A recent Federal Circuit decision serves as a cautionary tale for companies that rely on trade secrets to protect innovation.
On May 28, 2026, in Insulet Corp. v. EOFlow, Co. Ltd., No. 25-1807, 176 F.4th 1347 (Fed. Cir. 2026), the Federal Circuit reversed a jury’s verdict finding misappropriation of Insulet’s trade secrets and awarding Insulet more than $450 million in damages. The court concluded that Insulet’s claims were barred by the federal Defend Trade Secrets Act’s (“DTSA”) three-year statute of limitations because the company knew, or reasonably should have known, enough facts to bring a claim for misappropriation years earlier.
Although the case involved sophisticated medical device technology, the court’s reasoning applies broadly to companies that depend on trade secrets, particularly those operating in competitive industries where employees frequently move between competitors.
Why the Federal Circuit?
Unlike patent infringement claims, the Federal Circuit does not have original jurisdiction over federal trade secret claims. Here, the case initially included both patent and trade secret claims, and the patent claims were dismissed with prejudice. According to the court, when patent infringment claims are dismissed with prejudice, the Federal Circuit retains jurisdiction over the appeal regardless of the substantive issues raised. As a result, even though this appeal raised only trade secret issues, the Federal Circuit found its jurisdiction proper.
Because trade secret misappropriation and patent infringement claims are often brought together, this case offers valuable insight into how the Federal Circuit approaches trade secret law.
What Happened?
The circumstances are not uncommon. Insulet and EOFlow both marketed competing wearable insulin patch pumps. EOFlow hired several former Insulet employees, including the former Director of Mechanical Engineering at Insulet, who was allegedly entrusted with all details of the research and development efforts to create the world’s first insulin patch pump. While EOFlow had developed a patch pump prior to hiring these employees, Insulet alleged that EOFlow infringed patents and, through former Insulet employees, misappropriated trade secrets in developing the second generation of its patch.
The dispute ultimately turned on timing rather than whether misappropriation occurred. The primary issue was EOFlow’s argument that Insulet’s trade secret misappropriation claim was barred by the statute of limitations. Under the DTSA, a claim must be brought within three years after the misappropriation is discovered or reasonably should have been discovered. Following a five-week trial, the jury found that EOFlow misappropriated multiple trade secrets. The Federal Circuit, however, found that Insulet had sufficient information more than three years before it filed suit and, as a result, the verdict was reversed.
Notably, the DTSA treats misappropriation as a continuing wrong. This means, for example, that each product manufactured via misappropriation is not given its own three-year limitations period; instead, it is considered part of a continuing misappropriation that begins at the first instance of misappropriation the plaintiff knew, or should have known, about. This stands in stark contrast with other intellectual property limitations periods where each instance of infringement starts a new statute of limitations clock. In copyright law, separate acts of infringement each have separate three-year limitations periods, and in patent law, a patentee simply cannot recover damages for infringements that occurred more than six years before the complaint was filed. Thus, while the indefinite duration of trade secret protection may be attractive, it is important to recognize the trade secret statute of limitations provides less leeway for bringing claims.
Why the Court Said Insulet Waited Too Long
The court explained that evidence of “access” to trade secrets and “substantial similarity” in competing products starts the statute of limitations, and focused on two key facts:
- Former Insulet employees who previously had access to Insulet’s confidential and trade secret information and who were later working for EOFlow; and
- A product that EOFlow developed and displayed at trade shows, which Insulet itself admittedly viewed as similar to its own.
Critical to the court’s opinion were internal Insulet communications reflecting concerns of misappropriation years before suit was filed. One employee wrote that “EOFlow has cloned our product.” Another stated, “We need to see if this solution is based on our IP,” after seeing EOFlow’s product at a trade show. A third described EOFlow’s product as looking “almost identical” to Insulet’s product.
According to the court, those facts—“access” to Insulet’s trade secrets through former employees and “substantial similarity” the competing products—were enough to start the three-year clock and trigger Insulet’s obligation to investigate and bring a misappropriation action.
Significantly, the clock started even for trade secrets that Insulet argued could not have been discovered earlier. For example, Insulet asserted misappropriation of an algorithm trade secret that it only discovered was misappropriated after engaging in discovery during the litigation. The court held that when the limitations period begins to run on some trade secrets, it also begins to run as to other related trade secrets where they were disclosed by the same party during the same period and in connection with the same relationships.
Thus, if sufficient information exists to put a company on notice regarding misappropriation of one trade secret, the statute of limitations may also affect related secrets. For in-house counsel, that means delay can jeopardize far more than a single claim for misappropriation.
The Practical Takeaway: You May Not Have Time to Wait for a Smoking Gun
A significant business lesson from the decision is that a company may not be able to wait before bringing suit. The court rejected Insulet’s argument that the limitations period began to run only after it acquired detailed and specific knowledge of each misappropriation, including precise dimensions and other details that were not ascertainable from public disclosures. According to the court, the clock started ticking even without such information.
The decision suggests that companies cannot simply wait to have a “smoking gun.” Instead, they must act when they possess enough information to reasonably suspect misappropriation. This creates a practical challenge for businesses. Filing a claim too early can be risky, but waiting too long can be fatal.
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