Overview
In SS&C Technologies Holdings, Inc. v. Arcesium LLC, No. 25-2049-cv, 2026 WL 3318407 (2d Cir. Nov. 3, 2026), the Second Circuit reversed dismissal of a trade secret complaint involving competing financial technology platforms. The decision highlights how “use” of a trade secret at the pleading stage extends beyond exact copying
- Application of the DTSA Pleading Standard
SS&C alleged that its Geneva portfolio accounting software contained trade secrets, including its executable software, integration layer, and data model.[1] Arcesium had access to Geneva under a hosted reseller agreement, which authorized Arcesium to sublicense the software and provide related services to customers. The agreement restricted Arcesium’s use of Geneva and prohibited using it to develop competing products.[2]
SS&C alleged that Arcesium nevertheless used Geneva’s confidential information to develop its competing Trinity software and a separate interface, Nautilus, which allowed Arcesium to continue connecting its platform to Geneva after its license expired.[3] The district court found that SS&C adequately alleged the existence of trade secrets but failed to allege facts supporting a reasonable inference of misappropriation.[4] The Second Circuit rejected that conclusion.
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- Identifying Trade Secrets Requires Sufficient Detail, Not Rigid Specificity
The Court first rejected Arcesium’s argument that SS&C failed to identify its trade secrets with sufficient specificity. While a claimant must identify its purported trade secrets with “sufficient specificity,” the Court explained that it had never imposed a “general specificity rule” for pleading their existence.[5] Instead, a complaint must permit the defendant to ascertain “at least the boundaries within which the secret lies” and provide notice of the bases for the claim.[6]
SS&C’s complaint satisfied that standard because it did more than identify general categories of information. It described how Geneva’s executable software stored investment and portfolio information in a proprietary database and how its integration layer allowed developers to run Geneva-specific functions, extract and input data, and connect Geneva to other systems.[7]
The Court further rejected Arcesium’s argument that providing licensed users with access to Geneva defeated trade secret protection. The Court explained that sharing information with third parties does not undermine a trade secret claim when the information is provided “on an understanding of confidentiality.”[8] SS&C sufficiently alleged reasonable measures to maintain secrecy because access required valid licenses and was subject to nondisclosure and confidentiality provisions.[9]
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- “Use” Does Not Require Exact Copying
Turning to misappropriation, the Court emphasized that “trade secrets need not be exactly copied in order to impose liability.”[10] The Court construed “use” broadly, drawing on the Third Circuit’s explanation that exploitation of a trade secret may include “relying on the trade secret to assist or accelerate research or development” or marketing goods that embody it.[11]
Applying that understanding, the Court found that SS&C sufficiently alleged use. The complaint alleged that Arcesium replicated Geneva’s loader formats, data models, and integration layer in developing Trinity; used Geneva’s functions to solve problems in its own platform; and used Geneva’s database schema, data model, and integration layer to develop Nautilus.[12]
The Court also identified circumstances supporting those allegations, including Trinity’s accelerated development and transition timeline and Arcesium’s solicitation of Geneva customers by promising that Trinity could “mimic Geneva’s functionality.”[13] The Court did not decide whether each allegation independently would survive dismissal. Instead, it held that the combined allegations—that Arcesium used Geneva’s trade secrets to develop and market its own products in contravention of contractual restrictions—sufficiently alleged misappropriation.[14]
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- Competing Interpretations of Internal Documents Cannot Be Resolved on a Motion to Dismiss
The Court further rejected the district court’s reliance on Arcesium’s explanations of internal emails incorporated into SS&C’s complaint. Although a court may consider incorporated documents, it cannot assume that a plaintiff has adopted every statement in a defendant’s “unilateral writing” as true.[15] Such documents may contain the defendant’s account of disputed events or “self-serving, exculpatory statements.”[16]
The district court had concluded that Arcesium’s interpretation of certain emails was more persuasive than SS&C’s. The Second Circuit explained that doing so amounted to impermissible fact-finding.[17] The documents themselves did not contradict SS&C’s allegations. Instead, the parties disagreed about their meaning. The Court held that considering incorporated documents does not permit a district court to “take on the role of the jury” in resolving that disagreement.[18]
- A Pleading-Stage Victory for Trade Secret Plaintiffs
- Broad Interpretation of “Use” Reaches Beyond Exact Copying
The Court’s broad interpretation of “use” allows plaintiffs to challenge more than literal copying. Allegations that a defendant exploited trade secrets to solve problems or accelerate development may support a claim even when the resulting product differs from the plaintiff’s.
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- Supporting Circumstances Can Help Plaintiffs Get Past Dismissal
The decision supports considering specific allegations of use alongside accelerated development timelines, customer solicitations, and contractual restrictions. Although access and similarity alone do not necessarily suffice, surrounding circumstances can strengthen a plausible claim without requiring plaintiffs to prove misappropriation at the pleading stage.
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- Defendant’s Competing Explanation Does Not Warrant Dismissal
Plaintiffs who rely on a defendant’s internal documents need not adopt its interpretation of them. Unless those documents actually contradict the complaint, courts cannot choose the defendant’s explanation over the plaintiff’s reasonable interpretation on a motion to dismiss.
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- What the Court Did Not Decide
The Court expressly limited its holding to the sufficiency of SS&C’s allegations. It did not determine whether Geneva’s information ultimately qualified as trade secrets or whether Arcesium actually misappropriated that information.[19] Nor does the decision eliminate the distinction between unauthorized exploitation and lawful development: the DTSA excludes reverse engineering, independent derivation, and other lawful means of acquisition from “improper means.”[20]
The decision therefore addresses what a plaintiff must allege, not what it must ultimately prove. Specific allegations connecting identified trade secrets to unauthorized development activities, supported by surrounding circumstances, can survive dismissal even when the defendant offers a competing explanation of its conduct.
[1] Id. at *2, *5.
[2] Id. at *2.
[3] Id. at *2–3.
[4] Id. at *3.
[5] Id. at *6–7 (discussing Syntel Sterling Best Shores Mauritius Ltd. v. TriZetto Group, Inc., 68 F.4th 792, 801 (2d Cir. 2023)).
[6] Id. at *7 (quoting Oakwood Laboratories LLC v. Thanoo, 999 F.3d 892, 906 (3d Cir. 2021)).
[7] Id. at *7.
[8] Id. at *6 (quoting VBS Distribution, Inc. v. Nutrivita Laboratories, Inc., 811 F. App’x 1005, 1009 (9th Cir. 2020)).
[9] Id.
[10] Id. at *8 (quoting Vermont Microsystems, Inc. v. Autodesk, Inc., 88 F.3d 142, 148–49 (2d Cir. 1996)).
[11] Id. (quoting Oakwood Laboratories, 999 F.3d at 909).
[12] Id. at *8–9.
[13] Id. at *9.
[14] Id.
[15] Id. (discussing Pearson v. Gesner, 125 F.4th 400, 407 (2d Cir. 2025)).
[16] Id. (quoting Pearson, 125 F.4th at 407).
[17] Id.
[18] Id.
[19] Id. at *7 n.6, *9.
[20] Id. at *5; 18 U.S.C. § 1839(6)(B).
