Wu-Tang Clan's Once Upon A Time In Shaolin Album May Be More Groundbreaking Than Anticipated As Court Allows Trade Secret Claims To Proceed

In a first of its kind order, the Eastern District of New York denied defendant Martin Shkreli's motion to dismiss plaintiff PleasrDAO's federal and state claims of misappropriation of confidential information/trade secret as it relates to WuTang Clan's unreleased album Once Upon a Time in Shaolin.¹

The Wu-Tang Clan, a world-famous American hip hop collective formed in Staten Island, New York in the 1990's challenged the devaluation of music in the digital era by producing their Once Upon a Time in Shaolin album (the "Album') - an album with only one hard copy that has never been publicly released. Wu-Tang Clan leader Robert "RZA" Diggs and producer Tarik "Cilvaringz" Azzougarh packaged the Album in a boxed set including: (i) the only existing hard copy of the record album; (ii) a nickel and silver cased box set; (iii) a gold leafed certificate of authenticity; (iv) a pair of customized audio speakers; and (v) a 174-page leather bound manuscript volume containing lyrics, credits and anecdotes on the production and recording of each song.

In 2015, the producers sold the Album to Martin Shkreli, a former pharmaceutical executive, for $2 million dollars, making the Album one of the most expensive musical works ever sold. The sale was executed in an Original Purchase Agreement, wherein Shkreli received the physical Album in the boxed set, 50% of the copyrights and renewal copyrights in the recordings and musical compositions. In return, the purchase agreement required Shkreli to abide by several usage restrictions for a period of 88 years. The purchase agreement allowed for Shkreli to duplicate the Album for private use, but prohibited duplication, replication and exploitation of the Album for any commercial or other non-commercial purposes, not including the private or public exhibition or playing of the Album, with or without charge, in locations such as Shkreli's home, museums, art galleries, restaurants, bars, exhibition spaces, or similar spaces not customarily used as venues for large musical concerts. The purchase agreement gave Shkreli the right to sell the Album to another party under the same terms and conditions as described therein.

Shkreli's ownership of the album was short-lived. In 2017, Shkreli was convicted on two counts of securities fraud and one count of conspiracy to commit securities fraud. Shkreli was sentenced to 7 years in prison and ordered to pay over $7 million in proceeds. The court entered a forfeiture order to satisfy the judgement, requiring Shkreli to turn over to the United States his interest in certain assets, including the Album. The forfeiture order also required Shkreli to refrain from taking any actions that would affect the availability, marketability or value of the Album, and ensure the Album was preserved and maintained in good and marketable condition, not damaged, diluted or diminished by himself or any of his representatives.

In 2021, PleasrDAO, a Cayman Island company that collects and publicly displays culturally significant media and materials to create 'experiences', purchased the Album for approximately $4 million. In 2022, Shkreli was release from prison and began posting on various social media platforms and participating in online live steams wherein he admitted to playing the Album for his followers, admitted to retaining copies of the Album, and offered to send copies of the Albums to various users.

In response, PleasrDAO filed suit against Shkreli for violations of the Defend Trade Secrets Act (DTSA) and misappropriation of confidential information/trade secret, among other claims.² The elements required to establish misappropriation of trade secrets under the DTSA and New York law are fundamentally the same. The DTSA defines 'trade secret' to include 'all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes,' so long as: (1) the owner has taken reasonable measures to keep such information secret; and (2) the information derives independent economic value from not being generally known to another person who can obtain economic value from the disclosure or use of the information.

In determining whether information qualifies as a trade secret, New York courts consider the following six factors:

1. The extent to which the information is known outside of the business;
2. The extent to which it is known by employees and others involved in the business;
3. The extent of measures taken by the business to guard the secrecy of the information;
4. The value of the information to the business and to its competitors;
5. The amount of effort or money expended by the business in developing the information;
6. The ease or difficulty with which the information could be properly acquired or duplicated by others

As the Court notes, this case involves an unusual application of the trade secret doctrine and statutes. PleasrDAO alleges that the trade secret at issue is the unreleased Album, however the Album does not fit within the business information or data category that is traditionally protectable as a trade secret, nor does it clearly resemble a secret recipe or formula used to make a product.

This case does not involve the first time a court has considered whether trade secret protection extends to unreleased musical works. In a 2017 case,³ the District of Minnesota held that a plaintiff's trade secret claim related to five unreleased Prince songs was unlikely to succeed on the merits because the only economic value the recordings derive are from the right to sell the recordings, thus the plaintiff could not realize any independent economic value by keeping the recordings secret.

Similarly, the Central District of California⁴ held that an unreleased Janet Jackson song was not a trade secret because the plaintiff failed to identify anything in or about the song that derived independent economic value by keeping the recordings secret.

Nevertheless, the Eastern District of New York was willing to apply the factors to determine if PleasrDAO sufficiently plead that the Album is a trade secret under the DTSA and New York law and ultimately held that PleasrDAO indeed adequately alleged that the Album derives independent economic value from its secrecy. The Court explained that unlike the plaintiffs in the cases mentioned above, PleasrDAO has a unique business model wherein it collects culturally significant media and materials to create 'ecosystem experiences.' The independent economic value of the Album comes from PleasrDAO's ability to exploit is exclusively to create experiences that its competitors cannot, rather than from traditional commercial distribution of music.

The Eastern District of New York's most recent order expands how courts may recognize and categorize trade secrets – possibly opening a new avenue of protection for artists and authors. While only in its early stages, this case is one to watch as it could provide guidance on how authors and artists can protect their unreleased works. If you or a client need help navigating intellectual property issues associated with copyrights and trade secrets, please reach out to a member of TC's IP group.

Footnotes

1 PleasrDAO v Shkreli, Case No. 1:24-cv-04126-PKC-MMH (E.D.N.Y Sept. 25, 2025)

2 PleasrDAO filed action against Shkreli for: (1) enforcement of the Forfeiture Order; (2) violations of the DTSA; (3) misappropriation of confidential information/trade secrets; (4) tortious interference with prospective economic advantage; (5) unjust enrichment; and (6) recovery of chattel/replevin. Along with its Complaint, PleasrDAO filed a motion for a temporary restraining order ("TRO"), which the Court granted.

3 Paisley Park Enters., Inc. v. Boxill, 253 F. Supp. 3d 1037, 1041 (D. Minn. 2017)

4 Anderson v. Jackson, No. 04-CV-2649 (CAS) (JWJx), 2005 WL 8166024 (C.D. Cal. Aug. 8, 2005)

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