INSULET CORP. v. EOFLOW, CO. LTD.
Authored by: Jeremy J. Gustrowsky
The Federal Circuit recently reversed a massive trade secret misappropriation verdict, finding that the plaintiff waited too long to bring suit. The case involved competing insulin patch pumps and turned on when a reasonable company should have known its trade secrets had been stolen. The court’s analysis offers important guidance on how the statute of limitations operates under the Defend Trade Secrets Act (DTSA).
Insulet Corporation, maker of the Omnipod insulin patch pump, sued EOFlow and its CEO in August 2023 for misappropriating four trade secrets used to develop EOFlow’s competing EOPatch 2 device. The alleged misappropriation began in 2018 when EOFlow hired several former Insulet employees, including Steve DiIanni, who shared CAD files, soft cannula designs, occlusion-detection algorithms, and design history file information. A jury found EOFlow liable and awarded over $452 million in compensatory and exemplary damages, which the district court later reduced to roughly $59 million to avoid double recovery with a permanent injunction.
On appeal, the Federal Circuit first confirmed it had jurisdiction even though the patent infringement claims had been dismissed “without prejudice” after trial. Because the six-year patent limitations period under 35 U.S.C. § 286 had already run on the 2018 importation allegations, the dismissal functioned as one with prejudice, preserving Federal Circuit jurisdiction over the appeal.
Turning to the trade secret claim, the court held that even under the more demanding “discovery rule” standard from Merck & Co. v. Reynolds (rather than an “inquiry-notice” standard), Insulet’s claim was time-barred. The court adopted an “access-plus-similarity” framework, holding that a plaintiff has enough knowledge to plead trade secret misappropriation once it knows (1) the alleged misappropriator had access to the trade secrets through a former employee, and (2) there is similarity between the trade secrets and the competing product. Detailed knowledge such as precise dimensions is not required at the pleading stage.
Applying that framework, the court found that by March 2019 Insulet knew DiIanni was working with EOFlow on the EOPatch 2. Insulet’s own employees had observed at a June 2018 trade show that EOFlow had “cloned” the Omnipod, with one engineer noting it “looks almost identical.” Combined with publicly available materials including EOFlow’s 2020 Korean IPO prospectus showing the walking-man drive system, ratchet gears, and soft cannula features, the court concluded Insulet had or should have had enough information to plead its claim well before the August 2020 critical date.
The court also addressed an issue of first impression in the First Circuit: whether the statute of limitations runs separately for each trade secret. Following the approach developed in California cases like Intermedics and adopted by other circuits, the court held that when related trade secrets are disclosed by the same person during the same time period for the same purpose, they constitute a “single claim of misappropriation” under 18 U.S.C. § 1836(d). This meant that even the occlusion-detection algorithm, which would not be visible in EOFlow’s product, was time-barred along with the other trade secrets disclosed by DiIanni in early 2018.
Judge Prost dissented sharply, arguing the majority improperly substituted its own factual findings for those of the jury, adopted an access-plus-similarity framework not supported by the case law, and encouraged plaintiffs to rush to court based on mere suspicion. She emphasized that under a proper substantial evidence review viewing facts favorably to Insulet, the jury’s verdict should stand, particularly since Insulet did not learn until after the critical date that former employees had actually transferred thousands of confidential documents to EOFlow.