Sunday, August 26, 2012

Preempt . . . Preempt . . . Preempt

So, you bring claims for Idea Misappropriation; Unfair Competition; Breach of Oral Contract; Breach of Implied Covenant of Good Faith and Fair Dealing; Negligence; Misappropriation of Trade Secrets; Conversion of Trade Secrets; and Promissory Estoppel. All claims are based on the same set of facts. Any problems?

The Uniform Trade Secrets Act was designed, by the Commissioners, to “be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this Act among states enacting it.”  The general purpose has been stated as follows:
[T]o create a uniform business environment [with] more certain standards for protection of commercially valuable information, and to preserve a single tort action under state law for misappropriation of trade secret as defined in the statute and thus to eliminate other tort causes of action founded on allegations of misappropriation of information.
Other tort causes of action are the issue. One Federal Court judge has explained that finding something other than a trade secret and then applying other tort claims would destroy the general purpose of uniformity.
If the UTSA’s preemption provision only preempted claims of misappropriation of information that meets the statutory definition of a “trade secret,” the provisions purpose would be undermined. In every instance where a plaintiff could not meet the statutory requirements of the Uniform Act, the court would be forced to re-analyze the claim under the various common law theories. Such a result would undermine the uniformity and clarity that motivated the creation and passage of the Uniform Act.
Firetrace USA, LLC v. Jesclard, 800 F.Supp.2d 1042, 1048–49 (D.Ariz.2010). So, what does this all mean when I tell you my idea for a wrestling show, and then you do it without me?

An Indiana Appellate Court say PREEMPT. The Indiana Court followed a famous Hawaii case and found that the majority of jurisdictions applied the USTA's preemption provision as “abolish[ing] all free-standing alternative causes of action for theft or misuse of confidential, proprietary, or otherwise secret information falling short of trade secret status ( e.g. idea misappropriation, information piracy, theft or commercial information, etc.).” HDNET LLC v. North American Boxing Council  2012 WL 3250551, 4 (Ind.App.) (Ind.App.,2012); BlueEarth Biofuels, LLC v. Hawaiian Elec. Co., 123 Hawai‘i 314, 235 P.3d 310, 319 (Haw.2010);  Hauck Mfg. v. Astec Indus., 375 F.Supp.2d 649, 655 (E.D.Tenn.2004)).

The UTSA is intended to foster uniformity in the definition of state laws, and a party may not read this design out of the statutory scheme under the guise of “plain language” or any other rule of construction.

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