Can an exclusive licensee of a trade secret sue for its misappropriation? Maybe, even though North Carolina’s version of the Uniform Trade Secrets Protection Act reserves the right to sue to an "owner." N.C. Gen. Stat. §66-153.
The Uniform Act, by contrast, allows a "complainant" to bring an action for misappropriation. The Fourth Circuit, applying Maryland’s version of the Uniform Act, has held that it is not necessary to be an "owner" to sue under that state’s law. DTM Research, LLC v. AT&T Corp., 245 F.3d 327, 332 (4th Cir. 2001).
Judge Gale addressed the question whether a licensee has standing to sue for misappropriation of its trade secret under the North Carolina Trade Secrets Protection Act just before the new year began, in SCR-Tech LLC v. Evonik Energy Services LLC, 2014 NCBC 71. Well, he kinda sorta addressed the question, because he refused to reconsider an earlier ruling in the case and never really delved into the issue.
Judge Tennille had been presented with the exact same issue in the SCR-Tech case back in 2010. (This case has the dubious distinction of being one of the longest running cases in the Business Court, having been filed in 2008). He denied a motion for summary judgment in which the Defendants argued that Plaintiff lacked standing to pursue its trade secrets claim because it was not the owner of the trade secrets at issue. That Motion was summarily denied without any discussion.
So, did that 2010 ruling settle the issue of whether non-owners of trade secrets can sue for misappropriation? In other words, was Judge Gale entitled to reconsider the issue?
Judge Gale refused to reconsider the issue, stating that he did not see any new argument that had not been raised before Judge Tennille, and that he was "mindful of the import of allowing or requiring one Business Court Judge to revisit the earlier order of another Business Court Judge without any material change in record, policy, or authorities." Order ¶15.
I would not read this Order as opening the door to trade secrets lawsuits by licensees, given the lack of discussion of the issue by Judge Tennille, and Judge Gale’s reluctance to tread on the prior ruling.
Can the Defendants appeal to the NC Supreme Court based upon the recent changes to the cases that may be appealed from the Business Court? Perhaps.
Let me observe that there were a lot of Business Court decisions in the final month of 2014 which I did not write about. I’ve been kind of distracted and will get back on top of things early this new year.