Gognat v. Ellsworth

June 6, 2011
State Court
Colorado Supreme Court

Plaintiff Timothy A. Gognat filed suit against defendants Ellsworth, Smith and MSD Energy, Inc., alleging that defendants had misappropriated proprietary information, such as methodology, maps, charts logs and calculations, Gognat had gathered and developed to identify and extract oil and natural gas reserves in western Kentucky. However, the trial court dismissed Gognat’s trade secret misappropriation claim, finding the claim was barred by the three-year statute of limitations.

On September 17, 2009, the Court of Appeals of Colorado, Division Seven, affirmed that Gognat’s multiple allegations of misappropriation were rooted in a single trade secret or related trade secrets, for which the statute of limitations had already run. 224 P.3d 1039 (Colo. Ct. App. 2009). It interpreted that the statute of limitations in the Colorado Uniform Trade Secrets Act (UTSA) did not renew for each individual act of misappropriation of a single trade secret or related trade secrets. Id. Rather, the limitations period accrued when Gognat first learned of the defendants’ misappropriation. Id.

Undeterred, Gognat sought review in the Colorado Supreme Court. The Supreme Court also interpreted the UTSA to specify that a “continuing misappropriation” of a trade secret (but not “related” trade secrets) constituted a single claim. Additionally, it noted that a “continuing wrong approach,” in which the statute of limitations renewed for individual acts of misappropriation of a trade secret, was rejected in the UTSA commentary. However, a “separate and distinct misappropriation of a different trade secret” would constitute separate claim for which the statute of limitations would start anew.

Timoth A. Gognat
Chet J. Ellsworth, Joanne Ellsworth, MSD Energy, Inc., Stephen Smith
Uniform Trade Secrets Act

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