Does Connecticut's trade secrets act wipe out our NDA or confidentiality claims?
Not the contract. Unless otherwise agreed by the parties, CUTSA supersedes conflicting tort, restitutionary or other law pertaining to civil liability for misappropriation of a trade secret, but it does not affect contractual or other civil liability or relief not based on misappropriation of a trade secret (§ 35-57). In Dur-A-Flex v. Dy (2024) the Connecticut Supreme Court held that CUTSA preempts noncontractual civil claims against a former employee based on the acquisition, disclosure or use of confidential information that does not rise to the level of a trade secret, so a noncontractual claim for misappropriation of commercial information by a former employee must be brought under CUTSA or not at all, while the court noted, in a footnote, that CUTSA does not preclude parties from protecting sensitive information contractually if it does not meet the statutory definition of a trade secret.
The trap
Without a contract, a former employee owes no Connecticut common-law duty to keep confidential commercial information that falls short of a trade secret: Dur-A-Flex rejected a two-tier system and concluded that its dictum in Allen Mfg. Co. v. Loika suggesting such a duty no longer reflects the law. The court limited that: CUTSA does not preclude parties from protecting such information by contract, 'Nor does it foreclose actions in which the misuse of confidential information may be implicated but is not the wrong actually being alleged' (the examples it gives are the Restatement (Third) of Unfair Competition's: a current employee's general duty of loyalty, and the duty of confidence in an attorney-client relationship). A trade secret is information that derives independent economic value from not being generally known or readily ascertainable and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy (§ 35-51(d)).
10 authorities
- statuteConn. Gen. Stat. § 35-57enactment date not established
The words that state the rule
Unless otherwise agreed by the parties, the provisions of this chapter supersede any conflicting tort, restitutionary, or other law of this state pertaining to civil liability for misappropriation of a trade secret. (b) This chapter does not affect: (1) Contractual or other civil liability or relief that is not based upon misappropriation of a trade secret; (2) criminal liability for misappropriation of a trade secret; or (3) the duty of any person or state or municipal agency to disclose information pursuant to section 1-210 , sections 31-40j to 31-40p , inclusive, or subsection (c) of section 12-62 , or wherever expressly provided by law.
- statuteConn. Gen. Stat. § 35-51enactment date not established
The words that state the rule
(d) Notwithstanding the provisions of sections 1-210 , 31-40j to 31-40p , inclusive, and subsection (c) of section 12-62 , “trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that: (1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
The words that state the rule
We conclude, therefore, that CUTSA preempts non- contractual civil claims against a former employee based on the acquisition, disclosure, or use of confiden- tial information that does not rise to the level of a trade secret. A noncontractual claim based on the misappro- priation of commercial information by a former employee must be brought under CUTSA or not at all.
The words that state the rule
CUTSA, however, does not preclude parties from protecting sensitive infor- mation contractually if it does not meet the statutory definition of a trade secret.
The words that state the rule
For the following reasons, we conclude that our dic- tum in Allen Mfg. Co. suggesting that a former employee has a common-law duty to maintain the confidentiality of information that does not constitute a trade secret no longer reflects the law.
The words that state the rule
Nor does it foreclose actions in which the misuse of confidential information may be implicated but is not the wrong actually being alleged.
The words that state the rule
For example, the Restatement (Third) of Unfair Competition acknowledges that it may be appropriate to impose liability for breach of confidence when interests other than protection of commercially valuable information are implicated—for example, the general duty of loyalty owed by a current employee to an employer or the duty of confidence in an attorney-client relationship.
- statuteConn. Gen. Stat. § 35-51enactment date not established
The words that state the rule
As used in this chapter, unless the context requires otherwise: (a) “Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means, including searching through trash. (b) “Misappropriation” means: (1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (2) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or (B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was (i) derived from or through a person who had utilized improper means to acquire it; (ii) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use, including but not limited to disclosures made under section 1-210 , sections 31-40j to 31-40p , inclusive, or subsection (c) of section 12-62 ; or (iii) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
The words that state the rule
We conclude that the two tiered system of liability that the plaintiff envisions—claims under CUTSA for misap- propriation of trade secrets and common-law claims for misuse of other confidential information—is incon- sistent with the preemption clause in § 35-57 (a).
The words that state the rule
Accordingly, we conclude that the trial court correctly determined that CUTSA preempted the plaintiff’s claim that Samet had violated his common-law duty of confi- dentiality.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.