Seventh Circuit Affirms Summary Judgment in Software Trade Secrets Case

Holland & Knight recently secured a win in the U.S. Court of Appeals for the Seventh Circuit that crystallizes what software plaintiffs should prove – and what savvy defendants should press – when litigating under the Defend Trade Secrets Act (DTSA). In January 2026, the Seventh Circuit affirmed both summary judgment on the trade secrets claim for lack of specificity and pretrial ruling disallowing a late-breaking unjust enrichment theory premised on misuse of "proprietary information" that the plaintiff tried to use as a backdoor to maintain its trade secret theories. See NEXT Payment Sols., Inc. v. CLEAResult Consulting, Inc., No. 24-1377, 2026 WL 91208 (7th Cir. Jan. 13, 2026).

Case Background

The dispute centered on alleged misappropriation of software "modules" and combined features associated with an appointment scheduling tool used by a utility services company. After several attempts to identify its alleged trade secrets, the plaintiff identified 34 modules and five "combinations" of modules as its trade secrets. The plaintiff described those alleged trade secrets in functional, outcome-oriented terms (e.g., "manages inventory," "presents real-time availability") rather than articulating the underlying algorithms, source code or concrete technical methods that could constitute protectable trade secrets. The district court granted summary judgment dismissing the DTSA claim because the plaintiff never moved from generic functional descriptions to "specific and concrete" trade secrets, and the Seventh Circuit affirmed.

After the DTSA claim failed, the plaintiff attempted to pivot to a new unjust enrichment theory premised on "other proprietary information" that was allegedly misused, attempting to decouple it from the dismissed trade secrets theory. The district court granted Holland & Knight's pretrial motion in limine excluding that late, free‑standing theory because it was unpled and prejudicial. The Seventh Circuit affirmed that ruling as a proper exercise of case management discretion.

Why the Ruling Matters

The Seventh Circuit's opinion reinforces that software plaintiffs should identify "concrete secrets" and not rely on broad descriptions that articulate what a program does (the functionality) without showing how it does it in a way that is not generally known or readily ascertainable. The ruling also confirms that a plaintiff takes risk when pivoting to new liability theories at the 11th hour – especially after dispositive rulings – and can face exclusion of those theories where they would prejudice the other side or delay proceedings.

Practical Takeaways for Software Trade Secret Disputes

Nail Down "What" vs. "How" at the Outset

The opinion drew a bright line: The "whats" – functional descriptions (e.g., "manages inventory," "presents availability," "sends notifications") – do not qualify as trade secrets because they are apparent to any user; however the "hows" – the non‑obvious, non‑ascertainable methodologies (e.g., algorithms, source code, unique architectures) can qualify as trade secrets. Plaintiffs who cannot bridge that gap at summary judgment risk dismissal. Defendants should press that gap early through specific interrogatories, deposition testimony and other discovery tools. Notably, some jurisdictions nationally may require this specific identification at the motion to dismiss stage.

Practical Steps: Plaintiffs should consider preparing a confidential disclosure that differentiates user‑visible functionality from the underlying mechanics and explains concretely why the latter is not readily ascertainable. The disclosure should be specific and not rely on jargon‑laden descriptions. For software, pointing to code, algorithms or architecture is often the most efficient way to meet this burden.

If the plaintiff does not provide this level of specificity, defendants should promptly confer, seek supplemental responses and, if necessary, request court‑ordered detailed identifications.

Reasonable Measures Matter – But They Don't Necessarily Cure Vagueness

Nondisclosure obligations and internal access controls help prove secrecy, but they cannot transform user‑visible functions into protectable secrets. The court rejected the notion that the "non‑public" nature of an internal web application alone renders its functions trade secrets when those functions are ascertainable by users.

Practical Steps: Plaintiffs should consider connecting reasonable measures to specific technical materials (e.g., repositories, code branches, design specs), not just generalized "internal system" access. Defendants should emphasize where the alleged secret is apparent to authorized users or otherwise readily ascertainable, undercutting the secrecy element.

Guard Against Late‑Stage Theory Shifts

The Seventh Circuit affirmed exclusion of a late "other proprietary information" unjust enrichment theory that had not been consistently pursued earlier. Courts have broad discretion to prevent 11th‑hour pivots that would prejudice the opponent and burden the docket.

Practical Steps: Plaintiffs should consider preserving alternative theories early and make their contours explicit in complaints, discovery responses and case management statements. Defendants should build a record showing prejudice and delay when opposing late expansions and use motions in limine to cabin the case to disclosed theories.

Key Strategic Lessons

• Early, enforceable trade secret identifications can be outcome‑determinative in software cases. Courts require "specific and concrete" descriptions that separate visible functionality from hidden methods. Defense teams should push for precision; plaintiffs should be prepared to deliver it.
• Reasonable secrecy measures and nondisclosure agreements are necessary but insufficient. Plaintiffs still must prove non‑ascertainability and value from secrecy tied to the "how."
• Motions in limine are powerful tools to prevent late theory expansion. Where a party seeks to resurrect a case by reframing "proprietary information" as a new unjust enrichment theory, courts will prioritize fairness and efficiency.