Contract – Confidentiality Provision – Trade Secret Misappropriation

A jury must decide whether the parties intended for trade secret protection to expire three years after the termination of defendant’s employment.

We denied defendant’s motion for summary judgment.

Plaintiff United Therapeutics Corporation (UTC) is in the business of researching and developing treatments for cardiovascular and pulmonary diseases, including pulmonary arterial hypertension (PAH). Defendant Dr. Robert Roscigno was employed by UTC from 1997 to 2007. When Roscigno began his employment, he signed an employment agreement (the 1997 Agreement) that included a confidentiality provision. After 10 years of service and following an “excellent performance review,” Roscigno was offered a new employment agreement with UTC (the 2007 Agreement). The 2007 Agreement, which superseded the 1997 Agreement, also included a confidentiality provision. In contrast to the confidentiality provision contained in the 1997 Agreement, which was unrestricted by time, the confidentiality obligation in the 2007 Agreement ended three years after Roscigno’s employment ended.

Roscigno resigned from UTC in 2007, specifically referencing the 2007 Agreement in his resignation letter. Following his resignation, Roscigno joined GeNO, LLC, where he worked on nitric oxide products unrelated to his work at UTC. In 2011, Roscigno began consulting for defendant Liquidia Technologies, Inc. He joined Liquidia as an employee in 2015. Liquidia competes with UTC in the development of treatments for PAH. After joining Liquidia, Roscigno “discovered that [he] had old, personal thumb drives in [his] desk drawers that contained a mix of personal information and UTC-related information.” Using a Liquidia computer, Roscigno accessed the information on one of these flash drives “to refamiliarize [himself] with the PAH field, [his] publications, and [his] prior work.”

UTC initiated this action, complaining, among other things, that Roscigno’s acquisition and use of UTC’s information while working for Liquidia constitutes trade secret misappropriation. It asserted claims under both state and federal law. In 2024, Roscigno sought summary judgment on plaintiffs’ state law claim for misappropriation of trade secrets, the only claim alleged against him.

Among other things, Roscigno argued he is entitled to summary judgment with respect to plaintiffs’ misappropriation of trade secrets claim because no trade secrets existed in the first place. Roscigno argued that since UTC implicitly consented to disclosure of its Confidential Information, including its trade secrets, he was at liberty to disclose the information, and he cannot be said to have misappropriated it after he went to work for Liquidia more than three years later. UTC contended the 2007 Agreement was not the only effort UTC undertook to maintain the secrecy of its information.

We could not conclude that UTC’s efforts to protect its trade secret information from disclosure were unreasonable. Other courts have likewise denied summary judgment on similar showings. From these allegations, we inferred that the Non-Disclosure Agreement was not the only effort on the part of plaintiff to maintain the information’s secrecy. Indeed, an enforceable nondisclosure agreement is only one tool among many that the owner of a trade secret may use to ensure secrecy, but such an agreement is not required.

The intent of the parties with respect to whether Roscigno was required to continue to protect trade secret information even though his obligation to protect “Confidential Information” as defined in the 2007 Agreement expired three years after termination is unclear. It is not clear that they intended for his confidentiality obligation with respect to trade secret information to expire three years after his employment ended. When an agreement is ambiguous, and the intention of the parties is unclear, interpretation of the contract is for the jury to decide whether the parties intended for trade secret protection to expire three years after the termination of Roscigno’s employment.

Finally, Roscigno argued he is entitled to summary judgment with respect to UTC’s misappropriation claim because, under the North Carolina Trade Secrets Protection Act, a plaintiff may only recover actual damages that were caused by misappropriation. Even if the 2007 Agreement implicitly permitted Roscigno to disclose UTC’s trade secrets three years after termination of his employment—which itself is an issue for the jury—UTC presented evidence to support its position that he never should have taken the documents containing trade secrets in the first place. By statute, trade secret misappropriation is defined to include the unlawful acquisition of a trade secret, as well as its disclosure. Therefore, a jury could conclude that misappropriation occurred, and UTC was damaged as early as 2007, when Roscigno left its employ with company information stored on a flash drive in violation of its policy.

Denied.

United Therapeutics Corporation v. Liquidia Technologies Inc. (Lawyers’ Weekly No. 020-047-24, 16 pp.) (Julianna Theall Earp, J.) 2024 NCBC 47. Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Eric M. David, Jim W. Phillips, Jr., and Kasi W. Robinson; McDermott Will & Emery, LLP, by Douglas H. Carsten, Arthur P. Dykhuis, Katherine Pappas, Joshua Revilla, Courtney Seams, and Lillian J. Spetrino; and Goodwin Proctor, LLP, by William C. Jackson, for plaintiffs United Therapeutics Corporation and Lung Biotechnology PBC; Parker Poe Adams & Bernstein, LLP, by Stephen V. Carey, Corri A. Hopkins, and Andrew P. Tabeling; and Cooley, LLP, by Daniel Knauss, Kyung Taeck Minn, Lauren Strosnick, Brittany N. Cazakoff, Jonathan Davies, Adam Pivovar, Rachel L. Preston, and Sanya Sukduang, for defendant Liquidia Technologies, Inc.; McGuire Woods, LLP, by David E. Finkelson, Miles O. Indest, Mark E. Anderson, Corinne S. Hockman, and Kyle S. Smith, for defendant Robert Roscigno. North Carolina Business Court