Seventh Circuit: Describing What Software Does Is Insufficient to Define a Trade Secret Under DTSA

In 2014, CLEAResult hired NEXT Payment to develop an online-scheduling tool. NEXT Payment worked with CLEAResult to create a customized software application for booking appointments called the “FAST Tool.” The FAST Tool had a public side for customers to manage accounts and appointments and an internal side for CLEAResult staff to handle scheduling and to access customer data. NEXT Payment alone had access to the tool’s underlying rules, algorithms, and source code.

After a few years of utilizing the FAST Tool, CLEAResult acquired a separate green technology company that had its own cloud-based application, known as the DSMTracker. CLEAResult decided to replace the FAST Tool with that new platform. As part of that endeavor, CLEAResult conducted an internal analysis of DSMTracker’s gaps to ensure it had the same functionality as the FAST Tool by comparing it to the internal-facing side of the FAST Tool.

NEXT Payment alleged, however, that CLEAResult stole secret information from the FAST Tool to reverse-engineer and replicate its features into the DSMTracker. NEXT Payment conceded, however, that CLEAResult personnel never had access to the underlying processing engine or rules software of the FAST Tool and that there was no evidence that CLEAResult ever accessed the FAST Tool’s underlying source code. 

In November 2017, after transitioning several customers to the DSMTracker, it ended its relationship with NEXT Payment. Consequently, NEXT Payment sued CLEAResult for misappropriation of trade secrets under the Defend Trade Secrets Act (DTSA) and unjust enrichment under Illinois common law.

Case Information

NEXT Payment Solutions, Inc. v. CLEAResult Consulting, Inc., 163 F.4th 1091 (7th Cir. 2026)

Plaintiff: NEXT Payment Solutions, Inc.

Defendant: CLEAResult Consulting, Inc.

Judges: Chief Judge Michael B. Brennan; Judge Joshua P. Kolar; Judge Nancy L. Maldonado

Procedural History

Following discovery, CLEAResult moved for summary judgment on NEXT Payment’s DTSA claim, arguing that NEXT Payment failed to identify its software secrets with sufficient specificity. The court agreed in part and narrowed NEXT Payment’s DTSA claim to those parts of the FAST Tool that were not present in the DSMTracker before CLEAResult transitioned to its new program. The court later ordered NEXT Payment to provide more information on the features of the FAST Tool that it contended were misappropriated and to explain why those features were trade secrets. NEXT Payment produced a spreadsheet identifying a list of 34 software “modules” and five “combinations of modules and features” that it said CLEAResult misappropriated. Arguing that NEXT Payment’s spreadsheet was inadequate, CLEAResult again moved for summary judgment, which the district court granted in full.

Outcome Before Seventh Circuit

The Seventh Circuit affirmed the district court’s decision. The court held that NEXT Payment failed to come forward with evidence from which a jury could conclude that its software modules qualified as trade secrets.

NEXT Payment argued that the modules for its FAST Tool program listed in its spreadsheet were sufficient to constitute as a trade secret. The descriptions contained in the list, however, only defined the modules in vague and generic language describing what the software did (e.g., “manages the inventory of appointments,” “present real-time appointment availability,” “pre-set the number of available appointments based on the customer’s geographic location … [and] the availability of technicians”), not how it did it. NEXT Payment did not identify any specific algorithms, source code, or methodologies underlying the FAST Tool’s functionality. This lack of detail made it impossible to distinguish between aspects of the program that were generally known and ascertainable and those that were secret and derived value from being kept as such.

The Seventh Circuit rejected NEXT Payment’s argument that its software modules were trade secrets simply because they were kept on the non-public, internal side of the FAST Tool. In other words, NEXT Payment argued that because its internal web application was only accessible to CLEAResult, and not to the general public, it was a trade secret. This was unsatisfactory because NEXT Payment claimed that its software’s visible functionality was the trade secret. Seeing as the software’s functionality was obvious to any user, being restricted to only certain clients does not make the software a trade secret. 

The Seventh Circuit also rejected NEXT Payment’s argument that the FAST Tool modules were a trade secret because they were “new and valuable.” But that alone does not make something a trade secret. 

Why It Matters

This decision reinforces the stringent specificity requirements for DTSA claims involving software trade secrets. Plaintiffs must do more than describe what their software does in generic terms — they must identify the concrete aspects (such as specific algorithms, source code, or methodologies) that distinguish their technology from generally known information. Functional descriptions of software features that any user could observe are insufficient to establish trade secret protection. Additionally, keeping software “secret” and describing it as “new and valuable” does not necessarily transform the software into a trade secret without articulating what makes it unique.