Recent Federal Court Ruling Refuses To Expand The Scope Of Georgia Trade Secret Act's Preemption Clause

• Published date: 07 April 2022
• Subject Matter: Intellectual Property, Trade Secrets
• Law Firm: Seyfarth Shaw LLP
• Author: Mr Eric Barton

It is well established that the Georgia Trade Secret Act ('GTSA') includes a preemption clause holding that the Act 'supersede[s] conflicting tort, restitutionary, and other laws of this state providing civil remedies for misappropriation of a trade secret.' O.C.G.A. ' 10-1-767(a). The GTSA does not, however, preempt (1) '[c]ontractual duties or remedies, whether or not based upon misappropriation of a trade secret'; (2) '[o]ther civil remedies that are not based upon misappropriation of a trade secret'; or (3) '[t]he definition of a trade secret contained in [another Georgia statute].' O.C.G.A. ' 10-1-767(b). In other words, the GTSA preempts any non-contractual claims that allege the misappropriation of a trade secret. See Bd. of Regents of the Univ. Sys. Of Georgia v. One Sixty Over Ninety, LLC, 830 S.E.2d 503, 510 n.13 (Ga. Ct. App. 2019) ('[T]he Trade Secrets Act superseded the common law tort of misappropriation [of trade secrets].')

Notwithstanding the plain language of the GTSA, Georgia courts have previously held that'in narrow instances'the Act's preemption clause actually goes further than what the Act explicitly states. More specifically, the Georgia Supreme Court has held that the GTSA also preempts 'lesser and alternate' claims based upon the same factual allegations as a plaintiff's claim for trade secret misappropriation. Robbins v. Supermarket Equip. Sales, LLC, 722 S.E.2d 55, 58 (Ga. 2012).

In Robbins, the plaintiff asserted a single GTSA claim for misappropriation of its business drawings. The trial court determined that the drawings in question did not constitute trade secrets. Nevertheless, the trial court (acting sua sponte) awarded plaintiff equitable relief under another statute and held that the GTSA did not preempt this relief because 'the drawings were not ultimately found to be trade secrets under the act.' Id. at 56, 58. On appeal, the Georgia Supreme Court overturned the trial court's ruling, holding that 'the GTSA preempts claims that rely on the same allegations as those underlying the plaintiff's claim for misappropriation of a trade secret. [. . .] Since the trial court's award of general equitable relief under [the other statute] was based on the same conduct as the GTSA claim, i.e., the misappropriation of the drawings, such relief was preempted by the [GTSA].' Id.

A particularly insightful analysis of the GTSA's preemption clause occurred last month in Angel Oak Mortgage Solutions, LLC v. Victoria Mastronardi, et al....