Digital Diagnostics Inc. v. White
1:24-cv-01179
| D. Del. | Aug 18, 2025Background
- Plaintiff Digital Diagnostics (“Digital”) is a healthcare technology company developing autonomous AI diagnostic systems; Justin White was a former sales employee.
- White was terminated by Digital in August 2024 after poor performance and immediately downloaded hundreds of proprietary documents, which Digital alleges were trade secrets, to an external hard drive.
- White quickly applied for and was hired by AEYE Health, a direct competitor, offering to leverage what he learned at Digital, including customer leads and proprietary information.
- Digital alleges White shared confidential documents, including business modeling tools and customer contacts, with AEYE after being hired and both continued to use this information.
- Digital sued White and AEYE for trade secret misappropriation and related claims, seeking injunctive relief and later amending the complaint to add AEYE as a defendant.
- Defendants moved to dismiss the trade secret claims; the court addresses whether the complaint plausibly alleges existence and misappropriation of trade secrets.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of Trade Secrets | Information taken qualifies as trade secrets due to its secrecy, value, and security measures. | Files taken were customer lists/contacts, publicly available, thus not trade secrets. | Court finds sufficient allegations that materials are trade secrets under DTSA/IUTSA. |
| AEYE Misappropriation | AEYE knowingly acquired and used Digital’s proprietary info through White. | AEYE did not improperly acquire or use Digital’s materials. | Court finds plausible allegations of AEYE’s improper acquisition and use. |
| Use of Trade Secrets | White/AEYE continued using Digital’s confidential information post-hire. | No use or only non-protected information used. | Court finds detailed allegations support use for benefit of AEYE. |
| Sufficiency of Pleading | Allegations are detailed and supported by circumstantial evidence. | Allegations are speculative/conclusory. | Court finds allegations are not conclusory; sufficient at pleading stage. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (standard for plausibility in pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standards for Rule 12(b)(6))
- Mallet & Co., Inc. v. Lacayo, 16 F.4th 364 (trade secrets can include compilations)
- Oakwood Labs. LLC v. Thanoo, 999 F.3d 892 (circumstantial evidence suffices for misappropriation)
- Fres-co Sys. USA, Inc. v. Hawkins, 690 F. App’x 72 (use of trade secrets at new employer constitutes misappropriation)