Saturday, October 17, 2009, 10/17/2009 10:08:00 PM

Georgia Trade Secrets Act and Preemption

The Georgia Trade Secrets Act contains a provision that states that the GTSA supersedes “conflicting tort, restitutionary, an other laws of this state providing civil remedies for misappropriation of a trade secret.” GCGA § 10-1-767(a).

That provision was front and center in a recent opinion of the Georgia Court of Appeals, Professional Energy Management, Inc. v. Necaise, 2009 WL 3050598 (Ga.App. Sept. 25, 2009).

The fact pattern was pretty standard: the defendant Necaise left employment with the plaintiff company and founded his own company. He allegedly used the trade secrets of the former employer and stole customers for his new company.

Plaintiff, in addition to its trade secrets claim, brought claims for breach of fiduciary duty, tortuous interference with contractual relations, conversion, misappropriation of corporate opportunity, unjust enrichment, and constructive fraud.

The trial court dismissed all the claims except the GTSA claims on the grounds of statutory preemption. The trial court followed a decision in a federal case, Diamond Power Int’l, Inc. v. Davidson, 540 F.Supp.2d 1322 (N.D.Ga. 2007), which had ruled that where the “full extent” of a claim relied on the same allegations as those underlying a claim for misappropriation of trade secrets, the claims are “conflicting” under the GTSA and therefore precluded.

The court of appeals agreed with the federal court’s statement of the legal principle but found that each of the claims had to be reinstated because each of them, on the facts alleged, went beyond just trade secrets allegations. Thus, the “full extent” of the claims was not coterminous with the trade secrets claim.

The standard fact pattern of this case could make it a leading one on the contours of preemption under the Georgia Trade Secrets Act.


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