It is well known that courts interpreting their respective states’ versions of the Uniform Trade Secret Act (“UTSA”) have not uniformly applied UTSA’s preemption provision. While some states hold that their acts only preempt claims involving information that constitutes a “trade secret,” others hold that their acts also preempt claims based on information that may not technically meet the “trade secret” definition. See, e.g., Spitz v. Proven Winners N. Am., LLC, 759 F.3d 724, 733 (7th Cir. 2014) (concluding that Illinois’s UTSA preempts claims “that are essentially claims of trade secret misappropriation, even when the alleged ‘trade secret’ does not fall within the Act’s definition”); Am. Biomedical Grp., Inc. v. Techtrol, Inc., 374 P.3d 820, 827 (Okla. 2016) (holding that Oklahoma’s UTSA preempts “conflicting tort claims only for misappropriation of a trade secret” and “does not displace tort claims for information not meeting this definition” (internal quotation marks and citation omitted)).
To date, the Louisiana Supreme Court has not ruled whether the preemption provision included in Louisiana’s version of the UTSA, the Louisiana Uniform Trade Secrets Act (“LUTSA”), only applies to claims based on actual trade secrets or if it also more broadly preempts claims based on non-trade secret information. Given this uncertainty, the 5th Circuit recently addressed the issue head-on in Brand Services, LLC v. Irex Corp., — F.3d —, 2018 WL 6073675 (November 21, 2018). Specifically, the court analyzed the circumstances in which a civilian law conversion claim survives LUTSA preemption.
Ultimately, the 5th Circuit reversed the lower court’s ruling and concluded that the “LUTSA preempts a civilian law claim for conversion of trade secrets, but does not preempt a civilian law conversion claim for confidential information that is not a trade secret. [. . .] A claim for conversion of trade secrets plainly seeks protection of competitively significant information. Thus, we conclude that the plain text of LUTSA would preclude a civilian law conversion claim involving confidential information that qualifies as a trade secret under LUTSA. We also conclude that if confidential information that is not a trade secret is nonetheless stolen and used to the unjust benefit of the thief or detriment of the victim, then a cause of action remains under Louisiana law.” Id. at *4. The 5th Circuit also noted that its decision is also in line with two Louisiana appellate courts that held the LUTSA does not preempt where non-trade secret information was at issue. Id. at *5.
So, while the Louisiana Supreme Court has still yet to address this preemption issue, the Brand Services v. Irex ruling, combined with prior Louisiana appellate court rulings, largely settles the scope of the LUTSA’s preemption for future disputes. The LUSTA only preempts claims based on actual trade secrets, not claims based on confidential information outside the definition of a trade secret.