Business Court moves trade secret dispute forward

Summary judgment must be denied where it was unclear how the parties intended for an employee’s confidentiality obligation with respect to trade secret information to expire, the North Carolina Business Court has ruled.

Dr. Robert Roscigno was employed by United Therapeutics Corp. from March 1997 to June 2007. When he began his employment, he signed an agreement that contained a confidentiality provision.

After 10 years of service, he was offered a new employment agreement with United Therapeutics in 2007, which also included a confidentiality provision. Unlike the 1997 agreement, which was unrestricted by time, the confidentiality obligation in the 2007 agreement ended three years after Roscigno’s employment ended.

In addition to the confidentiality provision, the 2007 agreement featured other provisions that imposed confidentiality obligations on Roscigno, including Section 9, which spoke to the ownership of intellectual property, and Section 3, which referenced that he was also bound by the terms of the United Therapeutics employee handbook and technology policy.

Roscigno resigned from United Therapeutics in June 2007. He joined another company and worked on products unrelated to his work at United Therapeutics.

In 2015, however, Roscigno joined Liquidia, which competes with United Therapeutics, and discovered “old, personal thumb drives” that contained a mix of personal information and United Therapeutics-related information, which he accessed on a Liquidia computer.

United Therapeutics filed suit, alleging that Roscigno’s acquisition and use of United Therapeutics’ information while working for Liquidia constituted trade secret misappropriation.

Roscigno filed a motion for summary judgment, but Business Court Judge Julianna Theall Earp denied it.

Pursuant to the plain language of the 2007 agreement, no trade secrets existed, he told the court, because the three-year period had expired prior to his employment with Liquidia and United Therapeutics failed to take reasonable steps to ensure the secrecy of its purported trade secrets.

United Therapeutics pointed to its other efforts to secure the information, including the company policies in the employee handbook and its technology policy.

“On this record, the Court cannot conclude as a matter of law that UTC’s efforts to protect its trade secret information from disclosure were unreasonable,” the court wrote. “[A]n 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.”

As for the three-year period in the 2007 agreement, the court found the intent of the parties with respect to whether Roscigno was required to continue to protect trade secret information even though the confidentiality provision expired after three years was “unclear.”

“Section ten, which requires that Roscigno maintain confidentiality for three years post-employment, applies to Confidential Information generally and neither references trade secrets as a category nor specifies the subject matter of the information it purports to cover,” the court said. “On the other hand, section nine of the 2007 agreement, which requires that secrecy be maintained indefinitely, specifically uses the term trade secrets. Consequently, the parties, at least at times, treated trade secrets differently when it came to Roscigno’s confidentiality obligations than they did other forms of Confidential Information. Thus, 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.”

It should be up to a jury to decide whether the parties intended for trade secret protection to expire three years after the termination of Roscigno’s retirement, the court said.

Roscigno also argued that because a plaintiff may only recover actual damages that were caused by misappropriation under the North Carolina Trade Secrets Protection Act, and he took the position that no misappropriation occurred, United Therapeutics did not sustain any damages as a matter of law.

The court disagreed.

“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 has presented evidence to support its position that he never should have taken the documents containing trade secrets in the first place,” the court wrote. “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 June 2007, when Roscigno left its employ with company information stored on a flash drive in violation of its policy.”

The court denied Roscigno’s summary judgment motion.

Neither Raleigh attorney Eric M. David of Brooks, Pierce, McLendon, Humphrey & Leonard, who represented United Therapeutics, nor David E. Finkelson of McGuire Woods in Richmond, who represented Roscigno, responded to requests for comment.

The case is United Therapeutics Corporation v. Liquidia Technologies, Inc., No. 2024 NCBC 47.