As with most states, the North Carolina Trade Secrets Protection Act prohibits an employee from misusing his employer’s confidential and proprietary information.  The Act includes prohibitions against destruction of the employer’s trade secret information.  Last week, the North Carolina Court of Appeals refused to sanction a former employee who deleted files from his computer, in the absence of proof that the materials deleted included actual trade secrets.

In Panos v. Timco Engine Center, Inc., the employee was terminated for cause.  Shortly afterwards, he returned his company-provided computer, but the employer alleged that he had deleted files and information relating to his work.  In response to his breach of contract suit, Panos’ employer counterclaimed under the Trade Secrets Act.  Although the employer could not identify what proprietary information was allegedly destroyed, it claimed that under the spoliation of evidence rule, the court should presume that the files deleted constituted trade secret information.

The spoliation rule allows the court to infer that a party that destroys possibly relevant evidence did so because the evidence was prejudicial to its case.  In this situation, however, the court refused to use the spoliation rule to infer that the destroyed computer files constituted trade secrets.  The Court of Appeals said that the spoliation rule cannot substitute for the plaintiff’s burden under the Trade Secrets Act to identify the proprietary information that was misused.  Despite the employee’s alleged malfeasance, without more evidence as to what was deleted, the court would not presume that it was protected information.