Heraeus Medical GMBH v. Esschem Inc

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________

No. 18-1368
_____________

HERAEUS MEDICAL GMBH,

Appellant
v.

ESSCHEM, INC.
_______________

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(E.D. Pa. No. 2-14-cv-05169)
Honorable Cynthia M. Rufe, U.S. District Judge
_______________

Argued: October 23, 2018

Before: KRAUSE, COWEN, and FUENTES, Circuit Judges

(Opinion Filed: June 21, 2019)
Bruce P. Merenstein
Samuel W. Silver
John R. Timmer
Schnader Harrison Segal & Lewis
1600 Market Street
Suite 3600
Philadelphia, PA 19103

John Nilsson
Matthew M. Wolf [Argued]
Arnold & Porter Kaye Scholer
601 Massachusetts Avenue, N.W.
Washington, DC 20001

R. Reeves Anderson
Arnold & Porter Kaye Scholer
370 Seventeenth St.
Suite 4400
Denver, CO 80202
Counsel for Plaintiff-Appellant Heraeus Medical
GmbH

Benjamin P. Gilford
Greenberg Traurig
333 Southeast 2nd Avenue
Suite 4400
Miami, FL 33131

Richard D. Harris [Argued]
Cameron M. Nelson
Gregory E. Ostfeld
Greenberg Traurig

2
77 West Wacker Drive
Suite 3100
Chicago, IL 60601

Mary F. Platt
Fineman Krekstein & Harris
Ten Penn Center
1801 Market Street, Suite 1100
Philadelphia, PA 19103
Counsel for Defendant-Appellee Esschem, Inc.

_______________

OPINION OF THE COURT
_______________

KRAUSE, Circuit Judge.

The case before us involves another skirmish in a long-
running, cross-border court battle over the alleged theft of a
trade secret: Heraeus Medical GmbH’s recipe for its bone
cement. In this appeal, we consider whether Heraeus’ suit
against Esschem, Inc.—a company that works as a chemical
manufacturer for Heraeus’ main competitor—is barred by the
statute of limitations under the Pennsylvania Uniform Trade
Secrets Act. At summary judgment, the District Court held
that all of Heraeus’ claims, including those for Esschem’s
alleged continuing misappropriation during the three-year
limitations period, are time-barred and entered judgment for
Esschem. We agree that alleged misappropriations that
occurred more than three years before Heraeus filed suit are
time-barred, but because we hold that Pennsylvania applies the
rule of separate accrual to continuing trade secret

3
misappropriations, Heraeus may sue for misappropriations that
occurred within the three-year period before filing. We thus
will reverse in part and affirm in part the District Court’s grant
of summary judgment.

I. Background1

Heraeus is a German company that develops and
produces Palacos, a bone cement used to anchor artificial joints
in joint replacement surgeries. To make Palacos, Heraeus
developed its own particular process to manufacture two key
components: copolymers known as R262 and R263 (the
“copolymers”). Biomet also sells bone cement and is one of
Heraeus’ major competitors in this market. To make its bone
cement, Biomet uses the same copolymers, which it buys from
Esschem, a Pennsylvania company that manufactures acrylic
polymers and monomers.

Heraeus holds trade secrets related to the “overall
specifications for the . . . bone cement,” including

1
The facts set forth here are drawn from a combination
of the District Court’s recital of the facts and the parties’
submissions on summary judgment. To the extent certain
background facts appear only in the District Court opinion, we
note that the District Court appears to have drawn them from
the complaint, although Esschem indicated it was “without
knowledge or information sufficient to form a belief” about
many of those facts. Esschem’s Answer at 1–10, ECF No. 87.
Nonetheless, because these allegations pertain only to general
background and Esschem does not take issue with them on
appeal, we will reference them where relevant.

4
“specifications for [the] copolymers.” App. 81. These trade
secrets changed hands several times over the years before
allegedly falling into Esschem’s possession. In 1972, thirteen
years after Palacos first came on the market, Heraeus entered
into a distribution agreement with Merck, pursuant to which
Heraeus disclosed its trade secrets so that Merck could “obtain
and maintain regulatory approval” to distribute Palacos. App.
84. Merck was also obligated under the agreement to protect
Heraeus’ trade secrets from disclosure to third parties without
first obtaining Heraeus’ consent. This arrangement was in
place until 1997, when Merck and Biomet entered into a joint
venture that took over the distribution of Palacos. At that point,
Heraeus agreed to supply the joint venture, and only Merck,
pursuant to its confidentiality agreement with Heraeus, had
access to the trade secrets covering the copolymers.

In 2004, however, Biomet acquired Merck’s shares in
the joint venture, taking over the distribution agreement and,
unbeknownst to Heraeus, also gaining access to Heraeus’ trade
secrets. Upon learning of the joint venture’s sale to its
competitor, Heraeus announced it would terminate the
distribution agreement in August 2005, but by the time
Heraeus severed its ties with Biomet, Biomet had already
launched its own competing bone cement—a feat that Heraeus
alleges its “competitors had failed to do for decades” and that
it contends has since cost it 50 percent of its market share.
App. 88. Suspecting that Biomet’s bone cement was created
using its trade secrets, Heraeus acquired and analyzed samples
of Biomet’s bone cement in 2005 and discovered that, except
for “[m]inor discrepancies,” it “w[as] virtually identical to”
Heraeus’ bone cement and that Esschem was manufacturing
the copolymer components for Biomet. App. 89.

5
 Over the next few years, Heraeus took legal action to
protect its trade secrets. It filed suit for trade secret
misappropriation against Biomet in Germany in December
2008, and shortly thereafter, in aid of that litigation, brought
discovery suits in the United States against both Esschem and
Biomet.2

In its discovery suit against Esschem, Heraeus sought
“documents relating to communications between Esschem and
. . . Biomet . . . regarding the development” of the copolymers.
In re Heraeus Kulzer GmbH, 2009 WL 2981921, at *3. At the
time, Heraeus’ theory was that Biomet had “instruct[ed
Esschem] to manufacture [the copolymers] using Heraeus’
highly confidential information and trade secrets.” App. 651.
After an appeal, this Court ordered expedited discovery from
Esschem in July 2010. Heraeus Kulzer GmbH, 390 F. App’x
at 93. Esschem then produced several e-mail chains between
employees of Biomet and Esschem in which they discussed the
development of the copolymers. In those chains, all of which
had been produced to Heraeus by March 2011, Biomet
employees Dan Smith and Rainer Specht specifically
“discuss[ed] the specifications for R262 and R263” with
Esschem employees. Appellee’s Br. 37–38.

2
In re Heraeus Kulzer GmbH, No. 09-MC-00017, 2009
WL 2981921 (E.D. Pa. Sep. 11, 2009), rev’d by Heraeus
Kulzer GmbH v. Esschem, Inc., 390 F. App’x 88 (3d Cir.
2010); In re Application of Heraeus Kulzer for Order Pursuant
to 28 U.S.C. Section 1782, No. 3:09-CV-183 RM, 2009 WL
2058718 (N.D. Ind. Jul. 9, 2009), rev’d by Heraeus Kulzer,
GmbH v. Biomet, Inc., 633 F.3d 591 (7th Cir. 2011).

6
 Discovery against Esschem ended sometime between
August and December 2011, but discovery and litigation
against Biomet continued for several more years. In the course
of the proceedings against Biomet—specifically, in a
December 2011 deposition—Dan Smith corroborated what the
e-mail chains had indicated: that Biomet employees were
“direct participants,” Appellant’s Br. 11 (quoting Sealed App.
1703) in the development of the copolymers and that “their
work with Esschem . . . ultimately led to the copolymers
manufactured by Esschem for use in Biomet’s bone cement,”
id. Heraeus contends it was not until “that time,” i.e.,
December 2011, that it had “sufficient information to believe
that Esschem had actively participated in the misappropriation
of [its] trade secrets.” Id. at 12.

Just short of three years later, on September 8, 2014,
Heraeus sued Esschem for trade secret misappropriation in the
Eastern District of Pennsylvania. The complaint included one
count for misappropriation of trade secrets under the
Pennsylvania Uniform Trade Secrets Act (PUTSA) and five
counts for common law claims.3

Following discovery, Esschem moved for summary
judgment, arguing that all of Heraeus’ claims were time-
barred. Under the PUTSA, a plaintiff has three years from
when “the misappropriation was discovered or by the exercise
of reasonable diligence should have been discovered” to bring

3
Those common law claims were: (1) conspiracy to
misappropriate a trade secret; (2) unjust enrichment; (3) unfair
competition; (4) tortious interference with economic
advantage; and (5) conversion.

7
suit. 12 Pa. Cons. Stat. § 5307. Esschem argued that Heraeus
discovered or should have discovered the alleged
misappropriations as early as 2005, making its PUTSA claims
untimely. And because the common law claims were based on
the same facts as the PUTSA claims and were subject to
statutes of limitations of no more than four years, they were
also untimely.

In its opposition motion, Heraeus countered that it did
not discover the necessary facts to sue for trade secret
misappropriation until “the end of 2011,” and that any dispute
over when it discovered those facts was an issue of triable fact
that precluded summary judgment. App. 663. Heraeus also
urged that continuing misappropriations were subject to the
separate accrual rule, so that, under the PUTSA, each
additional use of Heraeus’ trade secrets within three years of
the filing of the complaint gave rise to a separate and timely
cause of action.

The District Court rejected both of Heraeus’ arguments
and ruled that the statutes of limitations had run on its PUTSA
and common law claims. At the very latest, the Court found,
Heraeus was aware of “the facts supporting its
misappropriation claims” against Esschem by January 2009.
Heraeus Med. GmbH v. Esschem, Inc., 285 F. Supp. 3d 855,
861 (E.D. Pa. 2018). It also held that Esschem’s additional
uses of the trade secrets between September 2011 and the filing
of the complaint in September 2014 were part of a single and
time-barred cause of action under the PUTSA because
Esschem’s continued use of the trade secrets was “nothing
more than a continuation of the original alleged
misappropriation.” Id. at 863. Interpreting the PUTSA to
adopt the separate accrual rule, it reasoned, would “eliminate

8
the statute of limitations altogether” by allowing Heraeus to
“sit by for nearly a decade” after learning all facts necessary to
bring a claim and to obtain damages for the entire period so
long as one misappropriation took place within the statute of
limitations.4 Id. On that basis, the Court granted summary
judgment for Esschem, and Heraeus now appeals.

II. Jurisdiction and Standard of Review

The District Court had diversity jurisdiction under 28
U.S.C. § 1332(a) and we have jurisdiction under 28 U.S.C.
§ 1291. Because we are sitting in diversity and Heraeus brings
state claims, we apply Pennsylvania law to address the parties’
arguments related to the PUTSA’s statute of limitations. See
Ragan v. Merchs. Transfer & Warehouse Co., 337 U.S. 530,
533 (1949); Lafferty v. St. Riel, 495 F.3d 72, 76 (3d Cir. 2007)
(citing Guar. Tr. Co. of N.Y. v. York, 326 U.S. 99, 110 (1945)).

We review the District Court’s grant of summary
judgment de novo. Faush v. Tuesday Morning, Inc., 808 F.3d
208, 215 (3d Cir. 2015). To prevail at this stage, the moving
party must establish that “there is no genuine dispute as to any

4
The District Court correctly identified the tension
between those jurisdictions that treat continuing
misappropriations as a single claim and those that treat
continuing misappropriations as a series of separate
misappropriations subject to the separate accrual rule. As we
explain below, however, it was mistaken in conflating the
effect of the separate accrual rule with the effect of the
continuing violation doctrine on the statute of limitations. See
infra Section III.B.2.

9
material fact and the movant is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a). All facts should be viewed “in
the light most favorable to the non-moving party,” with “all
reasonable inferences [drawn] in that party’s favor.”
Scheidemantle v. Slippery Rock Univ. State Sys. of Higher
Educ., 470 F.3d 535, 538 (3d Cir. 2006). A factual dispute is
genuine “if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986).

III. Discussion

On appeal, Heraeus raises the same two arguments it did
below. First, it contends that it did not discover sufficient facts
to state a claim against Esschem until December 2011, and
therefore its September 2014 suit fell within the three-year
limitations period. And to the extent there is a dispute over
when Heraeus discovered sufficient facts to state a claim,
Heraeus argues, this is a factual dispute for the jury. Second,
Heraeus posits that even if the limitations period began to run
before September 2011, Esschem would still be liable for each
time it used the trade secrets to manufacture the copolymers
between September 2011 and September 2014 because
continuing misappropriations under the PUTSA are subject to
the separate accrual rule. We address these issues in turn.5

5
The District Court dismissed Heraeus’ common law
claims for the same reasons it dismissed its PUTSA claims. On
appeal, however, Heraeus directs its arguments only to its
PUTSA claims and thus has waived any challenge to the denial
of its common law claims.

10
 A. The Commencement of the Limitations
Period

A “limitations period generally begins to run ‘as soon
as [an] injury is sustained.’” Davis v. Wells Fargo, 824 F.3d
333, 344 n.13 (3d Cir. 2016) (quoting Mest v. Cabot Corp., 449
F.3d 502, 510 (3d Cir. 2006)). In Pennsylvania, there are
several “exception[s]” to this “general rule.” Pocono Intern.
Raceway, Inc. v. Pocono Produce, Inc., 468 A.2d 468, 471 (Pa.
1983). One is the discovery rule, which evolved from the
notion that a limitations period should not “run[] against” a
plaintiff who is “ignorant of his loss.” Lewey v. H.C. Frick
Coke Co., 31 A. 261, 264 (Pa. 1895). When the discovery rule
applies, the limitations period only begins to run once the
plaintiff is no longer “ignorant of his loss,” id., i.e., once he is
able to “ascertain the fact of a cause of action,” Pocono, 468
A.2d at 471. That is not to say the period is suspended until
the plaintiff has “acquired finite knowledge of all operative
facts.” Id. (emphasis added). Rather, “[f]or the statute of
limitations to run, a plaintiff need not know the ‘exact nature’
of his injury, as long as it objectively appears that the plaintiff
‘is reasonably charged with the knowledge that he has an injury
caused by another.’” Mest, 449 F.3d 502, 510-11 (quoting
Ackler v. Raymark Indus., Inc., 551 A.2d 291, 293 (Pa. Super.
Ct. 1988)).

The PUTSA explicitly incorporates the discovery rule.
Under the statute, a plaintiff has three years to file an action for
trade secret misappropriation once she “discover[s]” or
“should have . . . discovered” the misappropriation.6 12 Pa.

6
In full, this provision reads: “An action under this
chapter for misappropriation must be brought within three

11
Cons. Stat. § 5307. “Misappropriation,” in turn, is defined in
several ways, but one definition in particular applies here: If,
as Heraeus contends, Esschem received Heraeus’ trade secrets
not from Heraeus itself, but from Biomet, Esschem could be
liable for “use of a trade secret of another without express or
implied consent,” so long as, “at the time of . . . use,” Esschem
“knew or had reason to know that [its] knowledge of the trade
secret was . . . derived from or through a person who owed a
duty to the person seeking relief to maintain its secrecy or limit
it use.” 12 Pa. Cons. Stat. § 5302(2)(ii)(C). In other words,
the limitations period would only begin to run once Heraeus
discovered sufficient facts to make it reasonably aware not
only that Esschem used Heraeus’ trade secrets without
Heraeus’ consent, but also that Esschem knew or had reason to
know that Biomet owed a duty to Heraeus to maintain their
secrecy. Cf. Merck & Co. v. Reynolds, 559 U.S. 633, 637
(2010) (holding that “scienter” is a fact which a plaintiff must
discover in order for the statute of limitations to begin running
on a § 10(b) claim under the Securities Exchange Act).

According to Heraeus, it was not until it deposed
Biomet’s Dan Smith in December 2011 that it obtained
sufficient evidence of scienter. Specifically, Heraeus directs
us to two pieces of information that it asserts gave it notice of
Esschem’s state of mind: Smith’s testimony (1) that he and
another Biomet employee were “direct participants” in work
with Esschem; and (2) that this work with Esschem “ultimately
led to the copolymers . . . for use in Biomet’s bone cements.”

years after the misappropriation was discovered or by the
exercise of reasonable diligence should have been discovered.”
12 Pa. Cons. Stat. § 5307.

12
Appellant’s Br. 11–12. Heraeus contends those concessions
finally revealed that “Esschem knew that Biomet was using
stolen trade secrets.” Id. at 33.

But the argument proves too much, for if that
information was sufficient to put Heraeus on notice of
Esschem’s scienter, then Heraeus was necessarily on notice
nine months earlier when it came into possession of essentially
the same information. In a March 2011 discovery production,
Heraeus received, among other things, a 2004 e-mail exchange
between Smith and Esschem in which Smith attempted to
troubleshoot Esschem’s manufacturing difficulties, and, in
declining to provide more detailed copolymer specifications,
noted that doing so would disclose non-public information.
But follow-up e-mails to Esschem from the other Biomet
employee, Rainer Specht, which Heraeus also received in
discovery by March 2011, did provide Esschem with those
supposedly non-public details. And soon thereafter, as
Heraeus was well aware, Biomet released its competing bone
cement.

This sequence and the face of these detailed exchanges
about the copolymer specifications reveal that the very facts
that Heraeus claims it first learned in the December 2011
deposition were in its possession by March 2011: (1) “direct
participat[ion]” by Biomet employees in Esschem’s
development of the copolymers; and (2) that this participation
is what “ultimately led” to Esschem’s successful production of
the copolymers. Appellant’s Br. 11. Moreover, the March
2011 discovery revealed the additional fact that Esschem had
reason to believe Specht’s subsequent disclosure of the
copolymer specifications constituted non-public information,
i.e., information that was “derived from or through a person

13
who owed a duty to the person seeking relief to maintain its
secrecy.” 12 Pa. Cons. Stat. § 5302.7 Thus, the information
that Heraeus learned through Smith’s testimony was
duplicative and, if anything, less revealing than the discovery
it received in March 2011. So, it was March 2011 when the
limitations period began to run and March 2014, three years
later, when it expired.8

7
In a filing below, Heraeus itself touted this logic,
describing the information in Specht’s later e-mails as “the
same information that Esschem had previously requested [from
Biomet] . . . [but] had been told that Biomet could not provide.”
App. 142.
8
The District Court held, and Esschem argues on
appeal, that Heraeus had sufficient information to state a claim
against Esschem at various points between 2005 and 2010,
such as in January 2009, when Heraeus brought its discovery
suit against Esschem in the United States. At that time,
Heraeus sought information from Esschem about its
communications with Biomet because it believed that Biomet
had “instruct[ed Esschem] to manufacture [the copolymers]
using Heraeus’ highly confidential information and trade
secrets.” App. 651. Esschem maintains that this suspicion was
enough for Heraeus to bring suit for Esschem’s alleged
misappropriations. As Heraeus points out, however, without
evidence that Esschem knew the instructions it was receiving
from Biomet were derived from Heraeus’ trade secrets, the
possibility that Esschem was “a total innocent” remained.
Appellant’s Reply Br. 23. In any event, we need not determine
whether Heraeus could have stated a claim at some point before
March 2011 because, outside of any claims that accrued in the
three-year period before filing, its September 2014 suit was

14
 Heraeus, however, did not file suit until September
2014—three and a half years later. Thus, any
misappropriations prior to March 2011 and any that occurred
between March and September 2011 (which would have been
discovered as they occurred) are indeed time-barred.

The question remains whether Esschem’s alleged
continued use of Heraeus’ trade secrets between September
2011 and September 2014 is properly viewed as part of one
violation that is time-barred in its entirety, as the District Court
held, or instead as a series of separate misappropriations that
accrued individually and thus were timely asserted. As we
explain next, the PUTSA provides the answer.

B. The Timeliness of Claims for
Misappropriation After September 2011

The Pennsylvania General Assembly based the PUTSA
on the provisions of the Uniform Trade Secrets Act (UTSA).
But while it adopted most of those provisions, it opted to
diverge from them in certain instances. One such instance is
in the treatment of a “continuing misappropriation.” The
UTSA provides:

An action for misappropriation must be brought within
3 years after the misappropriation is discovered or by
the exercise of reasonable diligence should have been
discovered. For the purposes of this section, a
continuing misappropriation constitutes a single claim.

untimely even if the limitations period began to run earlier than
March 2011.

15
Unif. Trade Secrets Act § 6 (Unif. Law Comm’n 1985). In the
PUTSA, the Pennsylvania General Assembly tracked this
language nearly verbatim, except that it omitted the final
sentence, so that Pennsylvania’s statute states simply:

An action under this chapter for misappropriation must
be brought within three years after the misappropriation
was discovered or by the exercise of reasonable
diligence should have been discovered.

12 Pa. Cons. Stat. § 5307.

The parties view the omission of the final sentence very
differently. Heraeus argues that the Pennsylvania legislature
intended “each wrongful use of misappropriated trade secrets
[to] trigger a distinct limitations period” and that, under this
separate accrual rule, its claims for misappropriations between
September 2011 and September 2014 are timely. Appellant’s
Br. 14. Esschem, on the other hand, defends the District
Court’s rejection of the separate accrual rule as a rule that
would nullify the PUTSA’s statute of limitations, and it urges
that we affirm the denial of Heraeus’ PUTSA claims as a
single, time-barred cause of action.

As explained below, Heraeus has the better of the
argument. The District Court erred in treating Esschem’s
continued use of Heraeus’ trade secrets as a single
misappropriation for three reasons: (1) the text of the PUTSA;
(2) Pennsylvania’s common law rule of separate accrual, which
provided the backdrop against which the PUTSA was drafted;
and (3) Pennsylvania’s adoption of the Restatement of Torts,

16
which also endorses the separate accrual rule for continuing
misappropriations. We address these in turn.

1. The PUTSA Treats Continuing
Misappropriations as Separate
Violations Subject to the Separate
Accrual Rule

a. The Text of the PUTSA

The UTSA, by its terms, treats a continuing
misappropriation as a single claim, but Pennsylvania, like
some other states, opted not to enact that particular provision.
See, e.g., N.C. Gen. Stat. Ann. § 66-157 (North Carolina); Ala.
Code § 8-27-5 (Alabama). While we do not have the occasion
to opine on the significance of that omission for other states,
Pennsylvania’s canons of construction indicate that the
omission reflects the General Assembly’s intent to apply the
separate accrual rule to continuing misappropriations.

Pennsylvania law provides that “[t]he object of all
interpretation and construction of statutes is to ascertain and
effectuate the intention of the General Assembly.” 1 Pa. Cons.
Stat. § 1921. A situation like the one here, where the General
Assembly omitted text from a borrowed statute, offers strong
evidence of legislative intent. See Fletcher v. Pa. Prop. & Cas.
Ins. Guar. Ass’n, 985 A.2d 678, 684 (Pa. 2009) (holding that
“where a section of a statute contains a given provision, the
omission of such a provision from a similar section is
significant to show a different legislative intent”). Under the
“separate-accrual rule,” which we have defined as “[a]
corollary of the standard rule” for accrual of federal causes of
action, a continuing misappropriation gives rise to multiple

17
discrete claims corresponding to each act of misappropriation,
and “[b]ecause each act violates the law on its own, each act
separately triggers its own limitations period.” Blake v. JP
Morgan Chase NA, No. 18-2368, slip op. at 10 (3d Cir. June
19, 2019). The Uniform Law Commission expressly rejected
this separate accrual rule in the second sentence of UTSA § 6
by providing that “a continuing misappropriation constitutes a
single claim,” i.e., not a series of claims. Unif. Trade Secrets
Act § 6 (emphasis added). But the Pennsylvania General
Assembly rejected that second sentence and retained only the
first when it enacted PUTSA § 5307, indicating that it intended
to retain the separate accrual rule. See Fletcher, 985 A.2d at
684.

Esschem, however, asks us to ignore the significance of
the second sentence’s omission and to imply the General
Assembly’s rejection of the separate accrual rule into the first
sentence. But in interpreting a statute, “language should not be
implied where excluded,” and we will not contravene
legislative intent by reading into PUTSA § 5307 the very
language that the General Assembly chose to omit. Fonner v.
Shandon, Inc., 724 A.2d 903, 907 (Pa. 1999). Nor does the text
of the first sentence support Esschem’s reading. That sentence,
which the General Assembly retained, simply specifies when
the limitations period begins—which is when “the
misappropriation is discovered” or “should have been
discovered.” Unif. Trade Secrets Act § 6. It has no bearing on
whether continuing misappropriations are treated as a single
claim or multiple claims. That is a separate question that is
addressed by the UTSA’s second sentence, independent of the
first.

18
 The comments to the UTSA reinforce this reading of
PUTSA § 5307.9 The UTSA drafters made explicit that they
sought in § 6 to achieve two distinct results: (1) to “reject[] the
continuing wrong approach,” under which “the limitation
period with respect to a specific act of misappropriation begins
at the time that the act of misappropriation occurs”—that is, to
reject the separate accrual rule; and (2) to start the limitations
period upon “discover[y of] the existence of
misappropriation.” Unif. Trade Secrets Act § 6 cmt.
Esschem’s argument that the first sentence alone is sufficient
to achieve both of these results is thus not only atextual, but it
also renders the second sentence mere surplusage, contrary to
Pennsylvania’s canons of construction. See Matter of Emps. of
Student Servs., Inc., 432 A.2d 189, 195 (Pa. 1981).

We decline to adopt Esschem’s reading. Instead, we
glean from the text of the statutes that the UTSA adopted the
discovery rule and single-claim treatment for continuing
misappropriations, and the PUTSA embraced the UTSA’s
discovery rule but declined its single-claim treatment in favor
of the separate accrual rule.

9
“The comments or report of the commission . . . which
drafted a statute may be consulted in the construction or
application of the original provisions of the statute” as long as
those materials were available when the statute was drafted. 1
Pa. Cons. Stat. § 1939. Since the UTSA was last updated in
1985 and the PUTSA was passed in 2004, the Uniform Law
Commission’s comments are properly within the scope of our
analysis. See Advanced Fluid Sys., Inc. v. Huber, No. 1:13-
CV-3087, 2017 WL 2445303, at *11 n.7 (M.D. Pa. June 6,
2017).

19
 b. Pennsylvania’s Common Law
Rule of Separate Accrual

That the Pennsylvania legislature intended to follow the
separate accrual rule is all the more apparent when we consider
the omission of the UTSA’s second sentence against the
backdrop of Pennsylvania common law.

As explained by our former Chief Judge Edward Becker
when he sat on the District Court in Anaconda Company v.
Metric Tool & Die Company, Pennsylvania courts have
adopted the “property” view of trade secrets, under which the
basis of a claim for trade secret misappropriation is the
violation of a property right, in contrast to the “confidential
relationship” view, under which a misappropriation is based on
a violation of a duty of confidentiality. 485 F. Supp. 410, 425–
26 (E.D. Pa. 1980).10 And the property view provides the

10
See generally Van Prods. Co. v. Gen. Welding &
Fabricating Co., 213 A.2d 769, 780 (Pa. 1965) (rejecting the
confidential relationship view and holding that “[t]he starting
point in every case of [trade secret misappropriation] is not
whether there was a confidential relationship, but whether . . .
there was a trade secret to be misappropriated”); Den-Tal-Ez,
Inc. v. Siemens Capital Corp., 566 A.2d 1214, 1228 (Pa. Super.
1989) (noting that “Van Products has been construed to have
adopted the ‘property’ view of trade secrets” and that “[c]ases
decided more recently than Van Products make it clear that this
is still the proper focus in a trade secrets case”); see also Moore
v. Kulicke & Soffa Indus., Inc., 318 F.3d 561, 571 (3d Cir.
2003) (discussing Van Products and its progeny); Sims v. Mack
Truck Corp., 488 F. Supp. 592, 598 (E.D. Pa. 1980)

20
theoretical underpinnings for the separate accrual rule: While
a breach of confidentiality only occurs upon the initial
misappropriation, and the “fabric of the [confidential]
relationship once rent is not torn anew with each added use or
disclosure,” under the property view, a trade secret “is in the
nature of property[] [and] is damaged or destroyed by the
adverse use,” such that “each use is a new wrong.” Monolith
Portland Midwest Co. v. Kaiser Aluminum & Chem. Corp.,
407 F.2d 288, 293 (9th Cir. 1969). It is for that reason, as Judge
Becker held in applying Pennsylvania’s common law of trade
secrets, that “the statute of limitations for the tort of wrongful
use begins to run at the time of the wrongful use, and not at the
time of the initial misappropriation.” Anaconda, 485 F. Supp.
at 426. He recognized, in other words, that Pennsylvania’s
common law embraced the separate accrual rule.

Esschem takes issue with Anaconda’s holding on the
ground that no Pennsylvania court “ever applied the separate
accrual rule to common law trade secret claims.” Appellee’s
Br. 49–50. But Anaconda’s reasoning is sound, and although
no Pennsylvania court has explicitly discussed this reasoning,
other courts have, confirming the separate accrual rule’s roots
in the property view and its incompatibility with the
confidential relationship view. Compare Underwater Storage,
Inc. v. U.S. Rubber Co., 371 F.2d 950, 955 (D.C. Cir. 1966)
(recognizing that use of a trade secret gives rise to a cause of
action and allowing “suit for any use of the [trade] secret so
long as the use has occurred within the statutory period of
limitations immediately preceding the bringing of the action”),

(“Pennsylvania cleaves to the ‘property’ view of trade secrets
law.”).

21
with Monolith, 407 F.3d at 293 (holding that “[t]he cause of
action arises but once,” when the confidential relationship is
breached). As the Fifth Circuit summarized, “[j]urisdictions
that adopt the ‘breach theory’ of trade secret misappropriation,
as opposed to the ‘property theory,’ generally do not treat trade
secret misappropriation as a continuing tort.” Gen. Universal
Sys., Inc. v. HAL, Inc., 500 F.3d 444, 451 (5th Cir. 2007); see
also Cypress Semiconductor Corp. v. Superior Court, 163 Cal.
App. 4th 575, 582 (2008) (collecting cases and noting the
same).

We hold today that this common law rule was not
displaced by the PUTSA. The Pennsylvania Supreme Court
has long instructed that “provisions in derogation of the
common law are to be held strictly,” Gibson v. Commonwealth,
87 Pa. 253, 256 (1878), and that “[s]tatutes are never presumed
to make any innovation in the rules and principles of the
common law or prior existing law beyond what is expressly
declared in their provisions,” Rahn v. Hess, 106 A.2d 461, 464
(Pa. 1954). The PUTSA “expressly declare[s]” only that trade
secret misappropriation claims are subject to the discovery
rule. So by omitting the UTSA’s second sentence, the General
Assembly in effect codified Pennsylvania common law,
foregoing the single-claim approach in favor of the separate
accrual rule and harmonizing the PUTSA with Pennsylvania’s
property view of trade secrets. Far from abrogating the
common law rule of separate accrual then, the PUTSA was
drafted to preserve it.

22
 c. Pennsylvania’s Adoption of the
Restatement of Torts

Our reading of the PUTSA is also in line with the
approach taken by the Restatement of Torts, which courts in
Pennsylvania “have generally accepted . . . as the basic outline
for [Pennsylvania’s] trade secrets law.” O.D. Anderson, Inc. v.
Cricks, 815 A.2d 1063, 1070 (Pa. Super. Ct. 2003); see Coll.
Watercolor Grp., Inc. v. William H. Newbauer, Inc., 360 A.2d
200, 204 (Pa. 1976) (“The standard for determining whether
one is liable for the use or disclosure of another’s trade secret
is set forth in the Restatement, Torts, [§] 757 (1939) and in Van
Products . . . .”); Den-Tal-Ez, Inc., 566 A.2d at 1228 (noting
the same). The Restatement recognizes a cause of action not
only for the initial disclosure of a trade secret—the confidential
relationship view—but also for the wrongful use of a trade
secret, explaining that a trade secret holder “may be harmed
merely by the disclosure of his secret to others as well as by
the use of his secret in competition with him.” Restatement
(First) of Torts § 757 cmt. c (1939). As we just discussed, harm
arising from wrongful use is the hallmark feature of the
property view, and the Restatement embraces this theory by
providing a cause of action for both disclosure and use of a
trade secret. Id. § 757. Pennsylvania’s adoption of the
Restatement, then, lends further support to the conclusion that
Pennsylvania followed the separate accrual rule for
misappropriation claims prior to the PUTSA and that the
PUTSA was deliberately drafted to preserve it.

Ultimately, the General Assembly drafted the PUTSA
against the backdrop of Pennsylvania’s adoption of the
Restatement of Torts and its common law rule of separate
accrual rule for trade secret misappropriation claims, and it

23
deliberately omitted a sentence from the UTSA that rejected
the separate accrual rule. Adopting Esschem’s reading of the
PUTSA, and finding that it eliminated the separate accrual rule,
requires us to ignore legislative intent along with several
unambiguous directives from the Pennsylvania Supreme
Court. As a result, we hold that, under Pennsylvania law, the
separate accrual rule applies to continuing misappropriations.11

11
In so holding, we are mindful of the Philadelphia
Court of Common Pleas’ decision in WebDiet, Inc. v.
NutriSystem, Inc., in which it held that the “misappropriation
of trade secrets is [not] a continuing tort under the PUTSA,”
using “continuing tort” to refer to the separate accrual rule. No.
4055 Commerce Program, 2016 Phila. Ct. Com. Pl. LEXIS
133, at *18–19 (Pa. C.P. Apr. 12, 2016). However, the Court’s
treatment of this issue is but a few lines long and it relied solely
on the statement in the comment to § 6 of the UTSA that the
“Act rejects a continuing wrong approach.” Id. As we already
discussed, that statement in the comment is tied exclusively to
the sentence that the General Assembly chose to omit and is
inapposite to interpreting the text of PUTSA. Sitting in
diversity, we are “careful to avoid the ‘danger’ of giving ‘a
state court decision a more binding effect than would a court
of that state under similar circumstances.’” McKenna v. Ortho
Pharm. Corp., 622 F.2d 657, 662 (3d Cir. 1980) (citation
omitted). For the reasons we have discussed, we predict the
Pennsylvania Supreme Court would find WebDiet similarly
unpersuasive.

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 2. Esschem’s Arguments to the Contrary
Are Unavailing

Esschem raises two primary objections to this
application of the separate accrual rule. Neither is persuasive.

First, following the District Court’s lead, Esschem
argues that applying the separate accrual rule to a claim for a
continuing misappropriation “would nullify the . . . statute of
limitations provision.” Appellee’s Br. 41–42. A “continuing
misappropriation” subject to the separate accrual rule may be
a “continuing violation” in the colloquial sense, but it is
conceptually distinct from the “continuing violation doctrine.”
The District Court appears to have conflated the two.

The “continuing violation doctrine” applies only to a
narrow class of continuing violations for which courts have
concluded that a claim accrues over time as a result of a
“continuing pattern, practice, [or] policy” that is unlawful in
nature. Havens Realty Corp. v. Coleman, 455 U.S. 363, 381
(1982); see also Randall v. City of Phila. Law Dep’t, 919 F.3d
196, 198 (3d Cir. 2019) (“This doctrine applies ‘when a
defendant’s conduct is part of a continuing practice.’” (citation
omitted)). In such cases, “[n]o single act may be enough to
make out a claim[, s]o the statute of limitations runs from the
last act of the illegal conduct,” and a plaintiff “may sue for all
acts that make out his claim, even acts that predate the
limitations period.” Blake, slip op. at 10 (citing Nat’l R.R.
Passenger Corp. v. Morgan, 536 U.S. 101, 118, 122 (2002)).

The same is not true for continuing violations subject to
the separate accrual rule, where each violation “starts the
statutory period running again” and “the commission of a

25
separate new overt act [within the limitations period] generally
does not permit the plaintiff to recover for the injury caused by
old overt acts outside the limitations period.” Klehr v. A.O.
Smith Corp., 521 U.S. 179, 189 (1997). Because the separate
accrual rule is sometimes referred to with terminology similar
to “continuing violation,” see, e.g., Allied Erecting &
Dismantling Co. v. Genesis Equip. & Mfg., Inc., 805 F.3d 701,
704 (6th Cir. 2015) (noting that the “‘continuing wrong’
approach[] [is] also known as [the] ‘separate-accrual’ rule”), it
is perhaps unsurprising that courts and litigants confuse the
two, see Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663,
671 n.6 (2014) (warning against this exact mix-up); Blake, slip
op. at 9–11 (describing confusion in the parties’ arguments
about which doctrine applies).

But the separate accrual rule does not “eliminate the
statute of limitations altogether” or allow a plaintiff to “sit by
for nearly a decade and . . . override PUTSA’s three-year
statute of limitations,” Heraeus, 285 F. Supp. 3d at 863; it
merely allows the plaintiff to claim as separate
misappropriations those wrongful uses of a trade secret that
occurred within three years of the complaint’s filing. The
three-year statute of limitations thus remains in full force under
the separate accrual rule—and is far from “toothless,”
Appellee’s Br. 44.

Second, Esschem contends that Heraeus cannot benefit
from the separate accrual rule because it did not “assert [in its
complaint] distinct claims for each new batch of copolymers
that Esschem has sold to Biomet,” and cannot do so because
Esschem’s “ongoing sale of products” does not constitute a
continuing misappropriation. Appellee’s Br. 53. Because the
alleged misappropriation is not a continuing one, the argument

26
goes, but a singular one with lingering effects, Heraeus’ claim
is time-barred even under the separate accrual rule.

Esschem is right that an injury that is “the lingering
effect[] of past unlawful conduct” is “not a continuing violation
and . . . thus not actionable in [its] own right.” Elad Peled,
Rethinking the Continuing Violation Doctrine: The
Application of Statutes of Limitations to Continuing Tort
Claims, 41 Ohio N.U. L. Rev. 343, 366 (2015). And though
we recognize that courts, legislators, and academics may
disagree on the exact bounds of a continuing violation,12 we
are persuaded that Esschem’s alleged continued use of
Heraeus’ trade secrets is within those bounds.

The PUTSA’s broad definition of misappropriation
includes a trade secret’s “use,” which Black’s Law Dictionary
defines as “[t]he application or employment of something;
esp., a long-continued possession and employment of a thing
for the purpose for which it is adapted, as distinguished from a
possession and employment that is merely temporary or
occasional.” Black’s Law Dictionary (10th ed. 2014). The
wrongful use that Heraeus claims against Esschem is not
merely sales, but the continued employment of Heraeus’ trade

12
See, e.g., Ledbetter v. Goodyear Tire & Rubber Co.,
Inc., 550 U.S. 618, 633–37 (2007), abrogated by 42 U.S.C.
§ 2000e-5(e)(3)(A) (discussing whether, in an employment
suit alleging decreased pay based on gender, the initial
employment decision to pay the employee less or the issuance
of each reduced paycheck was the actionable violation); Peled,
41 Ohio N.U. L. Rev. at 379–81 (proposing a new framework
for defining continuing violations).

27
secrets in Esschem’s manufacturing process. Such conduct, if
proven, is well within the broad meaning of “use” and in line
with other courts’ understanding of continuing
misappropriations. See Underwater Storage, 371 F.2d at 951–
52 (use of misappropriated fuel tank designs to create similar
fuel tanks); Anaconda, 485 F. Supp. at 417–19 (use of a
machine that was designed based on misappropriated trade
secrets to produce telephone cord armor); Cadence Design
Sys., Inc. v. Avant! Corp., 57 P.3d 647, 648–49 (Cal. 2002) (use
of misappropriated source code to create new software). And
because the separate accrual rule applies, injuries Heraeus
suffered due to any such uses after September 2011 are
actionable under the PUTSA.

IV. Conclusion

For the foregoing reasons, we will reverse in part and
affirm in part the District Court’s grant of summary judgment
and remand for proceedings consistent with this opinion.

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