Second Circuit broadens the definition of use in software trade secret disputes
The appellate court revived claims by SS&C Technologies that fintech rival Arcesium misappropriated portfolio accounting assets under the Defend Trade Secrets Act
The U.S. Court of Appeals for the Second Circuit revived a trade secret lawsuit by SS&C Technologies against Arcesium on November 3, 2026. The appellate ruling overturned a lower court dismissal, establishing an expansive definition of what constitutes unlawful use under federal intellectual property rules.
A reseller agreement turns into software litigation
The dispute over intellectual property centers on Geneva, a portfolio accounting software platform designed to give real-time firm-wide portfolio assessments. SS&C Technologies acquired Geneva in 2015 when it bought Advent, according to reporting by IPWatchdog. Before that buyout, fintech firm Arcesium entered into a hosted reseller agreement allowing it to sublicense Geneva and present Geneva data to customers inside its own software platform.
SS&C allowed the reseller contract to expire in 2020, leaving Arcesium with run-off rights to service existing clients. Relations fractured when Arcesium marketed Geneva to prospective clients, prompting SS&C to move to end those run-off rights. Arcesium sued in the U.S. District Court for the Southern District of New York, claiming antitrust violations and breach of contract. During that case, SS&C discovered that Arcesium had launched a project named Nautilus to reach Geneva through its integration layer, data model and database schema, while preparing its competing platform called Trinity.
Confidentiality agreements satisfy the reasonable measures test
In the Southern District of New York, Arcesium argued that SS&C failed to protect its trade secrets because every licensed Geneva user could access the executable software, the integration layer with its application programming interfaces, and the data model. The district court dismissed SS&C's claims, but the Second Circuit rejected that conclusion. IPWatchdog noted that the appellate judges applied the Ninth Circuit's 2020 ruling in VBS Distribution v. Nutravita Laboratories, finding that sharing alleged secrets with third parties does not eliminate a trade secret claim if the disclosure occurs under confidentiality agreements, which SS&C required from all Geneva clients.
The Second Circuit also rejected Arcesium's argument that SS&C had stated its trade secrets with too little specificity. Aligning with the Third Circuit's 2021 decision in Oakwood Laboratories v. Thanoo, the court held that plaintiffs do not face a rigid specificity formula at the initial pleading stage. SS&C needed only to provide enough detail about the functions of each trade secret and how developers use them to give Arcesium fair notice of the claims.
An expansive definition of commercial use under the DTSA
The core of the appellate decision addresses the statutory meaning of use under the Defend Trade Secrets Act (DTSA). Because the Second Circuit had not previously established what acts constitute use under the statute, it adopted an expansive standard supported by Oakwood Laboratories and Black's Law Dictionary. Under this rule, use includes any exploitation of protected assets that causes injury to the owner or enriches the defendant.
Applying that standard, the court held that SS&C sufficiently alleged trade secret use. The complaint outlined how Arcesium replicated Geneva loader formats, data models and integration layers, used Geneva functions to solve problems in its Trinity system, and accelerated Trinity's development timeline. The court also held that the district judge made a fundamental error by crediting Arcesium's explanations of internal emails attached to SS&C's complaint, citing Pearson v. Gesner to affirm that a plaintiff's allegations must be taken as true during a motion to dismiss, as reported by IPWatchdog. The case now returns to the district court for further proceedings, setting an important precedent for technological innovation.
