Sixth Circuit Confirms That Uniform Trade Secrets Act Broadly Preempts Related Claims
In Stolle Machinery Co. v. RAM Precision Indus., et al., Case No. 13-4103 (March 16, 2015), the Sixth Circuit Court of Appeals affirmed in part a district court’s decision dismissing trade secret and related claims as either time-barred or preempted by the Ohio Uniform Trade Secrets Act (“OUTSA”).
The case arose from an alleged theft of trade secrets, including technical drawings, by a former employee of the plaintiff based in China. The plaintiff learned as early as 2003 that the former employee was offering to produce products identical to the plaintiff’s at a substantial discount, and suspected that the former employee was using the plaintiff’s drawings to produce tooling to make competing products. Because of concerns about how to enforce its trade secrets rights in China, however, the plaintiff waited until 2010 to file claims against the former employee or a company he founded.
The Sixth Circuit agreed that trade secret claims against the former employee were barred by the four-year statute of limitations under the OUTSA. The Sixth Circuit reversed the grant of summary judgment by the district court as to claims against other companies, holding that the trial court erred by “treating the statute of limitations analysis identically” as to both the former employee and his new company. The court noted that the new company was not founded until 2004, and there was no evidence that conclusively demonstrated that the company had used the plaintiff’s trade secrets until 2006.
The Sixth Circuit affirmed the district court’s dismissal of tortious interference and conspiracy claims as preempted by the OUTSA. Noting that the Ohio Supreme Court has not yet ruled on the scope of the OUTSA’s preemption clause, the court predicted that the clause would have broad effect. The Sixth Circuit held that the OUTSA would preempt “causes of action that are based in some way on misappropriation of trade secrets,” including claims that are based on “the same operative facts.”