IP Law Daily, TRADE SECRETS—S.D.N.Y.: DTSA claims relating to access to a database of physician sales data were time-barred, (Apr 2, 2025)

By Kevin M. Finson, J.D.

Trade secrets claims were time-barred because the plaintiff unquestionably had notice of the alleged misappropriation in 2016 when its shareholders voted to retain counsel to pursue the matter, but a suit was not filed until 2020.

A medical and pharmaceutical information provider’s claims against WebMD Health Corp for misappropriation of trade secrets under the Defend Trade Secrets Act were barred by the statute of limitations, the U.S. District Court in New York has held. The claim had been discovered at the latest sometime before the provider’s shareholders voted to retain counsel to pursue the matter, which they did in 2016, more than three years before suit was filed (Medcenter Holdings Inc. v. WebMD Health Corp., No. 1:20-cv-00053-ALC-GWG (S.D.N.Y. Mar. 31, 2025)).

Medcenter Holdings, Inc. and related entities (collectively, Medcenter) were the dominant providers of medical and pharmaceutical drug information, professional accreditation, and continuing education for physicians in Central and South America. As part of that business, it developed extensive and detailed databases of physicians and sales records, including individual prescriber practices, for hundreds of thousands of medical professionals.

Medcenter brought suit for misappropriation of trade secrets under the Defend Trade Secrets Act (DTSA) and breach of contract, alleging that a competitor, WebMD Health Corp., and its related entities (collectively, WebMD), conspired to poach a senior employee with access to one database the right to request specific information from another, that the employee had downloaded and conveyed large amounts of confidential information to WebMD, and that WebMD used this information to essentially steal Medcenter’s entire business. Medcenter also alleged that this use of its confidential information by WebMD was a violation of a non-disclosure agreement which prevented WebMD from using Medcenter’s confidential information for any purpose beyond evaluation of a potential acquisition which had been in consideration at the time. WebMD moved for summary judgment.

Statute of limitations. The court noted that the applicable statute of limitations required that trade secrets claims be brought within three years of when the plaintiff knew of or through the exercise of reasonable diligence should have discovered the misappropriation. In this case, Medcenter’s shareholders voted to retain counsel to pursue claims against WebMD for theft and use of confidential information at their September 1, 2016, shareholder meeting, but the case was not filed until 2020. Because Medcenter must have known of the misappropriation in order to vote to bring the claim, the court held the trade secrets claims were time-barred.

Breach of contract. The court found that genuine questions of material fact existed on the question of whether WebMD had breached the non-disclosure agreement by using information obtained under that agreement to poach Medcenter’s employees, or had breached a non-solicitation agreement by hiring Medcenter employees with whom it had worked, or if WebMD’s employment of those individuals was instead based on finding them on LinkedIn or other sources.

The court granted summary judgment on the trade secrets claims and denied it on the breach of contract claim.

The Case is No. 1:20-cv-00053-ALC-GWG.

Judge: Carter, A.

Attorneys: Barry Werbin (Herrick, Feinstein LLP) for Medcenter Holdings Inc., Medcenter Solutions SA, Med Solutions Mexico, S. de R.L. de C.V., and Medcenter Solutions do Brasil SA. Jeffrey A. Mitchell (Ellis George LLP) for Web MD Health Corp., Medscape, LLC, and WebMD Global LLC.

Companies: Medcenter Holdings Inc.; Medcenter Solutions SA; Med Solutions Mexico, S. de R.L. de C.V.; Medcenter Solutions do Brasil SA; Web MD Health Corp.; Medscape, LLC; WebMD Global LLC

Cases: TradeSecrets TechnologyInternet NewYorkNews