1. Reproduced with permission from BNA’s Patent, Trademark & Copyright Journal, 89 PTCJ 1067, 02/20/2015.
Copyright ஽ 2015 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
Tr a d e S e c r e t s
The authors dissect a recent Arizona Supreme Court decision that added to the split over
whether state trade secret laws preempt common law claims of misappropriation of confi-
dential information, even if the information that was allegedly misappropriated is not a pro-
tectable trade secret.
The Arizona Uniform Trade Secrets Act: To Preempt or Not to Preempt?
BY AARON ARNSON AND BRUCE SAMUELS
I. Introduction
D
oes the Arizona Uniform Trade Secrets Act pre-
empt common law claims based on the alleged
misappropriation of confidential information,
even if the information in question does not rise to the
level of a ‘‘trade secret’’?
In Orca Communications Unlimited, LLC v. Noder,1
the Arizona Supreme Court held that it does not.
Other courts faced with the same question, however,
have reached different conclusions. Indeed, prior to the
court’s decision in Orca, even within the Arizona fed-
eral district court there were conflicting opinions.2
In this article, we discuss the ‘‘preemption provision’’
of the Uniform Trade Secrets Act (‘‘UTSA’’), on which
the Arizona Uniform Trade Secrets Act (‘‘AUTSA’’) is
largely based, as well as the split in authority regarding
the construction of that provision. We also detail the
Orca decision and its effect on this previously divisive
issue.
II. Background
In an attempt to codify the common law of trade se-
crets protection, the National Conference of Commis-
sioners on Uniform State Laws in 1979 approved the
UTSA,3
the provisions of which have been largely ad-
opted by forty-seven states and the District of Colum-
bia.4
As amended, the UTSA provides several remedies for
the misappropriation of ‘‘trade secrets,’’5
including in-
1
236 Ariz. 180, 337 P.3d 545 (2014).
2
See Unisource Worldwide, Inc. v. Swope, 964 F. Supp. 2d
1050, 1057 (D. Ariz. 2013) (discussing the scope of the UTSA’s
preemption provision and noting that ‘‘[e]ven this Court has
been less than consistent in adopting a rule as to the breadth
of AUTSA preemption’’) (citations omitted).
3
See Unif. Trade Secrets Act, Prefatory Note, 14 U.L.A.
530–31 (2005).
4
Massachusetts, New York, and North Carolina have not
adopted the UTSA. Acts—Trade Secrets Act, Uniform Law
Commission, http://bit.ly/1sTTnNG (last visited Feb. 13, 2015).
5
The UTSA defines ‘‘trade secret’’ as:
Aaron Arnson is a litigation associate at Lewis
Roca Rothgerber in Phoenix, Arizona. He
may be contacted at AArnson@LRRLaw.com.
Bruce Samuels is a litigation partner at Lewis
Roca Rothgerber in Phoenix, Arizona, and
co-chairs the firm’s litigation practice group.
Bruce previously served as president of the
State Bar of Arizona’s Intellectual Prop-
erty Section. He may be contacted at
BSamuels@LRRLaw.com.
COPYRIGHT ஽ 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. ISSN 0148-7965
BNA’s
Patent, Trademark
& Copyright Journal®

2. junctive relief; damages, plus exemplary damages for
‘‘willful and malicious misappropriation’’; and, in some
cases, reasonable attorney’s fees.
As relevant here, the UTSA also contains a provision
that calls for the ‘‘preemption’’ of conflicting law. That
provision states:
(a) Except as provided in subsection (b), this Act displaces
conflicting tort, restitutionary, and other law of this State
providing civil remedies for misappropriation of a trade se-
cret.
(b) This Act does not affect:
(1) contractual remedies, whether or not based upon
misappropriation of a trade secret;
(2) other civil remedies that are not based upon misap-
propriation of a trade secret; or
(3) criminal remedies, whether or not based upon mis-
appropriation of a trade secret.6
Finally, in conjunction with the preemption provi-
sion, a uniformity mandate directs courts to apply and
construe the UTSA’s provisions ‘‘to effectuate its gen-
eral purpose to make uniform the law with respect to
the subject of this [Act] among the states enacting it.’’7
Regarding the UTSA’s preemption provision, courts
are split as to whether the provision preempts all claims
based on the misappropriation of confidential informa-
tion, even if that information does not satisfy the
UTSA’s definition of a ‘‘trade secret.’’
As explained below, courts that have addressed the
question generally follow one of two approaches.
Majority Jurisdictions. A number of courts have inter-
preted the UTSA’s preemption provision broadly, hold-
ing that the UTSA displaces all common law claims
based on the misappropriation of confidential informa-
tion, whether or not the information meets the UTSA’s
definition of a trade secret.8
To support this construction, these courts rely on the
apparent purpose of both the UTSA itself, which is to
‘‘create a uniform business environment’’ with ‘‘more
certain standards for protection of commercially valu-
able information,’’9
and the preemption provision,
which is ‘‘to preserve a single tort action under state
law . . . and thus to eliminate other tort causes of action
founded on allegations of misappropriation of informa-
tion that may not meet the statutory standard for a
trade secret.’’10
These courts hold that allowing for the survival of
common law claims for unauthorized use of confiden-
tial information ‘‘would undermine the uniformity and
clarity that motivated the creation and passage of the
[UTSA].’’11
Minority Jurisdictions. A slightly smaller number of
courts decline to construe the UTSA’s preemption pro-
vision so broadly, instead adopting the position that the
UTSA preempts only those claims based on the misap-
propriation of a trade secret, as statutorily defined.12
These courts typically rely on the ‘‘plain language’’ of
the provision stating that the UTSA ‘‘displaces conflict-
ing tort, restitutionary, and other law of this State pro-
viding civil remedies for misappropriation of a trade se-
cret,’’13
but does not displace ‘‘other civil remedies that
are not based upon misappropriation of a trade se-
cret.’’14
In other words, per the plain text of the UTSA, com-
mon law claims that allege misuse of confidential infor-
mation that does not meet the statutory definition of
‘‘trade secret’’ survive the UTSA.
III. The AUTSA and the Orca Decision
Arizona courts have not escaped the controversy sur-
rounding the preemption provision.15
The AUTSA par-
allels the language of the UTSA in most material re-
spects, and its preemption provision is nearly identical
to that found in the UTSA.
The Arizona Supreme Court addressed the pre-
emption issue squarely in Orca Communications, Inc. v.
Noder.
Like so many trade secrets disputes, the Orca deci-
sion arose when a company’s insider announced the
formation of a competing business. Ann Noder served
as president of Orca Communications, a public rela-
tions company, from 2002 to 2009, during which time
she had access to Orca’s contracts, financial data, and
customer information. After a failed attempt to pur-
chase Orca, Noder informed some of Orca’s customers
that she was starting her own public relations company,
information, including a formula, pattern, compilation,
program, device, method, technique, or process, that:
(i) derives independent economic value, actual or potential,
from not being generally known to, and not being readily as-
certainable by proper means by, other persons who can obtain
economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
Unif. Trade Secrets Act § 1(4), 14 U.L.A. at 538. The AU-
TSA’s definition of the term is essentially the same. See A.R.S.
44-401(4).
6
Id. § 7, 14 U.L.A. at 651.
7
Id. § 7, 14 U.L.A. at 656 (alteration in original).
8
See, e.g., Firetrace USA, LLC v. Jesclard, 800 F. Supp. 2d
1042, 1049 (D. Ariz. 2010); BlueEarth Biofuels, LLC v. Hawai-
ian Elec. Co., 235 P.3d 310, 323 (Haw. 2010); Mortgage Spe-
cialists, Inc. v. Davey, 904 A.2d 652, 664 (N.H. 2006).
9
See Mortgage Specialists, Inc., 904 A.2d at 663 (citation
omitted).
10
See id. (citation omitted).
11
See id. (alteration in original) (citation and internal quo-
tation marks omitted.
12
See, e.g., Office Depot, Inc. v. Impact Office Prods., LLC,
821 F. Supp. 2d 912, 921 (N.D. Ohio 2011); Stone Castle Fin.,
Inc. v. Friedman, Billings, Ramsey & Co., 191 F. Supp. 2d 652,
659 (E.D. Va. 2002); Burbank Grease Servs., LLC v.
Sokolowski, 717 N.W.2d 781, 793–94 (Wis. 2006).
13
Unif. Trade Secrets Act § 7(a), 14 U.L.A. at 651 (empha-
sis added); Stone Castle Fin., Inc., 191 F. Supp. 2d at 659.
14
Unif. Trade Secrets Act § 7(b)(2), 14 U.L.A. at 651; Bur-
bank Grease Servs., LLC, 717 N.W.2d at 789.
15
Prior to the Orca decision, several federal district court
decisions reached different conclusions as to the preemption
issue. Compare Firetrace USA, LLC, 800 F. Supp. 2d at 1049
(holding that the AUTSA displaces all claims based on the mis-
appropriation of confidential information, whether or not the
information meets the definition of a trade secret), and Uni-
source Worldwide, Inc., 964 F. Supp. 2d at 1058 (same), with
W.L. Gore & Assocs.v. GI Dynamics, Inc., 872 F. Supp. 2d 883,
895 (D. Ariz. 2012) (holding that misappropriation claim sur-
vives AUTSA preemption if it ‘‘allege[s] acts other than misap-
propriation of a trade secret’’), and Casual Game Network,
LLC v. P.F. Chang’s China Bistro, Inc., No. CV-09-2462-PHX-
SRB (D. Ariz. May 13, 2010) (same as to common law claims
of misappropriation, conversion, unjust enrichment, unfair
competition, negligent misrepresentation, and fraud).
2
2-20-15 COPYRIGHT ஽ 2015 BY THE BUREAU OF NATIONAL AFFAIRS, INC. PTCJ ISSN 0148-7965

3. urged them to do business with her new company, and
resigned from her position at Orca a short time later.
Orca pursued several claims against Noder and her
company. As relevant here, Orca brought a claim of
‘‘unfair competition,’’ in which it alleged that Noder in-
tended to ‘‘steal’’ and ‘‘exploit’’ Orca’s customers and
‘‘confidential and trade secret information,’’ including
‘‘information about Orca’s business model, operating
procedures, techniques, and strengths and weak-
nesses,’’ to gain a competitive advantage for her com-
pany.
The trial court dismissed Orca’s complaint, ruling
that Orca’s unfair competition claim was preempted by
Section 44-407 of the AUTSA, even as to information
that did not rise to the level of a trade secret.
The Arizona Court of Appeals reversed in part, con-
cluding that, to the extent Orca’s unfair competition
claim was based on the misuse of ‘‘confidential infor-
mation’’ and not the misappropriation of a ‘‘trade se-
cret,’’ the AUTSA did not preempt the claim. In particu-
lar, the court was persuaded by the ‘‘plain language’’
approach taken by the ‘‘strong minority’’ of jurisdic-
tions that had addressed the preemption question.
The Arizona Supreme Court granted review. The
court agreed with the court of appeals that Section 44-
407 does not displace common law claims for misuse of
confidential information not rising to the level of a trade
secret, although its opinion noted slightly different rea-
sons for so holding.
Like the court of appeals, the supreme court relied on
the principle that courts must apply the ‘‘unambiguous
terms’’ of a statute ‘‘without resorting to other tools of
statutory interpretation, unless doing so leads to impos-
sible or absurd results.’’ Section 44-407, the court
stated, ‘‘On its face . . . displaces only conflicting tort
claims for ‘misappropriation’ of a ‘trade secret,’ terms
AUTSA specifically defines, and leaves undisturbed
claims ‘that are not based on misappropriation of a
trade secret.’ ’’ The court found ‘‘[n]othing in this lan-
guage’’ to suggest that ‘‘the legislature intended to dis-
place any cause of action other than one for misappro-
priation of a trade secret.’’
The court also noted that this interpretation also bet-
ter comported with the principle that ‘‘[i]f the legisla-
ture seeks to preempt a cause of action[,] . . . the law’s
text or at least the legislative record should say so ex-
plicitly.’’
Also like the court of appeals, the supreme court
found notable the fact that the legislature did not adopt
the UTSA’s uniformity mandate. In the court’s view, be-
cause other Arizona statutes derived from uniform acts
contain similar language, ‘‘its absence from AUTSA
suggests that the legislature intentionally omitted it.’’
Unlike the court of appeals, however, the supreme
court made little of the split in authority on the preemp-
tion question. The court recognized that, although it
generally considers decisions from other jurisdictions
regarding the construction of a statute derived from a
uniform act to achieve uniformity in interpretation,
‘‘that purpose is not served when, as here, the quest for
uniformity is a fruitless endeavor and Arizona’s ruling
one way or the other neither fosters nor hinders na-
tional uniformity.’’
Without a uniformity directive similar to those found
in other Arizona statutes, and considering the plain text
of Section 44-407 and the split of authority on the pre-
emptive scope of similar provisions, the court found the
conflicting views from other jurisdictions unavailing.
The court of appeal’s partial reliance on the decisions of
other jurisdictions may have led the supreme court to
order depublication of certain portions of the court of
appeals’ opinion.
The court rejected Noder’s main arguments against
adopting the plain language interpretation of Section
44-407. First, the court disagreed that its interpretation
would lead to ‘‘absurd results.’’ Noder had argued that,
because Section 44-403(B) limits an award of exem-
plary damages to no more than twice the amount of ac-
tual damages, a narrow interpretation of the preemp-
tion provision could lead to an ‘‘absurd’’ situation in
which a plaintiff who demonstrates misappropriation of
confidential information could possibly recover more in
punitive damages than a plaintiff that proves an AUTSA
claim for misappropriation of a trade secret.
As the court noted, this is actually not the case;
whereas an award of punitive damages on common law
claims requires ‘‘clear and convincing evidence of a de-
fendant’s ‘evil mind,’ the AUTSA imposes no such
heightened evidentiary standard.’’ Moreover, the AU-
TSA provides protections and remedies for misappro-
priation of a trade secret, such as injunctive relief and
attorneys’ fees, which are not generally available under
the common law.
Second, the court rejected the argument that a literal
reading of Section 44-407 undermines the UTSA’s pur-
pose of creating a single, uniform tort action governing
the misuse of allegedly confidential information. Al-
though the UTSA promotes uniformity in trade secret
law, it does not discuss confidential information in gen-
eral and does not affect various other claims and rem-
edies.
IV. Conclusion
By holding that plaintiffs can bring claims for misuse
of their confidential information, even if that informa-
tion does not rise to the level of a ‘‘trade secret,’’ the
Arizona Supreme Court adopted the position taken by a
minority of jurisdictions.
The Orca decision resolves previous uncertainty in
Arizona law by concluding that the AUTSA’s preemp-
tion clause does not bar plaintiffs from pursuing claims
for the misappropriation or misuse of confidential infor-
mation.
3
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