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Can Oregon employers bring conversion claims against employees who misappropriate confidential information without having their claims preempted by the state’s Uniform Trade Secrets Act? This result highlights the continued divergence of opinion across the nation concerning the viability of tort or statutory claims based upon the theft of information that may not rise to the level of a trade secret. It matters because such claims are often easier to prove than trade secret claims, particularly before juries who may have high expectations for trade secret classification. Simply put, theft of information claims (whether based upon common law business torts or statute) provide employers with additional leverage to protect their companies from employees and competitors that may use such information but arguably are inconsistent with the preemption provisions found in many states’ Uniform Trade Secrets Acts. The employee then brought a motion to dismiss arguing that the employer’s conversion claim was preempted by its claim under the OTSA and that a plaintiff may not base a conversion claim on taking copies of information.
The court indicated that Oregon courts have not addressed the extent to which the OTSA preempts civil remedies.
The employer argued that its allegations were broad enough, when read together to allege that employee may have in his possession information that is not trade secret information and, therefore, not covered by the OTSA.
The employee also argued that, even if the employer’s claim were not preempted, the employer still could not assert conversion because he did not interfere with the employer’s ability to access or control their documents. With the court’s rejection of the employee’s arguments against the conversion claim, the court confirmed that the employer could state a claim based upon the theft of confidential information.
This decision comes in the wake of several other preemption rulings which have reached different results.
A federal district court in California, for example, recently held claims for intentional interference with contractual relations, intentional interference with prospective economic advantage, unfair competition, breach of fiduciary duty were preempted or subject to supersession.
The California Supreme Court has yet to determinatively address the supersessive scope of CUTSA, but may eventually resolve this difference of opinion. The attorneys of the Trade Secrets, Computer Fraud, & Non-Competes practice group of Seyfarth Shaw LLP protect and defend clients against those who improperly handle proprietary information, violate non-compete agreements, improperly solicit customers or remove electronic data from businesses, and raid employees. Trade Secrets and Confidentiality Lawyers & Attorneys, the Trade Secrets, Computer Fraud, & Non-Competes practice group of Seyfarth Shaw LLP, offering services relating to corporate espionage, electronic information protection, non-compete agreements, non-disclosure, proprietary information, restrictive covenants, audits, protection policies, trade secrets litigation, with offices in Atlanta, Boston, Chicago, Los Angeles, New York, Houston, Sacramento, San Francisco.
Unless otherwise indicated, attorneys listed in this Web site are not certified by the Texas Board of Legal Specialization. On August 30, 2012, Emerson Electric sued Peter Ramos Yeo, a former employee of its subsidiary Astec International, Ltd., in St.

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The United States District Court for the Eastern District of Virginia recently denied a motion to dismiss a counterclaim for violation of Virginia’s Uniform Trade Secrets Act (“VUTSA”), holding that the counterclaim sufficiently alleged trade secret misappropriation based on improper acquisition of a trade secret, even in the absence of allegations of use or disclosure. Plaintiff Jacqueline Marsteller was a Senior Vice President and Account Executive employed by defendant Electronic Consulting Services, Inc.
Almost a year and a half after Marsteller left ECS, she sued her former employer on grounds not identified in the court’s opinion.  ECS filed a six-count counterclaim alleging, among other things, that after Marsteller was notified she was being terminated, she misappropriated various trade secrets by transferring information to an external storage device as well as e-mailing information to her personal e-mail account in violation of VUTSA.
In ruling on the motion, the court explained that a claim for violation of VUTSA must allege that: (1) the information in question constitutes a trade secret, and (2) the defendant misappropriated it. In analyzing the counterclaim, the court concluded that ECS’s allegation that Marsteller transferred and retained ECS’s internal documents outside of the scope permitted by her employment, including transferring proprietary documents to an external storage device, sufficiently stated a claim for “misappropriation” through improper acquisition.
The court stated that these allegations raised a “reasonable inference” that Marsteller used ECS’s information and that it was “plausible, not just possible, that Marsteller used or disclosed” ECS information to benefit her new employer. As a somewhat related side note, Virginia does not recognize the doctrine of inevitable disclosure.  Gov’t Tech. When misappropriation is suspected, it is essential not to delay to do a thorough factual and legal investigation before filing any misappropriation claim. Finally, if evidence of misappropriation is found, delaying legal action is likely to reduce the chances of obtaining injunctive relief to stop impermissible use of the misappropriated trade secrets, and thereby reduce your chances of preventing harm to your company. A group of prominent American Senators recently introduced the Deter Cyber Theft Act, a bill designed to reduce the threat of foreign cyber-espionage and trade secret theft. According to Senator Levin’s official announcement, this act would combat “the theft of valuable intellectual property from U.S.
They also provide a wider variety of remedies than contract claims, exposing defendants to liability for all harm proximately caused by the defendants’ conduct. The employer argued that its conversion claim was not preempted by the OTSA to the extent it sought damages for the conversion of information other than trade secrets and that it had adequately alleged that the employee exercised control over the copied information in a manner inconsistent with the employer’s rights as owner of the information.
The court acknowledged that a number of courts in other states have extended the preemptive effect of the language found in OR. There is, however, an interesting footnote in the court’s opinion that could limit the applicability of its analysis.

In that case, the court analyzed three different approaches to preemption employed by California courts. A Pennsylvania federal court, however, recently found that preemption should not be determined on the pleadings and a New Jersey state court determined that common law claims were not displaced by New Jersey’s new trade secret statute.
For some best practices to protect confidential information in light of this uncertainly, please see our previous blog post.
Additionally, such claims may not be subject to the stringent discovery requirements for trade secret claims in some states which require the identification of the stolen information with particularity before discovery commences. Consequently, the court found that the conversion claim seeks damages for the conversion of information other than trade secrets, and thus was not preempted by the OTSA.
Another approach has found a claim exempt from supersession unless it is based on the taking of information that is ultimately adjudged to be a trade secret.
2013), an employer filed suit against its former employee alleging that, when he departed, he took with him a variety of confidential and proprietary files.
Actions seeking contractual and criminal remedies are not affected by the Trade Secrets Act.
646.473 to claims that are based on the same operative facts as a claim for trade secret misappropriation. Nevertheless for Oregon employers who face the situation of an employee who walks out the door with confidential information, this decision lays out a path to plead a claim for conversion (at least for now).
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Moeykens (enforcing a Peruvian forum selection clause against a destitute family, 145 F.3d 298 (5th Cir.
The court further acknowledged that an Oregon federal district court had specifically held that the OTSA preempts conversion claims based on alleged misappropriation of trade secrets.

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