Fiduciary Duties Support Trade Secret Protection in Gilk v. Fishe

Introduction: When Boat Builders, Trade Secrets, and Fiduciary Duties Collide

It’s not every day that a dispute over high-tech skiff boats turns into an important lesson
in trade secret law. But that’s exactly what happened in Gilk v. Fisher (sometimes
mis-typed as “Fishe”), a 2025 decision out of the District of Minnesota involving a closely
held company, innovative boat designs, and investors who allegedly tried to spin off the
technology into competing entities.

At the heart of the case is a deceptively simple question: what counts as “reasonable
efforts” to protect trade secrets when you don’t have a thick stack of NDAs and written
policies? The court’s answer: in the right business context, fiduciary duties among
member-owners can help do some of that heavy lifting.

In this article, we’ll unpack what happened in Gilk v. Fisher, why fiduciary duties
mattered so much, and what this means for businesses that rely on confidential technology,
know-how, and corporate opportunities. We’ll also walk through practical, real-world
experiences and scenarios that show how these principles play out beyond the courtroom.

Background: The Fly Boatworks Dispute and the F2 Carbon Skiff

The case centers on Fly Boatworks, LLC, a closely held company founded in 2012 by Daniel and
Samuel Gilk to design and build skiff boats. Years later, they partnered with Mark Fisher to
develop a new, advanced skiff known as the F2 Carbona boat that relied on specialized
composite technology and proprietary “Skiff Innovations” integrated into the hull and other
components.

By 2021, Fisher and other investors had joined the company under an operating agreement,
becoming member-owners. They weren’t just passive financiers; they sat inside the tent,
receiving confidential details about Fly Boatworks’ designs and business strategy. After the
F2 Carbon prototype was developed and limited production began, Fly Boatworks entered
negotiations with Martac Corp., a company interested in integrating the F2 Carbon technology
into its M18 unmanned vessel platform.

According to the Gilks, things went sideways once real money was on the table. Instead of
pushing the Martac opportunity through Fly Boatworks, the investor group allegedly formed
new entitiesAxocon Polymers, LLC and Marine Aerospace Composites LLCto divert the
technology and the Martac deal away from Fly Boatworks and into their own pockets. They even
filed a patent application naming themselves as inventors, allegedly incorporating Fly
Boatworks’ proprietary innovations.

The Gilks responded with a lawsuit, seeking a temporary restraining order (TRO) and
preliminary injunction for, among other things, misappropriation of trade secrets and
diversion of a key corporate opportunity. The investors fired back with their own TRO,
claiming the Gilks improperly accessed Fisher’s email account to obtain confidential and
privileged information.

Trade Secret Law 101: Reasonable Efforts Are Non-Negotiable

To understand why Gilk v. Fisher matters, you need a quick refresher on trade
secret basics. Under both the Uniform Trade Secrets Act (UTSA) and the federal Defend Trade
Secrets Act (DTSA), a trade secret must meet three core criteria:

• It’s information (technical or business) that has economic value because it isn’t generally known.
• Others could get value from using or disclosing it.
• The owner has taken reasonable measures to keep it secret.

That last element is often the battleground. Courts regularly ask: did the company do enough
to protect this information? Examples of “reasonable measures” can include:

• Non-disclosure agreements (NDAs) with employees, contractors, and partners
• Access controls, passwords, and encryption on digital systems
• Confidentiality labels, employee training, and written policies
• Physical security such as locked facilities or limited lab access

Courts increasingly stress that simply hoping people will be discreet isn’t enough.
Some decisions have rejected trade secret claims where a company relied only on passwords or
vague expectations of confidentiality without formal measures. In that environment, the
Gilk decision is notable for its willingness to treat fiduciary duties among
member-owners as part of the “reasonable efforts” equation.

Fiduciary Duties in Closely Held LLCs: More Than Just Business Etiquette

In a closely held LLC, member-managers typically owe fiduciary duties of loyalty and care to
the company and to each other. The duty of loyalty generally means you can’t:

• Divert corporate opportunities for personal gain
• Compete unfairly with the company while you’re still an insider
• Misuse or misappropriate confidential information

The duty of care, in turn, requires members to make informed, prudent decisions and to act in
good faith. Many jurisdictions also recognize a duty of confidentiality as part ofor closely
aligned withthe duty of loyalty. In everyday language: if you’re on the inside of a small,
member-managed company, you’re supposed to treat the company’s secrets as the company’s
secrets, not your personal launchpad for a competing venture.

These duties can sometimes be modified by operating agreements, but they are rarely removed
entirely in closely held businesses, where trust and shared risk are fundamental. That’s the
backdrop in which the Gilk court evaluated whether Fly Boatworks had taken
“reasonable efforts” to protect its trade secrets.

How Gilk v. Fisher Connected Fiduciary Duties and Trade Secret Protection

The key move by the court in Gilk v. Fisher was recognizing that the fiduciary
duties owed among the five member-owners could, in the specific context of this small,
closely held LLC, satisfy the “reasonable efforts” requirement for trade secret protection.

The court granted a preliminary injunction in favor of the Gilks and made several important
findings:

• The F2 Carbon design and related “Skiff Innovations” qualified as trade secrets. The information
  wasn’t generally known or readily ascertainable, even though some boats had been marketed and sold.
• Evidence showed that even an insider like Fisher continued seeking engineering help from the Gilks,
  underscoring that the technology wasn’t easily reverse-engineered.
• The Martac business opportunity belonged to Fly Boatworks, not to the spin-off entities created by
  the investors.
• The Gilks’ reliance on fiduciary duties among the member-owners was sufficient, in this context,
  to show reasonable efforts to maintain secrecy, especially combined with emails implying
  confidentiality.

That doesn’t mean every startup can skip NDAs and simply point to fiduciary duties. What the
court really emphasized was the business context. In a closely held, member-managed
LLC where everyone is a fiduciary insider, the relational and legal duties among owners can
play a meaningful role in the secrecy analysis.

Equity Steps In: Preliminary Injunction and Irreparable Harm

The court also had to consider whether the Gilks would suffer irreparable harm without an
injunction. The answer was a resounding “yes.” The Martac deal and the opportunity to bring
the Skiff Innovations to market first were not easily quantifiable in dollars. Losing the
chance to be first to market, especially with a niche, innovative product, can cause damage
that money alone can’t fix later.

The court concluded that:

• Fly Boatworks risked losing a unique, non-monetary competitive advantage if Axocon moved ahead
  with the Martac integration.
• The Martac contract was potentially essential to Fly Boatworks’ survival, giving the case
  high stakes beyond ordinary lost profits.
• The investors’ creation of multiple entities to capture the opportunity suggested an attempt to
  bypass their obligations and capitalize on Fly Boatworks’ trade secrets.

On the flip side, the investors’ cross-motion for a TRO over Fisher’s email account went
nowhere. The evidence suggested that the account was used for company business, that the
Gilks likely had authorized access at some point, and that any improper access issues could
be sorted out later with evidentiary rulings. The alleged harm wasn’t ongoingthe password
had already been changed.

Why This Case Matters for Trade Secret Owners

The most eye-catching aspect of Gilk v. Fisher is the court’s willingness to treat
fiduciary duties as part of the “reasonable measures” calculus. That’s not the same thing as
saying, “You never need NDAs again.” But it does highlight several important takeaways:

1. Context is everything. In a small, closely held LLC, relationships and fiduciary
   duties can carry more weight than in a large company with diffuse ownership and many employees.
2. Fiduciary duties can reinforce secrecy. Duties of loyalty and confidentiality make
   it harder for insiders to argue that they were “free” to use or divert company information.
3. Courts look at behavior, not just paperwork. Emails referring to information as
   confidential and the way the parties actually treated the technology can support a finding
   that reasonable measures were taken.
4. Diversion of corporate opportunities is risky. Using new entities to capture
   a deal that rightfully belongs to the LLC can be both a fiduciary breach and evidence of
   misappropriation.

In other words, if you’re an insider thinking about quietly spinning off a business built on
your company’s know-how, Gilk is a big, flashing “Do Not Enter” sign.

Practical Lessons for Businesses and Startups

For business owners, the decision offers a mix of reassurance and caution:

1. Don’t Treat Fiduciary Duties as a Complete Substitute for Policies

Yes, Gilk shows that fiduciary duties can help satisfy the reasonable-efforts
requirementbut this was a very specific scenario. In many other cases, courts have refused
trade secret protection where companies failed to implement concrete protective measures.
Even in a small LLC, it’s wise to:

• Use NDAs and confidentiality clauses in operating agreements
• Limit access to sensitive design files and business plans
• Label key documents as “confidential” or “trade secret”
• Document who sees what and when, especially with potential investors

2. Align Operating Agreements with Trade Secret Strategy

In member-managed LLCs, your operating agreement is more than a formality. It can:

• Explicitly recognize that certain technologies, designs, or business opportunities are
  company property
• Spell out duties of confidentiality and non-use of company information for personal gain
• Clarify what happens if a member leaves or wants to pursue side projects

When fiduciary language and confidentiality clauses point in the same direction, you give
courts a far simpler roadmap if a dispute arises.

3. Be Careful with Spin-Off Entities and Side Deals

Creating new entities to pursue opportunities isn’t inherently wrong, but when those
opportunities came from the LLC’s trade secrets or negotiations, you’re stepping onto thin
ice. Courts look hard at:

• Who developed the technology and at whose expense
• Who initiated and advanced negotiations with third parties
• Whether insiders disclosed or used confidential information to benefit a competing entity

The more it looks like you quietly moved the crown jewels into a new company, the more likely
you are to face claims for both trade secret misappropriation and breach of fiduciary duty.

Experiences and Real-World Scenarios: How These Principles Play Out

To make the lessons from Gilk v. Fisher more concrete, imagine a handful of real-world
scenarios that mirror common experiences for business owners and professionals.

Scenario 1: The Friend-and-Family Startup

Picture a small engineering startup formed by two siblings and a college friend. They have an
LLC, a basic operating agreement downloaded from the internet, and a shared understanding
that “what happens in the company stays in the company.” No formal NDAs. No written trade
secret policy. Just trust, late nights, and too much takeout.

Years later, the college friend decides to pitch a similar product to one of the company’s
key customers through a new side company. He uses design files he helped create while at the
LLC and argues that because there were no NDAs, the information wasn’t truly protected.

A court looking at this scenario might, like in Gilk, weigh the nature of the
relationship and the fiduciary duties owed between the members. If the operating agreement
characterizes the company’s IP as company property and recognizes member fiduciary duties,
those duties can support a finding that the information was meant to be kept confidential
even if the paper trail isn’t perfect. Still, the startup could have made its position far
clearer with simple written NDAs and explicit confidentiality language from the beginning.

Scenario 2: The Investor Who Knows Too Much

In another common experience, a small business brings on an investor who becomes a
member-owner. That investor sits in strategy meetings, receives forecast models, source
code, technical drawings, and potential deal pipelines. The investor is subject to fiduciary
duties as a member, but there’s no stand-alone confidentiality agreement.

If the investor later forms a new company and tries to close a key deal based on the
original LLC’s technology and opportunities, the company could rely on both trade secret
law and fiduciary principlesmuch like the Gilks did. The investor might argue that because
there were no NDAs, the information wasn’t protected, but a court could conclude that a
member-owner cannot simply treat shared confidential information as a personal free-for-all.

In practice, lawyers often advise businesses to stack these protections: fiduciary duties,
NDAs, and clear IP ownership clauses all pointing in the same direction. That way, when you
go to court (or better yet, settle before getting there), you’re not relying on a single
thin reed.

Scenario 3: The “We’re Too Small for Policies” Mindset

Many small companies have a version of the same experience: policies feel like big-company
bureaucracy, so they operate on trust. That works until someone leavesor until a major
growth opportunity appears and incentives shift.

Gilk v. Fisher offers a partial safety net for closely held companies that didn’t
build a comprehensive compliance program from day one. But it’s also a warning: the court
spent a lot of time parsing relationships, context, and facts. Relying on a judge to rescue
your trade secrets after the fact is a far riskier strategy than building a basic protection
framework early on.

Scenario 4: Lessons for Counsel and In-House Teams

Lawyers and in-house counsel who work with closely held companies often see a familiar
pattern:

• Founders underestimate the value of their know-how until a big customer bites.
• Investors want access to everything, but resist restrictions on future ventures.
• Operating agreements are treated as static documents instead of living risk-management tools.

The experience of watching deals unraveland then litigating over trade secrets and
fiduciary breacheshas pushed many legal teams to hard-wire trade secret protection into:

• Operating agreements and buy-sell provisions
• Board and member meeting minutes noting confidential topics
• Routine use of NDAs for potential partners and investors
• Clear documentation of who created which innovations and at whose expense

When a dispute finally erupts, these layers of protection help courts see the story
clearly: who owed what duties, what information was truly secret, and how the parties were
supposed to behave.

Conclusion: Fiduciary Duties Are Powerfulbut Not a Free Pass

Gilk v. Fisher is a striking example of how fiduciary duties can support trade
secret protection in a modern, closely held business. The court recognized that when a small
group of member-owners share confidential technology and business opportunities, their
obligations to each other are part of what keeps that information “secret” in the eyes of
the law.

For businesses, the takeaway is both encouraging and sobering. Encouraging, because courts
will respect the reality of how closely held companies operate and won’t automatically punish
them for not having Fortune 500–level compliance structures. Sobering, because relying on
fiduciary duties alone is a gamble. The smartest move is to pair those duties with clear
contracts, policies, and practical safeguards that document exactly what is confidential and
how it must be treated.

In short: fiduciary duties can be a strong ally in trade secret protectionbut they work best
when they’re part of a broader, intentional strategy, not the only thing standing between
your company’s crown jewels and the open market.