IP Law Daily, TRADE SECRETS—E.D.N.Y.: Motion to dismiss purchaser’s trade secret misappropriation, recovery of chattel/replevin claims in Wu Tang Clan album dispute denied, (Sep 30, 2025)

By Carolin Dennis, B.Sc., LL.B., LL.M.

The purchaser of one-of-a-kind, unreleased Wu Tang Clan album known as Once Upon a Time in Shaolin sufficiently alleged that the album is cloaked with a substantial element of secrecy in order to survive the motion to dismiss.

The U.S. District Court in Brooklyn granted in part and denied in part Martin Shkreli’s motion to dismiss the purchaser of one-of-a-kind, unreleased Wu Tang Clan album’s complaint. The district court granted the motion to dismiss Count I seeking enforcement of the Forfeiture Order, Count IV alleging tortious interference with prospective economic advantage, and Count V alleging unjust enrichment, and denied the motion to dismiss Counts II and III alleging misappropriation of trade secrets and Count VI alleging recovery of chattel/replevin (PleasrDAO v. Shkreli, No. 1:24-cv-04126-PKC-MMH (E.D.N.Y. Sept. 25, 2025)).

Background. PleasrDAO was the owner of a one-of-a-kind, unreleased album produced by the Wu Tang Clan known as Once Upon a Time in Shaolin, which was sold at auction originally to Martin Shkreli and then later purchased by PleasrDAO under an agreement by which PleasrDAO was supposed to receive the sole existing copy and exclusive digital rights. PleasrDAO bought the album in two transactions in 2021 and 2024, for approximately $4,000,000, and $750,000, respectively, for the physical asset and the exclusive digital rights. The album was supposed to constitute the sole existing copy of the record, music, data and files, and packaging. Shkreli improperly retained copies of the data and files at the time of the forfeiture and has released and/or intends to release them to the public.

PleasrDAO brought an action against Shkreli for: (1) enforcement of the Forfeiture Order entered in Shkreli’s criminal case, United States v. Shkreli, No. 15-CR-0637 (E.D.N.Y. Mar. 26, 2018); (2) violations of the Defend Trade Secrets Act (DTSA); (3) misappropriation of confidential information/trade secrets; (4) tortious interference with prospective economic advantage; (5) unjust enrichment; and (6) recovery of chattel/replevin, New York Civil Practice Law and Rules (CPLR). Shkreli moved to dismiss the complaint under Rule 12 of the Federal Rules of Civil Procedure.

Forfeiture order. The district court noted that as PleasrDAO is not an intended beneficiary that falls within the zone of interests protected by the Forfeiture Order, PleasrDAO lacked standing to enforce the Forfeiture Order, and Count I must be dismissed.

Trade secret misappropriation. Shkreli sought dismissal of PleasrDAO’s federal and state-law trade secret misappropriation claims arguing that PleasrDAO failed to plead that the album is a “trade secret.” failed to plead that the Album is a “trade secret.” The parties disputed the scope of the restrictions under the Original Purchase Agreement dated September 3, 2015 (OPA), which speaks to whether the information can be easily acquired or duplicated by others. The district court noted that Wu-Tang Clan produced only one copy of the album, which has never been publicly released. PleasrDAO argued that the OPA bound Shkreli and any subsequent purchasers of the album to certain confidentiality and usage restrictions for a period of 88 years. Though it permited duplicating or replicating the contents of the album for private use, it prohibited duplicating, replicating, or exploiting the album for any commercial or other non-commercial purposes other than certain permitted uses, including the private or public exhibition or playing of the Work, in spaces not customarily used as venues for large musical concerts. PleasrDAO alleged that the OPA expressed the producers’ intention to create only one copy of the album as a protest to what they saw as the devaluation of music in the digital era, and to keep ownership of the album in one person’s hands at a time. In other words, the secret and exclusive nature of the album is a large part of its intrinsic value. The district court also noted that the value of the album, when it was initially purchased by Shkreli for $2,000,000, and when it was later purchased by PleasrDAO for approximately $4,000,000, was largely based on its secret and exclusive nature. Thus, the district court found that PleasrDAO adequately pleaded a “trade secret” under the DTSA and New York law. Accordingly, Shkreli’s motion to dismiss Counts II and III for failure to plead a secret was denied.

State law claims. Shkreli moved to dismiss PleasrDAO’s state law claims of tortious interference with prospective economic advantage, unjust enrichment, and recovery of chattel/replevin arguing that these claims are pre-empted by the Copyright Act. The district court found that PleasrDAO’s tortious interference and unjust enrichment claims are pre-empted by the Copyright Act, but its claim for recovery of chattel/replevin is not.

The district court noted that PleasrDAO’s tortious interference and unjust enrichment claims are premised on Shkreli’s alleged unauthorized “retention,” “sale,” and “distribution” of the album, and thus derived from the reproduction, use, or misappropriation of material covered by copyright protection. Thus, the copyright preemption requirements are met, and PleasrDAO’s claims for tortious interference with prospective economic advantage and unjust enrichment must be dismissed for failure to state a claim.

However, the district court found that the recovery of chattel/replevin claim was sufficiently distinct from a copyright claim in light of PleasrDAO’s allegation that it has an exclusive right to own the only physical copy of the album and thus was entitled to possession of Shkreli’s retained copies. Therefore, PleasrDAO’s recovery of chattel/replevin claim is qualitatively different from a copyright claim and not preempted.

Shkreli also sought dismissal for failure to state a claim for recovery of chattel/replevin. The district court found that the complaint contained factual allegations that Shkreli forfeited his interests in, and all proceeds traceable to, the album pursuant to the Forfeiture Order, and that PleasrDAO’ purchased what was supposed to constitute the sole existing copy of the record, music, data and files, and packaging. To the extent Shkreli sought to differentiate the tangible versus intangible aspects of the album to defeat this claim, the district court noted that “courts have sustained claims for replevin where the underlying property is a digital asset.” Thus, accepting PleasrDAO’s well- pleaded allegations as true, the district court found that PleasrDAO plausibly alleged a claim for replevin, and the motion to dismiss Count VI of the complaint was denied.

The Case is No. 1:24-cv-04126-PKC-MMH.

Judge: Chen, P.

Attorneys: Robert Carnes (Reed Smith LLP) for PleasrDAO. Edward Andrew Paltzik (Taylor Dykema PLLC) for Martin Shkreli.

Cases: TradeSecrets NewYorkNews