The Georgia Court of Appeals Waives Sovereign Immunity in a Trade Secrets Case

The Georgia Court of Appeals recently allowed a company’s Georgia Trade Secrets Act (GUTSA) claim to move forward against the University of Georgia Board of Regents (“the Board”), a government entity. Bd. of Regents of the Univ. Sys. of Ga. v. One Sixty Over Ninety, LLC, 2019 WL 2635620 (Ga. Ct. App. June 27, 2019). The Court held that a violation of the GUTSA constitutes a tort under Georgia law, and that while the Board could not be sued under the GUTSA because of sovereign immunity, it could be sued under the Tort Claims Act, where sovereign immunity has been waived.

One Sixty Over Ninety (“160”), a creative services agency that provides branding, strategy, design, public relations, and other services to higher education clients, alleged that it submitted a proposal to the Board marked “Confidential & Proprietary,” but that the Board disclosed the proposal to a competitor agency in violation of the GUTSA. The competitor won the bid for the project and 160 filed suit. The Board argued that the suit should be dismissed, in part because the Board was entitled to sovereign immunity, which would serve to shield the state from suits seeking to recover damages.

The Court of Appeals examined the GUTSA and determined that sovereign immunity was allowed under that statute, shielding the government from suit. However, the Court of Appeals also examined the Tort Claims Act. Under that law, government entities can be sued and found liable for tortious acts, as sovereign immunity has been waived. The Court made a conceptual leap and held that “a violation of the Trade Secrets Act constitutes a tort under Georgia law,” citing Virginia’s similar application for support. This allowed the suit against the government to move forward under the Tort Claims Act, and expanded potential liability for trade secret violations under Georgia law.

TIP: As trade secret law is new and ever-evolving, it is important to stay tuned to legal developments as they may expand and contract potential liability, including against state agencies.