## Facts

- Marvin L. Speck and Stanley E. Gilliland were professors at North Carolina State University (NCSU) who conducted dairy research using university facilities and resources.
- During their NCSU employment, they developed a secret process using *Lactobacillus acidophilus* to produce and market “Sweet Acidophilus” milk.
- NCSU treated the process as a trade secret/trademark matter rather than pursuing patent protection and licensed commercialization through the North Carolina Dairy Foundation, a nonprofit affiliated with NCSU that routed industry support and licensing arrangements.
- The Foundation entered agreements with private companies and received royalties tied to the “Sweet Acidophilus” process and mark.
- Speck and Gilliland initially participated in commercialization discussions without objecting, but later asserted they were entitled to royalties.
- Plaintiffs sued NCSU-related entities and the Foundation, alleging a fiduciary relationship, wrongful appropriation of the process and royalties, and sought imposition of a constructive trust over royalties.

## Issues

1. Whether professors acquired any proprietary interest in a secret scientific process at the time they discovered it while employed by NCSU and using university resources.
2. Whether, absent such an interest, plaintiffs could obtain royalties or a constructive trust over licensing proceeds received by the Foundation.
3. Whether defendants could be liable for fiduciary breach based on commercialization of the process without sharing revenues with plaintiffs.

## Decision

- The Supreme Court of North Carolina reversed the Court of Appeals and reinstated summary judgment for all defendants.
- The Court held plaintiffs did not acquire a proprietary interest in the secret process by discovering it during employment in the course of their research duties with university resources.
- Because plaintiffs lacked any legal or equitable interest in the process or proceeds, their constructive trust and royalty claims failed as a matter of law.
- Without a cognizable property right in the process, plaintiffs’ fiduciary-duty theory could not establish wrongful diversion of plaintiffs’ property.
- Summary judgment was proper because the material facts concerning the employment context and resource use were undisputed and the ownership consequence was resolved as a matter of law.

## Legal Principles

- A discovery or trade secret developed by an employee within the scope of employment and through the employer’s resources presumptively belongs to the employer absent a contrary agreement.
- A constructive trust requires an underlying equitable or beneficial interest by the claimant in the property or proceeds; it cannot be used to create an entitlement where none exists.
- Fiduciary-duty liability for misappropriation requires diversion of something in which the plaintiff has a legally cognizable property or equitable interest; disappointment over not sharing in profits from employer-owned property is insufficient.
- Summary judgment is appropriate where ownership and entitlement turn on undisputed facts about the employment relationship, assigned duties, and use of employer resources.

## Conclusion

The court held that professors who developed a secret process in the course of university employment using university resources did not obtain a personal ownership or royalty interest, so they could not impose a constructive trust or recover licensing proceeds, and defendants were entitled to summary judgment.


Speck v. N.C. Dairy Found., Inc., 311 N.C. 679, 319 S.E.2d 139 (N.C. 1984)