August 5, 2019

Trade Secret Claims Related to Hacking of DNC’s Computers Dismissed With Prejudice

Holland & Knight Trade Secrets Blog
Anthony J. Fuga

In a well-publicized litigation, the Democratic National Committee (DNC) sued the Russian Federation for "unlawfully hacking into the DNC's computers in connection with the 2016 presidential election and thereafter distributing stolen materials from those computers, particularly through WikiLeaks, who in turn made those materials publicly available." However, in a recent lengthy opinion, Judge Koeltl of the Southern District of New York found the Russian Federation had foreign sovereign immunity for its actions and dismissed the DNC's claims. The Court stated that "relief from the alleged activities of the Russian Federation should be sought from the political branches of the Government and not from the courts."

The DNC also sued a number of "second level participants" including the Trump Campaign, WikiLeaks, Julian Assange and others for dissemination of the stolen information. The DNC's complaint included claims related to the Computer Fraud and Abuse Act (CFAA), Racketeer Influenced and Corrupt Organizations Act (RICO), copyright and trade secrets. Most relevant to this blog, the Court found that DNC's trade secret claims under the Defend Trade Secrets Act and D.C. Uniform Trade Secrets Act failed to meet the necessary pleading requirements.

At issue in the trade secret counts were the DNC's "donor lists" and "fundraising strategies." Citing the DNC's failure to identify anything about the development of the list and strategies or the value of their alleged secrecy, the Court found that these "conclusory allegations are insufficient to state that the stolen documents were trade secrets."

Regarding misappropriation, the DNC did not allege that any of the defendants were liable for possession or publication of the alleged trade secrets besides the Russian Federation and WikiLeaks. And the DNC did not allege that any of the non-Russian Federation defendants actually participated in any of the hacks of the DNC's computer systems.

The Court dismissed the DNC's attempt to hold the remaining defendants liable for use of the documents containing alleged trade secrets because they had already been published. The Court explained that the other defendants using "documents that had already been published by the Russian Federation and WikiLeaks is not an unlawful or improper use of the documents." Maintaining this cause of action after the purported secrets were published was "untenable" and the Court cited a "trade secret that becomes public knowledge is no longer a trade secret."

Separately, the Court also determined that the First Amendment "prevents such liability in the same way it would preclude liability for press outlets that publish materials . . . so long as the disseminator did not participate in any wrongdoing in obtaining the materials in the first place." With regard to WikiLeaks and Julian Assange, the Court emphasized the fact that this "was not a solicitation to steal documents but a request for material that had been stolen," and "journalists are allowed to request documents that have been stolen and to publish those documents." As for the other defendants, including the Trump Campaign, the Court held that they could have published the stolen documents without liability because they did not participate in the theft and the documents are of public concern," again noting that there were no allegations that the non-Russian Federation defendants actually stole the information.

The Court ultimately dismissed the trade secret claims with prejudice because they were barred by the First Amendment and the DNC had failed to state a claim.

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