In Board of Regents of the University System of Georgia v. One Sixty Over Ninety, the Georgia Court of Appeals held recently that a state entity is not immune from trade secret claims brought under the Georgia Trade Secrets Act. The ruling paves the way for courts in other states to deny sovereign immunity in trade secret cases.
One Sixty, a creative services agency that provides branding and strategy services, claims that it shared confidential information with the University of Georgia through recorded webcasts and a written response to UGA’s request for proposal for a branding initiative. One Sixty ultimately lost the branding initiative bid to Ologie, LLC, its direct competitor in the higher education community. Despite UGA’s assurances that One Sixty’s responsive information would remain confidential, a UGA employee allegedly shared One Sixty’s recorded presentations and a selection of One Sixty’s creative work samples with Ologie, which used this information to compete with One Sixty in other proposals.
One Sixty sued UGA for misappropriation of its trade secrets under the Georgia Trade Secrets Act. UGA moved to dismiss, arguing that One Sixty’s trade secret claims were barred by sovereign immunity, which shields the state from suits seeking to recover damages unless immunity is explicitly or implicitly waived. The trial court, however, disagreed and concluded that One Sixty’s trade secret claims could move forward against UGA.
Affirming the trial court, the appellate court determined that the language of the Georgia Trade Secrets Act does not contain an express or implied waiver of sovereign immunity. But that did not end the inquiry. The appellate court next examined Georgia tort law, the history of the Uniform Trade Secrets Act and claims available under the Georgia Trade Secrets Act. It ultimately concluded that a violation of the Georgia Trade Secrets Act is a tort that a litigant may pursue as a claim against a state entity under the Tort Claims Act — a statute that does contain an express waiver of sovereign immunity.
The One Sixty decision comes on the heels of a 2018 ruling from the U.S. District Court for Massachusetts in Fast Enterprises v. Pollack, which held that the Defend Trade Secrets Act does not create a federal cause of action for trade secret misappropriation against a state government. In that case, the district court noted that this issue “must be resolved by the state courts or the state legislature.” Litigants seeking to bring trade secret claims against state entities should therefore be mindful of the differences between federal law and state law, and should consider these distinctions in deciding whether to bring a state or federal trade secret claim.