s confidential compounds were readily ascertainable from the publicly disclosed “Compound 31” was a factual issue that “should not be decided by the Court at the motion to dismiss stage.” Because Praxis had established the existence of trade secrets entitled to protection under the DTSA, the court concluded it had subject matter jurisdiction.

Actio and the former chairman also moved to dismiss the DTSA and Delaware Uniform Trade Secrets Act (DUTSA) claims under Rule 12(b)(6) by arguing that the alleged trade secret compounds did not qualify for trade secret protection and that the complaint failed to state a claim for misappropriation. Praxis’s complaint stated that it had trade secret information “relating to its non-public candidate KCNT1 inhibitor compounds, including the identity, formula, structure, properties and KCNT1-inhibiting activities of each such compound,” along with non-public assay results, comparative analyses, and “know-how,” that constituted confidential information and trade secrets. Therefore, the court concluded that Praxis identified its trade secrets “with enough specificity and particularity pursuant to the DTSA and DUTSA to place Defendants on notice of the bases of the claims.” The court also concluded that the complaint had sufficiently stated that Praxis had taken reasonable measures, such as confidentiality agreements, classification of sensitive data, confidentiality training, a Code of Conduct, and strict IT security precautions, to keep its trade secrets confidential and that the expectation of confidentiality surrounding the trade secrets had been conveyed to the former chairman. As to Actio, the court concluded that Praxis had sufficiently alleged misappropriation of its trade secrets through the former chairman’s disclosure and Actio’s use of the trade secrets under the DTSA and DUTSA. Therefore, the court allowed the claim to progress to the discovery and fact-finding stage of litigation.

Breach of contract. The former chairman and Actio also moved under Rule 12(b)(6) to dismiss the breach of contract claims made against them for violation of the MAA. They argued that Praxis failed to plausibly allege breach of contract by the former chairman and that there was no jurisdictional reason that the claims could not be pursued in the proper state forum because the counts in question were based solely on a supplemental jurisdiction basis. The court first concluded that the complaint plausibly pleaded the existence of a contract between Praxis and the former chairman. Praxis’s complaint described the MAA’s contents and its restrictions on the former chairman’s use of Praxis’s confidential information and trade secrets; its definitions of “Confidential Information,” “Praxis Materials,” and “Work Product;” and the MAA’s requirements that the former chairman use Praxis Materials only as necessary and not make them available to third parties without Praxis's consents and to assign to Praxis all work product developed by him. The complaint also alleged that the former chairman breached those obligations by misappropriating Praxis' confidential information to assist Actio in filing patent applications claiming Praxis’ intellectual property, by disclosing Praxis’s confidential information to Actio, and by using the confidential information to assist Actio in developing KCNT1 inhibitors. Praxis also alleged that it suffered damages as a direct and proximate result of these breaches because the former chairman deprived Praxis of its right to its inventions, which the former chairman was obligated to assign to Praxis under the MAA, and because the breaches destroyed the value of Praxis's confidential information and facilitated the development of products that will compete with Praxis and its licensees. The court concluded that the complaint plausibly stated a claim for breach of contract based on the obligation imposed on the former chairman by the MAA and the subsequent alleged breach by the former chairman and sufficiently identified the alleged damage suffered as a direct and proximate result of the alleged breaches. Therefore, the court denied the motion to dismiss these counts.

The Case is No. 1:25-cv-01256-JCG.

Judge: Groves, J.

Attorneys: Jeremy A. Tigan (Morris, Nichols, Arsht & Tunnell LLP) for Praxis Precision Medicines, Inc. Nathan Roger Hoeschen (Shaw Keller LLP) for David B. Goldstein.

Companies: Praxis Precision Medicines, Inc.

Cases: TradeSecrets ContractClaims StateLawClaims DelawareNews