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Dispute Over Mere Confidential Information Insufficient to Trigger Jurisdiction

Where the dispute involves merely a company’s confidential information and not its trade secrets, the Business Court lacks the statutory jurisdiction to hear the matter.  Unox, Inc. v. Conway, et al., 2019 N.C.B.C. 40 (J. Bledsoe).  As a result, where trade secrets are not at issue, the matter must be handled in the General Court of Justice in the Superior Court.

Plaintiff Unox, Inc. (“Unox”) is the former employer of defendant Michael Conway (“Conway”).  Conway left Unox and went to work for a competitor, defendant Tecnoeka, Inc. (“Tecnoeka”).  Before departing Unox, Conway allegedly took confidential information in violation of his nondisclosure agreement and gave it to Tecnoeka.  Unox filed its complaint in the General Court of Justice, Gaston County, alleging claims for breach of contract, conversion and other claims.  However, Unox did not allege a claim for misappropriation of trade secrets.  Conway and Tecnoeka filed a notice of designation, seeking to have the matter heard in the Business Court.  Unox objected to the designation.  Notwithstanding Conway and Tecnoeka’s assertion that the dispute involved trade secrets, Unox pointed to the plain language of its complaint and argued the Business Court lacked jurisdiction because it had not asserted any claim for misappropriation of trade secrets.

The Business Court agreed.  The Business Court recognized that it had limited jurisdiction and a dispute over a business’ “confidential information” was insufficient to trigger the Business Court’s statutorily defined jurisdiction.  The Business Court rejected Conway’s argument that an issue to be decided was whether the plaintiff’s confidential information was tantamount to a trade secret.  Instead, the Business Court held that it was required to look solely at the pleading upon which designation was claimed (i.e., the complaint) and determine whether jurisdiction existed based upon that pleading.  Because Unox did not assert a claim for misappropriation of trade secret in its complaint, jurisdiction with the Business Court was improper. 

Additional legal holdings from the case:

  • Disputes over trade secrets sufficient to trigger Business Court jurisdiction can be embodied in a breach of contract action where the subject of the claim for breach is ownership of a trade secret.  (Opinion, ¶ 8).
  • Designation to the Business Court is based upon the pleading identified in the Notice of Designation, which must raise a material issue that falls within a statutorily defined category.  (Opinion, ¶ 7).
  • Plaintiff remains the “master of its complaint” for purposes of determining designation and, if a plaintiff does not assert one of the statutorily identified claims, a defendant is not free to re-characterize the claim.  (Opinion, ¶ 12).

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