Consistent with many jurisdictions which have adopted the Uniform Trade Secrets Act, Delaware’s version expressly preempts common law claims based on the misappropriation of trade secrets. See 6 Del. C. § 2007. In a recent opinion, Vice Chancellor Slights of the Court of Chancery dismissed a claim for unjust enrichment based on defendant’s alleged misappropriation and use of plaintiff’s confidential and proprietary data because Delaware’s trade secret statute “occupies the filed” and preempts claims for common law unjust enrichment.
This recent case involved a proprietary sensor network created by plaintiff, 250ok. This technology helps email marketers avoid spam traps designed to block their email marketing efforts. 250ok entered into a “Reseller Agreement” with defendant SparkPost to market and sell 250ok’s product with SparkPost’s own products and services. Approximately 4 years later, SparkPost allegedly reverse engineered 250ok’s technology and offered its own competitive product. Not surprisingly, 250ok sued SparkPost, alleging that it had misappropriated its proprietary information.
250ok asserted three claims: (I) breach of the Reseller Agreement; (II) misappropriation of trade secrets under the Delaware Uniform Trade Secrets Act (the “DUTSA”); and (III) unjust enrichment. SparkPost moved to dismiss Count III—for unjust enrichment—as preempted by the DUTSA. The issue presented by SparkPost’s motion was whether a common law claim could be dismissed as preempted before the court determined that an actual trade secret exists. The court recognized that Delaware had “joined the ‘majority view’” that preemption under the DUTSA includes common law claims based on misappropriation of business information, even in cases in which the claim does not meet the statutory definition of trade secret and in which the term “trade secret” is not explicitly mentioned in the common law claim. As the court explained, “[u]nder our settled law, what matters for preemption purposes is whether the trade secrets and unjust enrichment claims are based on the ‘same alleged wrongful conduct.’”
250ok’s claims all arose under the same common nexus of facts: SparkPost allegedly took 250ok’s confidential information to develop its own competitive product. As the claim for unjust enrichment was based on the same facts and wrongdoing, the court dismissed the claim for unjust enrichment with prejudice.
250ok fell into a common trap—by opting for trade secret protection, it abandoned any possible common law claims (aside from those based on contract). Plaintiffs should be aware and consciously make the decision to either pursue misappropriation claims under the UTSA, or pursue common claims that lack the statutory benefits but also do not require proving the existence of a trade secret.