The Bottom Line
- A New York federal court recognized that a musical work could qualify as a trade secret when its economic value is derived from secrecy as opposed to revenue associated with album sales.
- Businesses creating luxury products, digital assets or exclusive experiences can consider whether such assets qualify for trade secret protection.
- The Court acknowledged the unusual application of the trade secret doctrine, as musical albums do not traditionally fall under protectable trade secret categories such as customer lists, proprietary software or secret formulas.
- This case serves as a reminder that while trade secret and copyright claims may overlap, courts have held that federal copyright law does not preempt state law on trade secret misappropriation.
The unreleased, single copy of the Wu-Tang Clan album Once Upon a Time in Shaolin, which was originally sold to defendant Martin Shkreli for $2 million in 2017 and later sold to plaintiff PleasrDAO in 2021 for around $4 million after the government had seized it through forfeiture, may warrant trade secret protection. On September 25, 2025, Judge Pamela K. Chen of the Eastern District of New York found that PleasrDAO adequately pleaded a trade secret under the federal Defend Trade Secrets Act and New York law. This ruling stretches the bounds of trade secret law beyond the conventional categories of trade secret information, which include formulas, processes, customer lists, and designs.
In its suit against Shkreli, PleasrDAO alleges that Shkreli misappropriated the “trade secret” album by unlawfully retaining digital copies and publicly streaming portions of it online. In denying Shkreli’s motion to dismiss the trade secret claims, Judge Chen analyzed the six factors that New York courts typically consider in analyzing both DTSA and state trade secret claims as outlined in Integrated Cash Mgmt. Servs., Inc. v. Digit. Transactions, Inc. The Court ultimately found that the factors strongly weighed in favor of the plaintiff.
The Court’s 6-Factor Analysis
(1) The extent to which the information is known outside the business and (2) the extent to which it is known by employees and others involved.
The Court found relevant that Wu-Tang Clan produced only one copy, the album was never publicly released, and when Shkreli owned the album, it was subject to strict contractual usage and confidentiality restrictions for a period of 88 years.
(3) Measures taken to guard secrecy.
The Court found that Plaintiff adequately alleged that it undertook security measures to protect the secrecy of the album, including the use of armed guards, a secure location, continual video surveillance and moving the album via secure transport.
(4) The value of the information to the business and competitors and (5) the effort or money expended in developing the information.
The Court agreed with the plaintiff that the album’s data and files are of significant value derived from its secrecy, but cautioned that “it cannot be understated that the application of trade secret doctrine to the unique facts of this case is unchartered territory.”
The Court found relevant that the plaintiff collects culturally significant media with the intent of creating experiential entertainment. Further, the purchase agreement expressed the album producers’ intention to create only a single copy “as a protest to what they saw as the devaluation of music in the digital era” and “to keep ownership of the [a]lbum in one person’s hands at a time.” When sold to Shkreli, the album was “the most expensive musical work ever sold.” The Court concluded that the exclusive nature of the album was a significant part of its intrinsic value.
(6) The ease or difficulty with which the information could be acquired or duplicated by others.
The Court found that the purchase agreement prevented Shkreli from duplicating the work for commercial use and required that he could only sell the album to a third party under the same terms and conditions.
Implications for Creative and Luxury Assets
While this decision only allowed the claims to survive the motion to dismiss (the Court noted that whether the album is a trade secret is ultimately a question of fact), it is nevertheless significant. This case marks one of the first times a court has considered a musical album as a potential trade secret and allows the possibility for trade secret protection to extend beyond traditional categories to certain exclusive creative works.
Key Takeaways
- A musical album can qualify as a trade secret if reasonable measures to maintain its secrecy are taken and it derives independent economic value from that secrecy.
- Businesses seeking to protect “outside the box” trade secrets should implement robust measures to limit access to the information, including through contractual usage and confidentiality restrictions, surveillance, encryption, and other security measures.
- The ability to exploit a musical work through public, commercial release may undercut the availability of trade secret protection.