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IDX Systems v. Epic Systems

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Citation Edit

IDX Sys. Corp. v. Epic Sys. Corp., 285 F.3d 581 (7th Cir. 2002) (full-text).

Factual Background Edit

A developer of medical record-keeping software sued a customer and its former employees for violating a non-disclosure agreement (NDA) and misappropriating certain trade secrets. Under the NDA, the customer could not provide or make available to any third party the software or any related materials. The agreement also prohibited the customer from using or disclosing any information or data relating to the software.

District Court Proceedings Edit

The district court dismissed all claims. It held that the plaintiff had failed to state a valid trade secret claim since it did not plead the claim with sufficient specificity.

The court also dismissed the breach of contract claim since (1) it was preempted by the Wisconsin Uniform Trade Secrets Act (UTSA), and (2) the NDA was invalid because it lacked temporal or geographic limitations.

Appellate Court Proceedings Edit

The Seventh Circuit Court of Appeals upheld the district court's ruling on the trade secret claim, but reversed on the preemption and contractual claims.

On the preemption claim, the court held that the Wisconsin UTSA stated that it did not preempt contractual remedies, whether or not based on trade secret misappropriation. Because the customer broke its promise not to disclose any information relating to the software, the plaintiff stated a claim for violation of the NDA.

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