The US Court of Appeals for the Tenth Circuit affirmed the dismissal of federal and state trade secret misappropriation claims against three out-of-state defendants for lack of personal jurisdiction, finding that although the defendants purposefully directed activities toward Colorado, the plaintiffs failed to establish that their alleged injuries arose out of or related to those contacts. Flux Drive Inc. v. Rong, Case Nos. 25-1308; 26-1013; -1292 (10th Cir. Oct. 30, 2026) (Matheson, McHugh, Federico, JJ.)
Flux Drive alleged that a former senior design engineer, Michael Sparks, conspired with John Qiang Rong, Rong’s wife Leigh Wang, and Zyrcon Global Strategies to misappropriate proprietary technology related to industrial drive equipment and transfer it to PRD Technologies, a Chinese manufacturer. According to Flux, Rong facilitated the alleged scheme by serving as a technical liaison between Sparks and PRD, transmitting a master services agreement under which Sparks performed engineering work for PRD, and helping provide financing to Sparks.
Rong and Wang, both Illinois residents, maintained that Rong merely assisted with communications between Sparks and PRD, and that the $23,000 transferred to Sparks’ Colorado bank account was a short-term bridge loan that was repaid within a month.
Flux sued in the District of Colorado, asserting claims under the Defend Trade Secrets Act (DTSA), the Colorado Uniform Trade Secrets Act, and several common law theories. Rong, Wang, and Zyrcon moved to dismiss for lack of personal jurisdiction. The district court granted the motion and subsequently awarded the defendants attorneys’ fees under Colorado Revised Statutes § 13-17-201, which mandates reasonable attorneys’ fees when certain tort actions are dismissed on a pretrial motion under Rule 12(b). Flux appealed both the dismissal and the fee awards.
The Tenth Circuit first addressed whether the defendants had sufficient contacts with Colorado to support specific personal jurisdiction. The Court explained that the DTSA does not independently authorize nationwide service of process and that Flux therefore had to establish personal jurisdiction under Colorado law and constitutional due process principles.
The Tenth Circuit concluded that Flux had made a prima facie showing that the defendants purposefully directed activities toward Colorado. Rong repeatedly communicated with Sparks, knowing that Sparks resided in Colorado; Sparks testified that Rong was someone to whom he was expected to report; and the defendants transferred $23,000 to Sparks’ Colorado bank account. Those contacts were sufficient to satisfy the purposeful-direction requirement at the preliminary stage.
Flux nevertheless failed to establish that its claims arose out of or were related to those contacts. Although Rong allegedly transmitted the master services agreement, Flux did not explain how that agreement facilitated the theft of its trade secrets. Similarly, Flux offered no evidence that the $23,000 loan was used to purchase equipment employed in the alleged misappropriation, or that the defendants knew or controlled how the funds would be used. The Tenth Circuit emphasized that allegations of a supervisory relationship or participation in a broader scheme, without a factual connection between the forum contacts and the claimed injuries, were insufficient to establish specific jurisdiction. It therefore affirmed the dismissal.
Turning to attorneys’ fees, Flux argued that Colorado’s fee-shifting statute did not apply because Flux’s principal claims arose under federal and state trade secret statutes rather than common law tort theories. The Tenth Circuit rejected that distinction, explaining that the relevant inquiry was whether the action sounded in tort, not whether the claims arose under statutes or common law. Because trade secret misappropriation claims sound in tort, the Court concluded that § 13-17-201 applied notwithstanding the statutory basis of the claims.
Practice note: This decision underscores that establishing purposeful contacts with a forum is not sufficient to support personal jurisdiction in a trade secret case. Plaintiffs must also connect each defendant’s forum-directed activities to the alleged misappropriation.
