IP Law Daily, TRADE SECRETS—S.D.N.Y.: Dismissal granted in jewelry shop trade secrets dispute+, (Mar 26, 2024)

By Kevin M. Finson

A claim under the federal Defend Trade Secrets Act was dismissed because the plaintiff did not allege that the trade secrets were related to a good or service used or intended for use in interstate commerce.

A jewelry shop failed to state a claim against its former employee and her new employer under the federal Defend Trade Secrets Act, the U.S. District Court in New York has held. The store did not allege the required federal nexus (Aira Jewels, LLC v. Mondrian Collection, LLC, March 25, 2024, Rochon, J.).

Aira Jewels, LLC (Aira) operated a family-run jewelry business in New York City, which claimed to use “disruptive” techniques including “proprietary sales, marketing, and display techniques” to drive its business. Lisbeth Sylvain was employed as a salesperson by Aira and signed nondisclosure and noncompetition agreements as a condition of her employment. Sylvain was eventually hired by Mondrian Collection, LLC (Mondrian) as a jewelry salesperson and allegedly lied to Aira about her new employment, claiming she was working in a different industry while actually going to work for one of Aira’s competitors. Aira brought suit for breach of the Defend Trade Secrets Act (DTSA) as well as for various state law claims against both Sylvain and Mondrian, alleging that Sylvain was using Aira’s trade secrets to benefit Mondrian’s business. Both defendants moved to dismiss.

Federal nexus. The court noted that the federal Defend Trade Secrets Act by its terms applied only to products and services used in or intended for use in interstate or foreign commerce. Aira made no allegations whatsoever of interstate sales or that it served customers from outside of New York. Absent any allegation at all related to this element the court found that Aira had failed to state a claim.

Specificity of trade secret. The court additionally noted that even if Aira had made the requisite pleading of interstate commerce Aira had independently failed to state a claim under the DTSA because it did not describe the claimed secret with any specificity, merely claiming that “customer lists, client contacts [and] supplier contacts” as broad categories were trade secrets, without explaining specifically what these items were and how they derived value from not being generally known.

Finding that Aira failed to state a claim as to the sole federal count, the court declined to exercise supplemental jurisdiction over the surviving state law claims and dismissed the case with leave to amend.

The Case is No. 1:23-cv-04510-JLR.

Attorneys: David Michael Fish (Romano Law PLLC) for Aira Jewels, LLC. Patrick Papalia (Archer & Greiner, P.C) for Mondrian Collection, LLC.

Companies: Aira Jewels, LLC; Mondrian Collection, LLC

Cases: TradeSecrets NewYorkNews