Federal Circuit applies unforgiving standard for accrual of statute of limitations on DTSA claims
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On May 28, 2026, the US Court of Appeals for the Federal Circuit overturned a $59 million damages award for trade secret misappropriation under the Defend Trade Secrets Act (“DTSA”) on statute of limitations grounds. In Insulet Corp. v. EOFlow, Co. Ltd., No. 25-1807, the Federal Circuit rejected arguments that it lacked jurisdiction over a case where all patent claims had been voluntarily dismissed and held that the statute of limitations had expired by the time Insulet filed its lawsuit because Insulet knew or should have known the critical facts it needed to sufficiently plead a trade secret misappropriation claim more than three years earlier. The decision applies a new standard for when the DTSA’s three-year statute of limitations begins to run and carries significant strategic implications for companies suspecting potential misappropriation. It also emphasized the vigilance that companies must pay to departing employees and the need to conduct audits, when appropriate, of their files and electronic data to enforce trade secret protection.
Background
Insulet Corporation is a Massachusetts-based medical-device manufacturer that makes an adhesive, wearable insulin patch pump called the Omnipod. Sometime around 2018, EOFlow, which at the time was an early-stage company based in South Korea, began developing a similar-looking wearable insulin patch pump, the EOPatch 2, That same year, former employees of Insulet, including the former Insulet Director of Mechanical Engineering, Steve DiIanni, began working for EOFlow.
Although Insulet saw the EOPatch 2 at an industry conference in June 2018, and learned about DiIanni’s work for EOFlow by March 2019, Insulet did not file suit for trade secret misappropriation until August 3, 2023 (a few months after Medtronic announced plans to acquire EOFlow).
In its complaint against EOFlow in the District of Massachusetts, Insulet asserted DTSA and patent infringement claims, among others. Insulet won a preliminary injunction, which was later overturned on appeal by the Federal Circuit. The case then proceeded to a jury trial on the DTSA claims, which ended in a verdict awarding $452 million in damages for EOFlow’s misappropriation of four trade secrets. In post-trial proceedings, the district court granted Insulet’s motion to dismiss its patent claims without prejudice, issued a global permanent injunction, and reduced the damages award to $59.4 million to avoid double-recovery.
On appeal, Insulet sought to avoid another appeal before the Federal Circuit by moving to transfer the appeal to the First Circuit on the grounds that the Federal Circuit lacked jurisdiction after the patent claims were dismissed. A motions panel denied the transfer motion and deferred the jurisdictional issue to the merits panel.
Federal Circuit holds that it has jurisdiction and the DTSA’s three-year limitations period begins with knowledge of access plus similarity
In a split decision, a panel majority (Dyk, Reyna) held that the Court had jurisdiction over the appeal and that Insulet’s DTSA claims were time-barred under the three-year statute of limitations. Judge Prost dissented on the holding as it related to the statute of limitations.
On jurisdiction, the Court of Appeals held that although Insulet had voluntarily dismissed its patent claims without prejudice, the dismissal was functionally with prejudice because claims for some alleged acts of infringement (importation for the June 2018 conference) were time-barred by the time of their dismissal in January 2025. Therefore, the complaint did plead patent claims, which gave the Federal Circuit jurisdiction.
On statute of limitations, the Court of Appeals held that it need not resolve whether “inquiry-notice” or the stricter “discovery” standard for accrual applies under the DTSA, because under either standard, the statute of limitations had accrued by 2019 when Insulet knew or should have known that (1) the alleged misappropriator had access to the alleged trade secrets through a former employee of Insulet and (2) there was similarity between the trade secrets and EOFlow’s competing product which the court concluded was sufficient to plead a claim for misappropriation. This analysis applied the “access-plus-similarity” framework to help determine when Insulet had sufficient facts to pursue a DTSA claim.
As an issue of first impression under the governing law of the First Circuit, the Federal Circuit also held that a single accrual date should apply to all four asserted trade secrets as a single course of continued misappropriation even though Insulet could not reasonably have known about the misappropriation of certain trade secrets until after the lawsuit was filed.
Judge Prost’s dissent criticized the majority’s reasoning, arguing that the majority conflated its application of the discovery rule with the inquiry-notice standard; adopted an access-plus-similarity standard not supported by the case law; substituted its findings of fact for the jury’s findings; and encouraged plaintiffs to “race to the courthouse with undeveloped claims based on mere suspicion.”
In light of the dissent, a petition for rehearing or rehearing en banc is likely. As is a petition for certiorari on at least the question of jurisdiction. Regional circuits— including the First Circuit, whose law the Federal Circuit was bound to apply—could also take differing views on the DTSA’s statute of limitations.
Strategic Takeaways
Think carefully before adding patent claims to what is at its core a trade secret dispute: Where a company has a strong trade secret misappropriation claim, adding patent infringement claims to the complaint may create litigation risk on appeal. Once patent claims are filed and the statute of limitations on some of those claims expires, a plaintiff may find itself locked into the Federal Circuit’s appellate jurisdiction, with no ability to redirect the appeal to a regional circuit through a later voluntary dismissal. The Federal Circuit, as a court created to adjudicate patent disputes, has sometimes demonstrated more scrutiny of various aspects of trade secret claims even when bound to apply regional circuit law.
Stay attuned to pleading standards: Given the majority’s generalized discussion of the facts deemed sufficient to plead a trade secret claim under the access-plus-similarity framework for statute-of-limitations purposes, it remains to be seen whether the Federal Circuit or district courts relying on this decision would deem similar facts sufficient to survive a motion to dismiss.
Implement strict protocols to secure files of departing employees and promptly investigate suspicions of misappropriation with experienced counsel: Under the majority’s holding, once a company learns that a former employee with access to its trade secrets has gone to a competitor and that the competitor has a product with features similar to aspects of its own proprietary technology, the three-year clock begins to run on any misappropriation claim arising out of those facts. Thus, even if the competitor’s product is in a nascent state, with no clear indication of commercial viability, companies that wait to investigate potential misappropriation risk losing the right to later sue on the misappropriated trade secrets. Companies suspecting potential misappropriation of trade secrets should act quickly, ideally with the assistance of experienced counsel, to investigate potential claims.
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