Author: Bob Meynardie

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Do I Have a Trade Secret?

A trade secret is business or technical information that is not generally known and not readily ascertainable through independent development or reverse engineering as long as the owner takes reasonable steps to protect the secrecy.

1. Does North Carolina protect trade secrets?

Yes. North Carolina has adopted an amended version of the Uniform Trade Secrets Act “(“UTSA”). The Trade Secrets Protection Act (NCTSPA) can be found at N.C. Gen. Statutes §§66-152 to 66-157. It was enacted in 1981.

2. How do I know if I have a protectable trade secret?

Under certain prescribed conditions, the following can be a protectable trade secret under the NCTSPA

  • business or technical information, including but not limited to:
    • a formula,
    • a pattern,
    • a program,
    • a device,
    • a compilation of information,
    • a method,
    • a technique, or
    • a process.

In order to be protectable, however, the secret must derive independent actual or potential commercial value from not:

  • being generally known or
  • readily ascertainable through independent development or
  • readily ascertainable through reverse engineering by persons who can obtain economic value from its disclosure or use; and
  • is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Further, North Carolina courts will consider an additional six factors to assist in determining whether material constitutes a trade secret:

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How Long Is Your Warranty?

North Carolina General Statute § 1-50(a)(5) provides that “[n]o action to recover damages based upon or arising out of the defective or unsafe condition of an improvement to real property shall be brought more than six years from the later of the specific last act or omission of the defendant giving rise to the cause of action or substantial completion of the improvement.” “Unlike an ordinary statute of limitations which begins running upon accrual of the claim, the period contained in the statute of repose begins when a specific event occurs, regardless of whether a cause of action has accrued or whether any injury has resulted.” Roemer v. Preferred Roofing, Inc., 190 N.C.App. 813, 816, 660 S.E.2d 920, 923 (N.C.App.,2008). As the court stated, if the action is not brought within 6 years, the plaintiff “literally has no cause of action.”

In Roemer, the plaintiff received a lifetime warranty on a roof that failed after seven years. The Plaintiff brought an action for damages for the breach of warranty. The Court of Appeals affirmed the dismissal. This decision was recently affirmed in Christie v. Hartley Construction, 745 S.E. 2d 60 (N.C. App. 2013). Where does this leave a building owner who is relying on a warranty longer than six years? You bargained for the longer protection and may have even chosen amongst competitors based upon how long the warranty lasted.

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