/>iTo safeguard valuable intellectual property, businesses can implement various protective measures, such as confidentiality agreements, access restrictions, and logging of access to material systems and information. However, once a trade secret is compromised — “the secret’s out of the can” — companies often find themselves relying on the legal system to resolve the fallout. In state courts, this typically involves invoking the protections of the Uniform Trade Secrets Act (UTSA). Nearly every state has adopted some version of this statute, with the exceptions of New York and North Carolina[1]. While each state’s version may differ slightly, the core provisions are consistent across jurisdictions.
One key feature of UTSA is that it preempts other legal claims and remedies related to trade secret theft. In other words, the UTSA provides the exclusive remedy for misappropriation of trade secrets, effectively overriding other potential legal actions that might otherwise be available. This preemption makes sense in many cases. After all, there is little need for a common law claim of misappropriation when a statute clearly outlines the rules, remedies, and consistent approach for addressing intellectual property theft. However, the application of UTSA is not always straightforward.
A recurring issue is whether UTSA preempts breach of contract claims. This question was recently addressed by the Sixth Circuit, which ruled in Metron Nutraceuticals v. Cook that a victim of trade secret theft can pursue legal remedies under both the Ohio UTSA (OUTSA) and breach of contract law.
In Metron, the company’s founder developed a unique nutritional supplement, which it asserts is its trade secret. As part of its efforts to bring the product to market, Metron invited certain consultants to its facility and shared details about the new supplement. However, before disclosing any business information, Metron ensured that each consultant signed a nondisclosure agreement. One of the consultants invited to the meeting was Christina Rahm Cook. Although Metron and Cook did not ultimately form a business relationship, Cook later developed a product that Metron alleged incorporated its proprietary “secret sauce” related to the supplement. Metron filed a lawsuit against Cook and other defendants, claiming violations of OUTSA, breach of contract, and other allegations of misconduct.
The trial court ruled that the breach of contract claim was based on the alleged misappropriation of trade secrets and was therefore preempted by the OUTSA. The court dismissed the breach of contract claim on summary judgment, reasoning that while the OUTSA preempted claims for trade secret misappropriation, it did not preempt contractual remedies. It is this tension the appeals court stepped in to address.
On appeal, the Sixth Circuit Court of Appeals reversed the trial court’s decision. After carefully analyzing the language of OUTSA, the court found that the District Court’s interpretation of the statute was overly fragmented, leading to an illogical outcome where the remedies survived but the underlying claim did not — an impractical and untenable position. The Sixth Circuit also noted that the primary aim of the UTSA is to create consistency across the states that have adopted it, and the trial court’s interpretation would have made Ohio an outlier in this regard.
While the issue of preemption remains a key point of debate across all UTSA jurisdictions, the Sixth Circuit’s ruling provides much-needed clarity. It reaffirmed that breach of contract claims — and the full range of remedies associated with them — remain an important tool for protecting trade secrets.
[1] New York follows the state’s common law on trade secrets matters, while North Carolina has its own statute, the North Carolina Trade Secrets Protection Act.
