Anything But Uniform: A State-By-State Comparison of the Key Differences of the Uniform Trade Secrets Act Sid Leach Snell & Wilmer LLP AIPLA Annual Meeting Washington, D. C. October 23, 2015
Uniform Trade Secrets Act • Completed by the Uniform Law Commissioners in 1979 • Based upon “the commercial importance of state trade secret law to interstate business” and a finding that uniform trade secret protection was “urgently needed. ” • Three main goals – • • • uniform definition of a “trade secret” uniform definition of “misappropriation” uniform statute of limitations (3 years)
Uniform Trade Secrets Act “States without the UTSA now depend on the common law to resolve disputes over misappropriation of trade secrets. This creates great uncertainty for industry, particularly for companies that conduct business in more than one state, since the courts in different jurisdictions have made conflicting decisions on trade secret issues. ” “Under the common law, some fundamental concepts are disturbingly unclear -- including the precise definition of a ‘trade secret, ’ and the question of rights and equitable relief for businesses whose secrets have been improperly obtained and used. ” “Litigation over trade secrets frequently involves parties from more than one state. Variations in state law have created confusion about which law should be applied, and encourage litigants to ‘forum shop’ looking for the most favorable jurisdiction. Adoption of the UTSA by all states would eliminate these problems. ”
Uniform Trade Secrets Act • According to the Uniform Law Commissioners website, it has been enacted in 47 states • Three states are listed as not having enacted the UTSA: • • • New York Massachusetts North Carolina
Uniform Trade Secrets Act • Massachusetts – HB 32 introduced in the state legislature (Massachusetts already has a statute governing trade secrets - Mass. Gen. Laws Ann. ch. 93, § 42) • New York – SB 3770 introduced in the state legislature (only common law jurisdiction remaining) • North Carolina – enacted the North Carolina Trade Secrets Protection Act in 1981 (uses some language from the UTSA but is substantially different)
Uniform Trade Secrets Act This might lead one to conclude that the law is uniform in 47 states. If you came to that conclusion, you would be mistaken. My test for uniformity: Can you give legal advice to a client without knowing what state law applies, and not expose yourself to the risk of a malpractice claim.
Uniform Trade Secrets Act One reason for nonuniformity -- there is not one uniform act – there are two. Uniform Law Commissioners amended the language of the uniform act in 1985 • “In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for a misappropriator's unauthorized disclosure or use of a trade secret. ”
Uniform Trade Secrets Act Some states enacted the 1979 version, and the state legislatures did not enact the 1985 amendments: Washington Alaska Arkansas Connecticut Indiana Louisiana
Uniform Trade Secrets Act Some states enacted language from both the 1979 version and the 1985 version Illinois (injunction 1979 version; damages & preemption 1985 version) Michigan (injunction 1979 version; damages & preemption 1985 version)
Uniform Trade Secrets Act In many states, the state legislatures: • made substantive changes in the language of the statute; • did not enact sections of the uniform act; or • enacted additional statutory provisions
Uniform Trade Secrets Act “Typically, when a Legislature models a statute after a uniform act, but does not adopt the particular language of that act, courts conclude the deviation was deliberate and that the policy of the uniform act was rejected. ” K. C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. , 171 Cal. App. 4 th 939, 956, 90 Cal. Rptr. 3 d 247, 259 (Ct. App. 2009) (citation and internal quotes omitted).
Uniform Trade Secrets Act When a provision is absent from the version of the uniform trade secrets act enacted in a state, it “suggests that the legislature intentionally omitted it. ” Orca Communications Unlimited, LLC v. Noder, 236 Ariz. 180, 184, 337 P. 3 d 545, 549 (2014).
Uniform Trade Secrets Act EXAMPLE: I will give a dollar to the first person who already knows without looking it up and can tell me who was the 21 st President of the United States? Is this a trade secret in Arizona? – No. Is this a trade secret in California? – Yes. Is this a trade secret in Alabama? – No, (and for different reasons from Arizona)
Arizona definition of a trade secret: "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
California definition of a trade secret: "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
California definition of a trade secret: The California legislature deleted the “not readily ascertainable” requirement from the definition of a “trade secret” because the legislature thought it would muddy the meaning of the term, and invite parties to speculate on the time needed to discover a secret. The effect of that deletion is “to exclude from the definition only that information which the industry already knows, as opposed to that which the industry could easily discover. ” ABBA Rubber Co. v. Seaquist, 235 Cal. App. 3 d 1, 286 Cal. Rptr. 518 (1991) (emphasis added).
California definition of a trade secret: Therefore, under California law, information can be a trade secret even though it is readily ascertainable, so long as it has not yet been ascertained by others in the industry. ABBA Rubber Co. v. Seaquist, 235 Cal. App. 3 d 1, 286 Cal. Rptr. 518 (1991) (emphasis added).
Alabama law - trade secret is information that: “a. Is used or intended for use in a trade or business; “b. Is included or embodied in a formula, pattern, compilation, computer software, drawing, device, method, technique, or process; ” “c. Is not publicly known and is not generally known in the trade or business of the person asserting that it is a trade secret; ” “d. Cannot be readily ascertained or derived from publicly available information; ” “e. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; and” “f. Has significant economic value. ”
Uniform Trade Secrets Act EXAMPLE: Your client has a secret computer program that was taken by a former employee. Although the computer program does not display a notice of copyright or have any other proprietary or confidential markings, all employees know it is a trade secret. You could file suit in Idaho or in Nevada. Which state should you choose?
Idaho definition of a trade secret: The Idaho legislature enacted a statutory definition for a “computer program, ” and included that term in the list of information that may constitute a protectable “trade secret. ” The definition of a “computer program” for purposes of the Idaho Trade Secrets Act includes the requirement that the computer program: “Has prominently displayed a notice of copyright, or other proprietary or confidential marking, either within or on the media containing the information. ”
Uniform Trade Secrets Act In Alabama, a defendant can move for summary judgment on grounds that the information is not a trade secret because it could be readily ascertained or derived from publicly available information, even if the defendant actually obtained the information from the plaintiff. In New Jersey, a defendant cannot defend on grounds that proper means to acquire the trade secret existed at the time of misappropriation.
Uniform Trade Secrets Act Under the USTA, trade secret information must not be generally known or readily ascertainable. In Nebraska, information is not a trade secret if it is known, or if it is ascertainable. Nebraska eliminated the word “generally” before known, and eliminated the word “readily” before ascertainable. Thus, if information is ascertainable in Nebraska, it is not a trade secret, even if the information is not readily available.
Uniform Trade Secrets Act California, Oregon and Illinois eliminated the requirement that the information not be readily ascertainable. Under the Colorado statute, information must be “secret and of value” and the owner “must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes. ”
Uniform Trade Secrets Act In North Carolina, information must derive “independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use. ”
Documents in Publicly Available Trash The Connecticut statute defines “improper means” to explicitly include “searching through trash. ” Alabama defines improper means to include: “[o]ther deliberate acts taken for the specific purpose of gaining access to the information of another by means such as electronic, photographic, telescopic or other aids to enhance normal human perception, where the trade secret owner reasonably should be able to expect privacy. ”
![Documents in Publicly Available Trash “[I]t is rather difficult to find that one has](https://present5.com/presentation/5aca16e8c4a009c278bdd1053a61c293/image-26.jpg "Documents in Publicly Available Trash “[I]t is rather difficult to find that one has")
Documents in Publicly Available Trash “[I]t is rather difficult to find that one has taken reasonable precautions to safeguard a trade secret when one leaves it in a place where, as a matter of law, he has no reasonable expectation of privacy from prying eyes. ” Frank W. Winne & Son, Inc. v. Palmer, No. 91 -2239, 1991 WL 155819, at *4 (E. D. Pa. Aug. 7, 1991). “In this case, there are disputes of fact as to whether Alpha. Med adequately protected the secrecy of its documents, either by shredding them, not placing them in publicly available trash, not freely disseminating them, requiring confidentiality agreements, or any other reasonable means. ” Alphamed Pharmaceuticals Corp. v. Arriva Pharmaceuticals, Inc. , No. 03 -20078 CIV, 2005 WL 5960935, at *4 (S. D. Fla. Aug. 24, 2005)
Uniform Trade Secrets Act Under the North Carolina statute, the existence of a trade secret is not negated merely because other people have independently developed the same information. Under the Nevada statute, the existence of a trade secret is negated if the information is generally known or readily ascertainable by proper means “by the public or any other persons…”.
Uniform Trade Secrets Act South Carolina enacted an additional provision: A trade secret may consist of a simple fact, item, or procedure, or a series or sequence of items or procedures which, although individually could be perceived as relatively minor or simple, collectively can make a substantial difference in the efficiency of a process or the production of a product, or may be the basis of a marketing or commercial strategy. The collective effect of the items and procedures must be considered in any analysis of whether a trade secret exists and not the general knowledge of each individual item or procedure. ”
Uniform Trade Secrets Act Minnesota enacted an additional provision providing that the existence of a trade secret is not negated merely because an employee is not given express or specific notice that information is a trade secret if under the circumstances the employee should know it is a secret.
Uniform Trade Secrets Act Prior to the USTA, courts followed the Restatement (First) of Torts § 757, which provided six factors to consider in determining whether information is a “trade secret”. The USTA was intended to replace these “disturbingly unclear” six factors with a statutory definition of a “trade secret”.
Uniform Trade Secrets Act However, courts in many USTA states still consider the six factors in the Restatement (First) of Torts § 757 in determining whether information is a “trade secret. ” E. g. , Network Telecommunications, Inc. v. Boor-Crepeau, 790 P. 2 d 901, 903 (Colo. Ct. App. 1990); Con. Agra, Inc. v. Tyson Foods, Inc. , 342 Ark. 672, 677, 30 S. W. 3 d 725, 729 (2000); Powercorp Alaska, LLC v. Alaska Energy Authority, 290 P. 3 d 1173, 1187 & n. 47 (Alaska 2013); Enterprise Leasing Co. v. Ehmke, 197 Ariz. 144, 149 n. 6, 3 P. 3 d 1064, 1069 n. 6 (Ct. App. 1999); Basic American, Inc. v. Shatila, 133 Idaho 726, 735, 992 P. 2 d 175, 184 (1999); Liebert Corp. v. Mazur, 357 Ill. App. 3 d 265, 276 -77, 827 N. E. 2 d 909, 921 -22 (2005); Optic Graphics v. Agee, 87 Md. App. 770, 591 A. 2 d 578, 585 (1991); Secure Energy, Inc. v. Coal Synthetics, LLC, 708 F. Supp. 2 d 923, 926 (E. D. Mo. 2010).
Uniform Trade Secrets Act EXAMPLE: Your client has to file an answer in Iowa to a complaint alleging trade secret misappropriation. Your client tells you he had consent to use the information. You file an answer denying the allegations of the complaint. Your malpractice insurance carrier faints when it learns what you did. Why?
Uniform Trade Secrets Act Under the USTA, the definition of “misappropriation” includes the requirement that the use or disclosure was “without express or implied consent” Thus, under the USTA, it is generally the plaintiff’s initial burden to show that the use of the information was without the trade secret owner’s express or implied consent, because it is an element of the claim.
Uniform Trade Secrets Act The Iowa legislature eliminated “without express or implied consent” from the definition of “misappropriation” The Iowa legislature enacted a statute making implied or express consent a defense. Under Iowa law, you must allege express or implied consent as an affirmative defense.
Uniform Trade Secrets Act New Jersey enacted a different definition of “misappropriation, ” and eliminated from the definition any provision concerning a trade secret acquired by accident or mistake. Under the Alabama statute, the owner of a trade secret has no recourse against someone who innocently learns of a trade secret.
Uniform Trade Secrets Act Virginia and Wisconsin modified the definition of “misappropriation” to include disclosure or use of a trade secret of another without express or implied consent by a person who acquired the trade secret by accident or mistake. They eliminated the requirement in the uniform act that (a) the person “knew or had reason to know” that the information was a trade secret, and (b) that knowledge of it was acquired by accident or mistake, and (c) that this occurred before a material change in the person’s position.
Uniform Trade Secrets Act Nevada modified the definition of “improper means” to limit any breach of a duty to maintain secrecy to a “willful” breach or “willful” inducement of a breach. Thus, a breach of a duty to maintain secrecy that was not willful is not misappropriation under Nevada law.
Uniform Trade Secrets Act Virginia enacted a definition of “improper means” that includes “use of a computer or computer network without authority. ” Georgia, Illinois, Texas, Oregon, and New Jersey enacted statutes explicitly stating that reverse engineering is not improper means.
Damages Measured by Reasonable Royalty The states that enacted the 1979 version do not have a statutory provision for damages measured by a reasonable royalty. Connecticut, Indiana, Louisiana, Arkansas, Washington, and Alaska
Damages Measured by Reasonable Royalty Under the 1985 version of the USTA, a plaintiff can elect for reasonable royalty damages in any case. California, Georgia, Illinois and Indiana only allow a reasonable royalty as the measure of damages if neither actual loss nor unjust enrichment are provable.
Damages Measured by Reasonable Royalty Virginia allows damages to be measured by a reasonable royalty only “[i]f a complainant is unable to prove a greater amount of damages by other methods of measurement” And under those circumstances, the statute provides that a reasonable royalty must be the exclusive measure of damages.
Damages Measured by Reasonable Royalty Wisconsin allows damages to be measured exclusively by the imposition of liability for a reasonable royalty only if the complainant cannot by any other method of measurement prove an amount of damages which exceeds the reasonable royalty.
Damages Measured by Reasonable Royalty In Montana, a reasonable royalty can be the measure of damages for a misappropriator’s unauthorized use of a trade secret, but not the misappropriator’s disclosure.
Damages Measured by Reasonable Royalty Oregon modified the damages provisions to say that “a complainant is entitled to recover damages adequate to compensate for misappropriation. ” The statute sets a reasonable royalty as the floor for a damages award, providing that damages “shall not be less than a reasonable royalty for the unauthorized disclosure or use of a trade secret”
Damages Measured by Reasonable Royalty Ohio adopted modified language providing that a court may impose “a reasonable royalty that is equitable under the circumstances considering the loss to the complainant, the benefit to the misappropriator, or both. ”
Uniform Trade Secrets Act EXAMPLE: Your client has a trade secret that was misappropriated by a competitor. It is a compelling case of willful and malicious misappropriation. You could file suit in Arkansas, Nebraska, or in Mississippi. Which state should you choose?
Uniform Trade Secrets Act Arkansas eliminated the exemplary damages provision from the statute enacted in that state. Exemplary or punitive damages are not recoverable under the Arkansas Trade Secrets Act. Jenkins v. APS Insurance, LLC, 2013 Ark. App. 746, 431 S. W. 3 d 356, 363 (Ct. App. 2013).
Uniform Trade Secrets Act Nebraska did not enact the provision of the USTA allowing for exemplary damages. Nebraska did not enact the provision of the USTA allowing for attorneys fees.
Uniform Trade Secrets Act The USTA permits exemplary damages, but limits the amount to twice the amount awarded as compensatory damages. Mississippi enacted the provision allowing for exemplary damages, but the Mississippi legislature eliminated any limit on the amount of exemplary damages that may be awarded.
Uniform Trade Secrets Act The USTA provides for exemplary damages up to 2 times actual damages. Arkansas, Louisiana, Nebraska & Michigan – no exemplary damages Colorado – 1 times actual damages Virginia – no more than 2 times or $350 K Ohio – 3 times actual damages Mississippi, North Carolina, Missouri, Montana & Vermont – no limit
Uniform Trade Secrets Act The USTA allows exemplary damages for “willful and malicious misappropriation. ” The USTA does not define “willful and malicious. ” Pennsylvania enacted a statutory definition of “willful and malicious, ” which is defined to mean “[s]uch intentional acts or gross neglect of duty as to evince a reckless indifference of the rights of others on the part of the wrongdoer, and an entire want of care so as to raise the presumption that the person at fault is conscious of the consequences of his carelessness. ”
Uniform Trade Secrets Act Some states enacted statutory language different from the USTA “willful and malicious” standard. Nevada – “if willful, wanton or reckless misappropriation or disregard of the rights of the owner of the trade secret exists. ” South Carolina - “[u]pon a finding of wilful, wanton, or reckless disregard of the plaintiff's rights. ” Missouri - if the misappropriation is “outrageous because of the misappropriator’s evil motive or reckless indifference to the rights of others. ”
Uniform Trade Secrets Act The case law is split concerning the burden of proof required to show exemplary damages. Trandes Corp. v. Guy F. Atkinson Co. , 996 F. 2 d 655, 666 (4 th Cir. 1993) (Maryland law) (clear and convincing); Centrol, Inc. v. Morrow, 489 N. W. 2 d 890, 896 (S. D. 1992) (clear and convincing); Zawels v. Edutronics, Inc. , 520 N. W. 2 d 520, 523 -24 (Minn. App. 1994) (preponderance of the evidence). In Texas, the statute provides that the burden of proof is by clear and convincing evidence.
Uniform Trade Secrets Act The USTA provides for an award of attorneys fees: 1. a bad faith claim of misappropriation 2. willful and malicious misappropriation 3. motion to terminate injunction made or resisted in bad faith
Uniform Trade Secrets Act North Carolina & Virginia allow attorneys fees under more limited circumstances (not when a motion to terminate an injunction is made or resisted in bad faith) South Carolina allows attorneys fees if “willful misappropriation exists. ” (need not be malicious) Vermont awards attorneys fees to prevailing party Idaho, Missouri & Nebraska – not allowed Alaska did not enact USTA attorneys fee provision
Attorneys Fees in Alaska is the only state that follows the English Rule that the prevailing party is generally entitled to an attorneys fee award. The state courts adopted a rule for awarding fees. In diversity cases in federal courts in Alaska, the Alaska state rule is applied and awards of attorney’s fees are routinely granted. This includes trade secret cases governed by state law. Alaska Rent-A-Car, Inc. v. Avis Budget Group, Inc. , 738 F. 3 d 960, 973 -74 (9 th Cir. 2013), cert. denied, 134 S. Ct. 644 (2013).
Uniform Trade Secrets Act Alabama allows attorneys fees if a claim of misappropriation is made or resisted in bad faith. California & New Jersey allow attorneys fees and expert witness fees Montana allows attorneys fees and “reasonable costs” Pennsylvania allows attorneys fees and “expenses and costs”
Uniform Trade Secrets Act The USTA does not define “bad faith. ” California case law defined “bad faith” to require objective speciousness of the plaintiff’s claim, as opposed to frivolousness, plus the plaintiff’s subjective bad faith in bringing or maintaining the claim. “An objectively specious claim is one that is completely unsupported by the evidence or one that lacks proof as to one of its essential elements. ” JLM Formation, Inc. v. Form Pac, No. C 04– 1774 CW, 2004 WL 1858132, at *2 (N. D. Cal. Aug. 19, 2004).
Uniform Trade Secrets Act “Subjective misconduct exists where a plaintiff knows or is reckless in not knowing that its claim for trade secret misappropriation has no merit. ” “A court may determine a plaintiff’s subjective misconduct by examining evidence of the plaintiff’s knowledge during certain points in the litigation and may also infer it from the speciousness of a plaintiff’s trade secret claim. ” JLM Formation, Inc. v. Form Pac, No. C 04– 1774 CW, 2004 WL 1858132, at *2 (N. D. Cal. Aug. 19, 2004).
Uniform Trade Secrets Act California cases interpreting the meaning of “bad faith” in the attorney’s fee provision have been followed in other states. Berry v. Hawaii Express Service, Inc. , No. 03 -000385 SOM/LEK, 2007 WL 689474, at *13 -15 (D. Haw. March 2, 2007), aff’d, 291 Fed. Appx. 792 (9 th Cir. 2008). Contract Materials Processing, Inc. v. Kataleuna GMBH Catalysts, 222 F. Supp. 2 d 733, 744 (D. Md. 2002). Degussa Admixtures, Inc. v. Burnett, No. 1: 05–CV– 705, 2007 WL 274219, at *7 (W. D. Mich. Jan. 30, 2007), aff’d, 277 Fed. Appx. 530 (6 th Cir. 2008).
Uniform Trade Secrets Act New Jersey enacted a statutory definition of “bad faith” that is different: “For purposes of this section, ‘bad faith’ is that which is undertaken or continued solely to harass or maliciously injure another, or to delay or prolong the resolution of the litigation, or that which is without any reasonable basis in fact or law and not capable of support by a good faith argument for an extension, modification or reversal of existing law. ”
Uniform Trade Secrets Act The USTA provides a 3 -year statute of limitations (enacted in 38 states – 80% success rate). 2 years - Alabama 4 years - Maine, Nebraska, Ohio & Wyoming 5 years - Georgia, Illinois & Missouri 6 years - Vermont
Uniform Trade Secrets Act Georgia and Tennessee adopted different provisions concerning continuing misappropriation by multiple persons. Alabama, Pennsylvania and North Carolina did not enact the provision in the uniform act that a continuing misappropriation constitutes a single claim for purposes of the statute of limitations.
Uniform Trade Secrets Act There is a split of authority concerning the statute of limitations when the same defendant later commits a second act of misappropriation. In California, a claim concerning the second act of misappropriation is barred, even if the first act of misappropriation was relatively inconsequential. Intermedics, Inc. v. Ventritex, Inc. , 822 F. Supp. 634, 654 (N. D. Cal. 1993). The Colorado Supreme Court disapproved of this rule, and held that the correct approach is to determine whether the second act of misappropriation involves the same trade secret. Gognat v. Ellsworth, 259 P. 3 d 497, 502 -03 (Colo. 2011).
Preemption of Common Law The USTA cannot replace the common law with a uniform law of trade secrets unless it preempts the common law. The uniform act includes preemption language in section 7. Iowa did not enact section 7. As a result, there is no preemption in Iowa. New Mexico and Nebraska also did not enact section 7.
Preemption of Common Law In the states that enacted section 7, there is a significant split of authority concerning the scope of preemption. A number of courts have held that the uniform trade secrets act preempts common law tort claims based upon misappropriation of confidential information that does not rise to the level of a “trade secret. ” Other states have held that there is no preemption of common law claims based upon confidential information.
Preemption of Common Law New Jersey adopted a statute explicitly providing that the remedies provided in the New Jersey Trade Secrets Act “are in addition to and cumulative of any other right, remedy or prohibition provided under the common law or statutory law of this State, ” except that the New Jersey statute supersedes conflicting civil remedies for misappropriation of a trade secret.
Preemption of Common Law There is a split among the states concerning whether fraud claims are preempted. Compare Chatterbox, LLC v. Pulsar Ecoproducts, LLC, 2007 WL 1388183, at *4 (D. Idaho May 9, 2007) (fraud claim not preempted), and Hecny Transp. , Inc. v. Chu, 430 F. 3 d 402, 404 -05 (7 th Cir. 2005) (fraud claim not preempted), with Weins v. Sporleder, 605 N. W. 2 d 488 (S. D. 2000) (fraud claim preempted), cert. denied, 531 U. S. 821 (2000).
Preemption of Common Law There is a split among the states concerning whether the common law respondeat superior doctrine is displaced by the uniform trade secrets act. Compare Infinity Products, Inc. v. Quandt, 810 N. E. 2 d 1028, 1034 (Ind. 2004) (respondeat superior doctrine is displaced), with Newport News Industrial v. Dynamic Testing, 130 F. Supp. 2 d 745, 751 (E. D. Va. 2001) (respondeat superior doctrine is not displaced).
Uniform Trade Secrets Act Section 8 of the USTA provides that the act shall be applied and construed to effectuate its purpose to make the law uniform. Arizona, Georgia, Hawaii, Idaho, Illinois, Iowa, Minnesota, North Dakota, Maine, New Mexico, Nebraska, Nevada, New Jersey, Alabama, and North Carolina did not enact section 8. The Alabama Trade Secrets Act provides that it “should be construed to be consistent with the common law of trade secrets, ” not the uniform trade secrets act.
Uniform Trade Secrets Act In Georgia, a former employee is free to use any customer information he may have committed to memory. Avnet, Inc. v. Wyle Labs. , Inc. , 263 Ga. 615, 437 S. E. 2 d 302 (1993). In most states, a former employee cannot use memorized trade secrets of his previous employer. Burt Dickens & Co. v. Bodi, 144 Ill. App. 3 d 875, 882, 494 N. E. 2 d 817, 821 (1986) (“It is well established that an employee breaches his confidential relationship with his employer where he acts in a manner inconsistent with his employer’s interest during his employment in that he surreptitiously copies or memorizes trade secret information for use after his termination in the solicitation of his employer’s customers. ”).
Uniform Trade Secrets Act In some states, the plaintiff only need establish that it is in rightful possession of the trade secrets that are the basis for the claim of misappropriation. Metso Minerals Inds. v. FLSmidth-Excel LLC, 733 F. Supp. 2 d 969, 972 (E. D. Wis. 2010). In North Carolina, the plaintiff must be the owner of the trade secret. N. C. Gen. Stat. § 66 -153 (2015).
Other Conflicts in Case Law Many states have adopted the inevitable disclosure doctrine. E. g. , Pepsi. Co, Inc. v. Redmond, 54 F. 3 d 1262, 1269 (7 th Cir. 1995). California and Maryland have rejected the inevitable disclosure doctrine. Whyte v. Schlage Lock Co. , 101 Cal. App. 4 th 1443, 125 Cal. Rptr. 2 d 277, 291 (2002); Le. Jeune v. Coin Acceptors, Inc. , 381 Md. 288, 849 A. 2 d 451, 471 (Md. 2004).
Uniform Trade Secrets Act As a result of: 1. State legislatures enacting different versions of the uniform act, enacting modifications to the uniform act, rejecting portions of the uniform act, and/or enacting additional statutory provisions. 2. Courts reaching conflicting decisions concerning preemption. 3. Courts interpreting their state statutes differently, or reaching different results on areas not explicitly covered by the uniform act. The law of trade secrets now appears to be less uniform than it was in 1979 before the uniform trade secrets act was proposed for enactment in the 50 states.
Sid Leach Snell & Wilmer LLP One Arizona Center 400 East Van Buren Phoenix, Arizona 85004 -2202 Direct Line: (602) 382 -6372 Email: sleach@swlaw. com Firm Website: www. swlaw. com
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