5th Circuit Uses Common Law to Determine What Constitutes "An Act in Furtherance" Under DTSA

On May 13, 2019, the US District Court for the Eastern District of Texas issued an opinion in Luminati Networks, LTD. v. BIScience Inc. (2019 WL 2084426).

Luminati instituted claims against Israeli company BIScience for direct and indirect patent infringement, tortious interference with employment agreements, tortious interference with current and prospective business relationships, false advertising, and trade secret misappropriation, citing violations of the DTSA and the Lanham Act. According to Luminati’s claim, BIScience “sold its allegedly infringing ‘GeoSurf’ service to at least 52 customers in Texas,” “allows customers all over the world to utilize residential proxy devices in ten Texas cities,” and “advertises as such.” The claim also alleged “BIScience hired former employees of Luminati for the purpose of obtaining Luminati’s trade secrets, in violation of those former employees’ employment agreements, which contained both non-compete and confidentiality provisions.” The events of the latter claim for tortious interference with employment agreements occurred exclusively in Israel, so the Court declined to exercise supplemental jurisdiction.

The most significant aspect of this case is the Courts’ determination of what constitutes an “act in furtherance of the offense.” For the DTSA to apply to conduct occurring outside the US, an act in furtherance of the offense must have been committed inside the US. The Court sought to interpret this language using federal conspiracy law, choosing to apply the established common law meaning. Using Yates v. US, 354 U.S. 298, 334 (1957), the Court determined “the act in furtherance of the offense of trade secret misappropriation need not be the offense itself or any element of the offense, but it must ‘manifest that the [offense] is at work’ and is not simply ‘a project in the minds of the’ offenders or a ‘fully completed operation.’” In other words, “an act that occurs before the operation is underway or after it is fully completed is not an act ‘in furtherance of’ the offense.”

Luminati argued that the use of its trade secrets in the defendant’s competing service and sales of that service caused harm to Luminati within the US. The Court noted that damages resulting from misappropriation are “consequence of a ‘fully completed operation,’” not an act in furtherance. However, it denied BIScience’s motion to dismiss, citing BIScience’s use of Luminati’s trade secrets within the US “is sufficient to draw a reasonable inference” of acts committed in furtherance of sales of the allegedly infringing GeoSurf service within the US.