IP Law Daily, TRADE SECRETS—S.D.N.Y.: Health and wellness company’s trade secrets and trade dress claims against former employees dismissed, (Mar 26, 2026)

By Ravindra Kumar Singh, B.L.

Claims failed for lack of plausibility, with the court finding no protectable trade dress and insufficiently pled trade secrets.

A federal district court in New York has dismissed with prejudice a health and wellness company’s federal claims for trade dress infringement under the Lanham Act, trade secrets misappropriation under the Defend Trade Secrets Act (DTSA), and violation of the Computer Fraud and Abuse Act (CFAA), holding that the plaintiff failed to plausibly allege protectable trade dress, sufficiently defined trade secrets, or cognizable computer-related loss or damage. The court further declined to exercise supplemental jurisdiction over the remaining state law claims, finding that all federal claims had been dismissed at the pleading stage and that considerations of judicial economy and comity favored dismissal (Life’s Fortune LLC v. Serenu Inc., No. 7:24-cv-05066-CS (S.D.N.Y. Mar. 20, 2026)).

Background. Life’s Fortune LLC and related entities, which operate health supplement, cosmetic, and over-the-counter product businesses, brought the action against former employees and their competing venture, Serenu Inc. The individual defendants, former senior employees with access to confidential business information, allegedly left the plaintiff’s business and established a competing enterprise using the plaintiff’s resources, relationships, and know-how. The dispute thus arose from a classic employee departure scenario involving alleged misuse of proprietary information and competing product development.

The plaintiffs asserted two principal categories of intellectual property. First, they claimed trade secrets comprising product formulas, customer lists, vendor and supplier relationships, and business strategies related to pricing, marketing, and e-commerce operations. Second, they asserted trade dress rights in the packaging of their “Owell Naturals” product line, described as a combination of features including uniform container shapes, contrasting lid and container colors, prominent brand placement, bold product descriptors, and standardized label layouts.

The dispute arose after the defendants allegedly began developing a competing business while still employed, diverting vendors, duplicating product formulations, accessing and deleting company data, and launching competing products with similar packaging under a new brand. The plaintiffs filed suit seeking damages and injunctive relief across federal and state causes of action. The moving defendants filed motions to dismiss under Federal Rule of Civil Procedure 12(b)(6), challenging the sufficiency of all federal claims and, by extension, the court’s jurisdiction over the remaining claims.

Trade dress analysis. The court first addressed the Lanham Act claim and held that the plaintiffs failed to plausibly allege protectable trade dress. Citing Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101 (2d Cir. 2001), the court reiterated that a plaintiff must show distinctiveness, non-functionality, and likelihood of confusion. It further relied on Fun-Damental Too, Ltd. v. Gemmy Industries Corp., 111 F.3d 993 (2d Cir. 1997), to explain that product packaging may be inherently distinctive only if it falls within suggestive or arbitrary categories.

Applying the Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4 (2d Cir. 1976) framework, the court found that the alleged trade dress consisted largely of generic or descriptive elements common in the industry. The plaintiffs’ description amounted to a “laundry list” of standard packaging features rather than a distinctive combination capable of identifying the source. Citing Eliya, Inc. v. Steven Madden, Ltd., 749 F. App’x 43 (2d Cir. 2018), the court emphasized that merely listing features without explaining their distinctiveness was insufficient.

The court further held that the plaintiffs failed to allege secondary meaning plausibly. Applying factors articulated in L. & J.G. Stickley, Inc. v. Canal Dover Furniture Co., 79 F.3d 258 (2d Cir. 1996), the court found that most factors—including consumer recognition, media coverage, and duration of use—did not support distinctiveness. As a result, the trade dress claim failed at the threshold.

Trade secrets analysis. Turning to the DTSA claim, the court held that the plaintiffs failed to identify their alleged trade secrets with sufficient specificity. Citing Syntel Sterling Best Shores Mauritius Ltd. v. The TriZetto Group, Inc., 68 F.4th 792 (2d Cir. 2023), the court reiterated that plaintiffs must define trade secrets beyond general categories to provide adequate notice.

Although the plaintiffs identified categories such as product formulas, customer lists, and business strategies, the court found these descriptions overly broad and conclusory. However, the court held that generic classifications do not suffice to plead a trade secret. With respect to product formulas, the court found no factual allegations demonstrating secrecy, economic value, or specific protective measures. As to customer lists, the court noted that such lists qualify as trade secrets only when they are not readily ascertainable and reflect significant effort or confidential insights. The complaint failed to allege any such characteristics. Similarly, the allegations concerning pricing strategies and e-commerce data were deemed too vague to distinguish trade secrets from general business information. Accordingly, the DTSA claim was dismissed for failure to plausibly allege both the existence of trade secrets and their misappropriation.

CFAA analysis. The court next addressed the CFAA claim, focusing on whether the plaintiffs had adequately alleged “damage” or “loss” as required under 18 U.S.C. § 1030. Citing Van Buren v. United States, 593 U.S. 374 (2021), the court emphasized that the statute targets technological harms to computer systems rather than general economic injuries.

Although the plaintiffs alleged that defendants deleted data and accessed systems without authorization after their employment ended, the court held that the complaint failed to specify the nature of the damage or the costs incurred in responding to it. Relying on Reis, Inc. v. Lennar Corp., No. 15-CV-7905, 2016 WL 3702736 (S.D.N.Y. July 5, 2016), the court found that conclusory allegations of investigative costs were insufficient.

The court further clarified that the value of allegedly stolen data does not constitute recoverable loss under the CFAA, citing Turret Labs USA, Inc. v. CargoSprint, LLC, No. 19-CV-6793, 2021 WL 535217 (E.D.N.Y. Feb. 12, 2021). Because the plaintiffs failed to allege specific technological harm or qualifying losses exceeding the statutory threshold, the CFAA claim was dismissed.

Supplemental jurisdiction and disposition. Having dismissed all federal claims, the court declined to exercise supplemental jurisdiction over the remaining state law claims, citing 28 U.S.C. § 1367(c)(3). Applying the factors set out in Kolari v. New York-Presbyterian Hospital, 455 F.3d 118 (2d Cir. 2006), the court found that the case remained at an early stage, discovery had not commenced, and state courts were better positioned to adjudicate the remaining issues.

The court also dismissed the federal claims against a non-moving defendant sua sponte, noting that the claims were substantively identical and that the plaintiff had already had a full opportunity to address the deficiencies.

Finally, the court denied leave to amend, observing that the plaintiffs had already amended their complaint after receiving notice of deficiencies and failed to indicate how further amendment would cure the defects.

The Case is No. 7:24-cv-05066-CS.

Judge: Seibel, C.

Attorneys: Yair Bruck (Bruck LLP) for Life’S Fortune LLC. Jeffrey Zachter (Zachter PLLC) for Serenu Inc.

Companies: Life’s Fortune LLC; Serenu Inc.

Cases: TradeSecrets NewYorkNews