When using ArcCatalog to alter privileges on a feature class held in a relational database, the following error is returned:
"Cannot modify privileges on [layer name]. Lock request conflicts with an existing lock."
It is not possible to alter the privileges of a feature class while another user has that feature class open.
Solution or Workaround
Revoking permissions requires an exclusive lock on the data being modified. The user that is viewing/using the feature class open must close their connection. See the Schema Locking Web Help article located within the related section of this article.
The user privileges can be granted using the Data Management Tools within ArcToolbox in addition to the Privileges context tool. The Change Privileges tool establishes or changes user access privileges to the input ArcSDE dataset, stand-alone feature class, or table. It requires an ArcEditor or ArcInfo license level.