Does a Trade Secret Plaintiff in North Carolina Have to Be the Owner of The Trade Secrets to Have Standing to Sue for Misappropriation?

An interesting motion was made in case pending in the North Carolina Business Court that alleged the defendants had stolen trade secrets of the plaintiff. During the discovery phase of the suit, the defendants learned that the plaintiff was not the “owner” of the purported trade secrets – plaintiff had an exclusive license to use them from the entity that DID own the technology that constituted the trade secrets.

North Carolina’s Trade Secret Protection Act provides that “the owner of a trade secret shall have remedy by civil action for the misappropriation of his trade secret.” This is different language than that contained in the model for the TSPA – which is the Uniform Trade Secrets Act. In the uniform act, the action may be brought by a “complainant.” Did the North Carolina legislature, in adopting the UTSA but modifying this language regarding who could bring a claim, intend that only the “owner” of a trade secret could bring a claim for misappropriation – not a licensee or other legal holder?

Judge Gale, in this case captioned SCR-TECH, LLC v. EVONIK ENERGY SERVICES LLC et al. , denied the motion to dismiss SCR-TECH’s motion on technical grounds that the original judge assigned to the case had already denied this same argument that plaintiff did not have standing. As such, this rendered Judge Gale powerless to overrule the original ruling and order a different result. But this outcome puts into direct conflict two legal/jurisprudential principles that are both foundational: (a) one judge of the same court cannot overrule the earlier ruling of another judge based on the same motion; and (b) the subject matter jurisdiction of a court can be challenged at any time, including by the court itself.

The Business Court got this one correct but it seems that this issue should be submitted to the appellate court and the case stayed to determine how the appellate courts interpret the word “owner” in this context. Should appeal suggest that the word “owner” means that what it says and there is obviously only one “owner” of a trade secret, I await the explanation regarding this language from the same NC TSPA: “The existence of a trade secret shall not be negated merely because the information comprising the trade secret has also been developed, used, or owned independently by more than one person, or licensed to other persons.”

We’ll keep an eye on this one for you.