In a recent decision, Wilcox Indus. Corp. v. Hansen, 2012 U.S. Dist. LEXIS 63668 (D.N.H. May 7, 2012), a federal judge for the District of New Hampshire interpreted the New Hampshire Uniform Trade Secrets Act’s (the “NHUTSA”) preemption provision to preempt all non-contract claims based on unauthorized use of information even if the information at issue is not a trade secret. 

In Wilcox Indus. Corp. v. Hansen, plaintiff Wilcox, a manufacturer of military equipment, filed a complaint against former consultant Mark Hansen and his new employer, Advanced Life Support Technologies, Inc. (“ALST”), alleging misappropriation of trade secrets, unfair competition, and other state law claims after Hansen incorporated Wilcox’s confidential and trade secret information into ALST’s competing life support device. Wilcox also alleged that defendants solicited its existing and prospective customers to purchase ALST’s competing product by using confidential information that Wilcox had entrusted to them, all in violation of a non-disclosure and nonsolicitation agreement and a royalty agreement. Defendants moved to dismiss all claims. The Court granted in part and denied in part the motion to dismiss, and found that plaintiff’s claims for unjust enrichment and breach of fiduciary duty were preempted by the NHUTSA.

By its plain language, the NHUTSA “displaces conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret.” The only exceptions are claims for contractual remedies, criminal remedies, and other remedies not based on misappropriation. 

The District Court adopted the Supreme Court of New Hampshire’s holding in Mortgage Specialists, Inc. v. Davey, 153 N.H. 764, 776 (2006), finding that a claim survives preemption only to the extent that it alleges wrongful conduct independent of any alleged unauthorized use of information, provided that the independent allegations are sufficient to plead all elements of the claim. In Mortgage Specialists, Inc. v. Davey, the Supreme Court of New Hampshire reasoned that the preemption provision was designed “to preserve a single tort action under state law for misappropriation of a trade secret as defined in the statute and thus to eliminate other tort causes of action founded on allegations of misappropriation of information that may not meet the statutory standard for a trade secret.”

In essence, the District Court determined that the NHUTSA broadly classifies information either as a protected trade secret, as defined in the statute, or as unprotectabe information. The full text of the opinion can be found here. Ken Vanko’s Non-Compete Blog also has a nice overview of the decision and its implications.