Trade Secret Two-Step
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According to the complaint filed in Krawiev v. Manly, No. 252A16 (N.C. 2018), Happy Dance studio hired two European dancers and procured their visas in exchange for the dancers’ agreeing not to work for a competitor. Not only did the dancers waltz right out of Happy Dance, they took Happy Dance’s dance-production ideas, marketing, and customer-contact information to a competitor. That competitor then marketed Happy Dance’s productions as its own and lured away customers.
Happy Dance sued, bringing a smattering of claims including one for misappropriation of trade secrets. The Trial Court dismissed the claim because the allegations were too general. All Happy Dance said was that the trade secrets taken were “original ideas and concepts for dance productions, marketing strategies and tactics, as well as student, client and customer lists.”
The North Carolina Supreme Court agreed with the Trial Court’s dismissal of the claim. And, for the first time, it addressed how to plead a misappropriation claim: “To plead misappropriation of trade secrets, a plaintiff must identify a trade secret with sufficient particularity so as to enable a defendant to delineate that which he is accused of misappropriating.”
“There is no presumption that a thing is a secret,” reasoned the Court. You’ve got to plead why the information wasn’t otherwise accessible or generally known. And you also must plead that you undertook efforts that were “reasonable under the circumstances to maintain its secrecy.”
You might think that the particularity standard requires too much (the dissent in Manly did: “the majority validates a heightened pleading standard for a claim in which public disclosure of confidential information is a real concern for plaintiffs.”). Your complaint (a presumptively public document) doesn’t have to give away the very secrets you’re trying to protect, but you must provide “additional descriptors to put defendants and the courts on notice” of the information allegedly misappropriated. Keep in mind that trade-secret discovery may disclose some of the information you want to protect, but your lawyer can help you guard that information from prying eyes. The particularity requirement will likely spur additional pleadings-stage motions practice but shouldn’t stop any meritorious case.
DuRant & DuRant, P.A. can help if you’ve got a misappropriation issue. It is located at 2107 Farlow Street, Myrtle Beach, South Carolina 29577. Frank DuRant is licensed in South Carolina. Julian DuRant is licensed in South Carolina and North Carolina.