NORTH CAROLINA GENERAL ASSEMBLY
1981 SESSION

CHAPTER 890
HOUSE BILL 439

AN ACT TO AMEND CHAPTER 66 OF THE GENERAL STATUTES TO PROTECT TRADE SECRETS.

The General Assembly of North Carolina enacts:

Section 1. Chapter 66 of the General Statutes is amended by adding a new Article to read:
"ARTICLE 22.
"Trade Secrets Protection Act.
"§ 66‑126. Definitions. — As used in this Article, unless the context requires otherwise:
(a)	'Misappropriation' means acquisition, disclosure, or use of a trade secret of another without express or implied authority or consent, unless such trade secret was arrived at by independent development, reverse engineering, or was obtained from another person with a right to disclose the trade secret.
(b)	'Person' means an individual, corporation, government, governmental subdivision or agency, business trust, estate, trust, partnership, association, joint venture, or any other legal or commercial entity.
(c)	'Trade secret' means business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that:
(1)	derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by 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 existence of a trade secret shall not be negated merely because the information comprising the trade secret has also been developed, used, or owned independently by more than one person, or licensed to other persons.
"§ 66‑127. Misappropriation actionable. — The owner of a trade secret shall have remedy by civil action for misappropriation of his trade secret.
"§ 66‑128. Remedies. — (a) Except as provided herein, actual or threatened misappropriation of a trade secret may be preliminarily enjoined during the pendency of the action and shall be permanently enjoined upon judgment finding misappropriation for the period that the trade secret exists plus an additional period as the court may deem necessary under the circumstances to eliminate any inequitable or unjust advantage arising from the misappropriation.
(1)	If the court determines that it would be unreasonable to enjoin use after a judgment finding misappropriation, an injunction may condition such use upon payment of a reasonable royalty for any period the court may deem just. In appropriate circumstances, affirmative acts to protect the trade secret may be compelled by order of the court.
(2)	A person who in good faith derives knowledge of a trade secret from or through misappropriation or by mistake, or any other person subsequently acquiring the trade secret therefrom or thereby, shall be enjoined from disclosing the trade secret, but no damages shall be awarded against any person for any misappropriation prior to the time the person knows or has reason to know that it is a trade secret. If the person has substantially changed his position in good faith reliance upon the availability of the trade secret for future use, he shall not be enjoined from using the trade secret but may be required to pay a reasonable royalty as deemed just by the court. If the person has acquired inventory through such knowledge or use of a trade secret, he can dispose of the inventory without payment of royalty. If his use of the trade secret has no adverse economic effect upon the owner of the trade secret, the only available remedy shall be an injunction against disclosure.
(b)	In addition to the relief authorized by subsection (a), actual damages may be recovered, measured by the economic loss or the unjust enrichment caused by misappropriation of a trade secret, whichever is greater.
(c)	If willful and malicious misappropriation exists, the trier of fact also may award punitive damages in its discretion.
(d)	If a claim of misappropriation is made in bad faith or if willful and malicious misappropriation exists, the court may award reasonable attorneys' fees to the prevailing party.
"§ 66‑129. Burden of proof. — Misappropriation of a trade secret is prima facie established by the introduction of substantial evidence that the person against whom relief is sought both:
(1)	knows or should have known of the trade secret; and
(2)	has had a specific opportunity to acquire it for disclosure or use or has acquired, disclosed, or used it without the express or implied consent or authority of the owner.
This prima facie evidence is rebutted by the introduction of substantial evidence that the person against whom relief is sought acquired the information comprising the trade secret by independent development, reverse engineering, or it was obtained from another person with a right to disclose the trade secret. This section shall not be construed to deprive the person against whom relief is sought of any other defenses provided under the law.
"§ 66‑130. Preservation of secrecy. — In an action under this Article, a court shall protect an alleged trade secret by reasonable steps which may include granting protective orders in connection with discovery proceedings, holding in‑camera hearings, sealing the records of the action subject to further court order, and ordering any person who gains access to an alleged trade secret during the litigation not to disclose such alleged trade secret without prior court approval.
"§ 66‑131. Statute of limitations. — An action for misappropriation of a trade secret must be commenced within three years after the misappropriation complained of is or reasonably should have been discovered."
Sec. 2. G.S. 6‑21 is amended by inserting a new subdivision (12) to read as follows:
"(12)	In actions brought for misappropriation of a trade secret under Article 22 of Chapter 66 of the General Statutes."
Sec. 3. This act shall become effective October 1, 1981, and shall apply only to causes of action arising after that date.
In the General Assembly read three times and ratified, this the 9th day of July, 1981.