Remedies Available for the Misappropriation of Trade Secrets Quiz

PDF page 184: The UTSA provides a full array of remedies, including statutory damages, injunctive relief, attorneys’ fees, xxviii and exemplary damages. The remedy or remedies will depend on the extent of trade secrets involved, the manner of misappropriation or conversion, and the type of damage sustained by the owner.

PDF page 184: As discussed above, under the UTSA, injunctive relief is available to enjoin actual, as well as threatened, misappropriation. Injunctive relief allows the owner of a trade secret to obtain a court order prohibiting the actual or threatened misappropriation of a trade secret. The ability to enjoin threatened misappropriation is very important because it enables the owner of the trade secret to prevent public disclosure of the trade xxix secret. Injunctive relief may take many forms. The scope of an injunction may vary from a broad prohibition on any use of material found to be a trade secret, to a more limited prohibition on the scope of an xxx employee’s work with a new employer. Both the scope and subject matter of an injunction vary depending upon the specific facts of the case and the nature of the trade secret in question. The UTSA provides that an injunction shall terminate once the trade secret ceases to exist, but may be continued for a reasonable period of time to extinguish any commercial advantage that otherwise would be derived from the misappropriation. This is especially important where, at the time of the action, the information or knowledge is no longer a trade secret. In such a case, the court may still award the owner injunctive relief that is narrowly crafted to deprive xxxi the defendant of the benefit of time saved by improper use of the owner’s trade secret.

PDF page 184: As discussed above, under the UTSA, injunctive relief is available to enjoin actual, as well as threatened, misappropriation. Injunctive relief allows the owner of a trade secret to obtain a court order prohibiting the actual or threatened misappropriation of a trade secret. The ability to enjoin threatened misappropriation is very important because it enables the owner of the trade secret to prevent public disclosure of the trade xxix secret. Injunctive relief may take many forms. The scope of an injunction may vary from a broad prohibition on any use of material found to be a trade secret, to a more limited prohibition on the scope of an xxx employee’s work with a new employer. Both the scope and subject matter of an injunction vary depending upon the specific facts of the case and the nature of the trade secret in question. The UTSA provides that an injunction shall terminate once the trade secret ceases to exist, but may be continued for a reasonable period of time to extinguish any commercial advantage that otherwise would be derived from the misappropriation. This is especially important where, at the time of the action, the information or knowledge is no longer a trade secret. In such a case, the court may still award the owner injunctive relief that is narrowly crafted to deprive xxxi the defendant of the benefit of time saved by improper use of the owner’s trade secret.

PDF page 185: Duration The duration of an injunction is determined based on the amount of time it would take a and competitor to reveal the trade secret by proper means. An injunction can be terminated Termination when the trade secret ceases to exist.

PDF page 185: Duration The duration of an injunction is determined based on the amount of time it would take a and competitor to reveal the trade secret by proper means. An injunction can be terminated Termination when the trade secret ceases to exist.

PDF page 185: Where the information has not been publicly disclosed, the issue becomes more difficult. The duration of the injunction is often calculated according to the time that would be required for independent development of the information or knowledge that was misappropriated. These “head start” injunctions assume that the xxxii information could be properly obtained through reverse engineering or independent development. To determine what length of time is appropriate, courts may rely on the opinions of experts and the xxxiii experience of other competitors. However, a court may also opt to impose a permanent injunction that can later be modified, or in some circumstance rely on other considerations deemed important by the xxxiv court.

PDF page 185: To determine the appropriate length of time, courts may rely on the opinions/experience of Permanent experts and competitors. They may impose permanent injunctions or rely on other Injunctions considerations seen as important by the court.

PDF page 185: Where the information has not been publicly disclosed, the issue becomes more difficult. The duration of the injunction is often calculated according to the time that would be required for independent development of the information or knowledge that was misappropriated. These “head start” injunctions assume that the xxxii information could be properly obtained through reverse engineering or independent development. To determine what length of time is appropriate, courts may rely on the opinions of experts and the xxxiii experience of other competitors. However, a court may also opt to impose a permanent injunction that can later be modified, or in some circumstance rely on other considerations deemed important by the xxxiv court.

PDF page 185: Courts also exhibit broad flexibility in the nature and duration of relief in cases dealing with former employees. When an injunction is issued in these cases, it usually will not be an outright ban on employment. Rather, it will xxxv be a more limited injunction for a more limited duration. Most courts are willing to allow continued employment, but will restrict the employee from working with a particular product line or area of the new xxxvi employer’s business. However, if the role the employee will assume would inevitably lead to the disclosure xxxvii of trade secrets, the employment may be prohibited altogether.

PDF page 186: xxxviii Damages are often awarded in addition to an injunction and are not an exclusive remedy. For example, in Seagate Tech., LLC v. Western Digital Corp. (https://www.openstax.org/l/SeagateVWD), 834 N.W.2d 555 (Minn. App. 2013), the Minnesota Court of Appeals affirmed a judgment of $630 million in favor of the plaintiffs against the defendants stemming from a trade secret misappropriation dispute. Under the UTSA, damages are measured by the actual loss caused by the misappropriation as well as any resulting unjust enrichment of the misappropriator. Where the amount of actual loss or unjust enrichment cannot be accurately calculated, the UTSA provides that damages may also be measured by the imposition of a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret. Exemplary or punitive damages may be xxxix awarded where the court finds that the misappropriation was willful and malicious. For example, in Mattel, Inc. v. MGA Entm’t, Inc. (https://www.openstax.org/l/MattelVMGA), 801 F. Supp. 2d 950 (C.D. Cal 2011), Mattel was found to have engaged in a prolonged practice of encouraging employees to use false pretenses to acquire competitive information from the defendant. As a result of this conduct, the jury awarded, and the court affirmed a verdict of $85 million dollars in exemplary damages. A punitive or exemplary award may not xl exceed twice the amount of the damage award. However, some states have modified this cap on punitive xli damages, and allow for punitive damages greater than two times the amount of actual damages.

PDF page 186: xxxviii Damages are often awarded in addition to an injunction and are not an exclusive remedy. For example, in Seagate Tech., LLC v. Western Digital Corp. (https://www.openstax.org/l/SeagateVWD), 834 N.W.2d 555 (Minn. App. 2013), the Minnesota Court of Appeals affirmed a judgment of $630 million in favor of the plaintiffs against the defendants stemming from a trade secret misappropriation dispute. Under the UTSA, damages are measured by the actual loss caused by the misappropriation as well as any resulting unjust enrichment of the misappropriator. Where the amount of actual loss or unjust enrichment cannot be accurately calculated, the UTSA provides that damages may also be measured by the imposition of a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret. Exemplary or punitive damages may be xxxix awarded where the court finds that the misappropriation was willful and malicious. For example, in Mattel, Inc. v. MGA Entm’t, Inc. (https://www.openstax.org/l/MattelVMGA), 801 F. Supp. 2d 950 (C.D. Cal 2011), Mattel was found to have engaged in a prolonged practice of encouraging employees to use false pretenses to acquire competitive information from the defendant. As a result of this conduct, the jury awarded, and the court affirmed a verdict of $85 million dollars in exemplary damages. A punitive or exemplary award may not xl exceed twice the amount of the damage award. However, some states have modified this cap on punitive xli damages, and allow for punitive damages greater than two times the amount of actual damages.

PDF page 186: In this case, Mattel was found to have encouraged employees to use false Mattel, Inc. v. MGA Entm’t. pretenses to acquire competitive information from the defendant. As a Inc. result of this conduct, $85 million dollars in exemplary damages was (https://www.openstax.org/ awarded. A punitive or exemplary award may not exceed twice the amount l/MattelVMGA) xlii xliii of the damage award. However, some states have modified this cap.

PDF page 186: xxxviii Damages are often awarded in addition to an injunction and are not an exclusive remedy. For example, in Seagate Tech., LLC v. Western Digital Corp. (https://www.openstax.org/l/SeagateVWD), 834 N.W.2d 555 (Minn. App. 2013), the Minnesota Court of Appeals affirmed a judgment of $630 million in favor of the plaintiffs against the defendants stemming from a trade secret misappropriation dispute. Under the UTSA, damages are measured by the actual loss caused by the misappropriation as well as any resulting unjust enrichment of the misappropriator. Where the amount of actual loss or unjust enrichment cannot be accurately calculated, the UTSA provides that damages may also be measured by the imposition of a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret. Exemplary or punitive damages may be xxxix awarded where the court finds that the misappropriation was willful and malicious. For example, in Mattel, Inc. v. MGA Entm’t, Inc. (https://www.openstax.org/l/MattelVMGA), 801 F. Supp. 2d 950 (C.D. Cal 2011), Mattel was found to have engaged in a prolonged practice of encouraging employees to use false pretenses to acquire competitive information from the defendant. As a result of this conduct, the jury awarded, and the court affirmed a verdict of $85 million dollars in exemplary damages. A punitive or exemplary award may not xl exceed twice the amount of the damage award. However, some states have modified this cap on punitive xli damages, and allow for punitive damages greater than two times the amount of actual damages.

PDF page 186: In this case, Mattel was found to have encouraged employees to use false Mattel, Inc. v. MGA Entm’t. pretenses to acquire competitive information from the defendant. As a Inc. result of this conduct, $85 million dollars in exemplary damages was (https://www.openstax.org/ awarded. A punitive or exemplary award may not exceed twice the amount l/MattelVMGA) xlii xliii of the damage award. However, some states have modified this cap.

PDF page 186: In this case, the Minnesota Court of Appeals affirmed a judgment of $630 Seagate Tech., LLC v. million in favor of the plaintiff stemming from a trade secret Western Digital Corp. misappropriation. Under the UTSA, damages are measured by the actual (https://www.openstax.org/ loss caused by the misappropriation and any resulting unjust enrichment of l/SeagateVWD) the misappropriator.

PDF page 186: xxxviii Damages are often awarded in addition to an injunction and are not an exclusive remedy. For example, in Seagate Tech., LLC v. Western Digital Corp. (https://www.openstax.org/l/SeagateVWD), 834 N.W.2d 555 (Minn. App. 2013), the Minnesota Court of Appeals affirmed a judgment of $630 million in favor of the plaintiffs against the defendants stemming from a trade secret misappropriation dispute. Under the UTSA, damages are measured by the actual loss caused by the misappropriation as well as any resulting unjust enrichment of the misappropriator. Where the amount of actual loss or unjust enrichment cannot be accurately calculated, the UTSA provides that damages may also be measured by the imposition of a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret. Exemplary or punitive damages may be xxxix awarded where the court finds that the misappropriation was willful and malicious. For example, in Mattel, Inc. v. MGA Entm’t, Inc. (https://www.openstax.org/l/MattelVMGA), 801 F. Supp. 2d 950 (C.D. Cal 2011), Mattel was found to have engaged in a prolonged practice of encouraging employees to use false pretenses to acquire competitive information from the defendant. As a result of this conduct, the jury awarded, and the court affirmed a verdict of $85 million dollars in exemplary damages. A punitive or exemplary award may not xl exceed twice the amount of the damage award. However, some states have modified this cap on punitive xli damages, and allow for punitive damages greater than two times the amount of actual damages.

PDF page 187: A court may also award attorneys’ fees to a prevailing party in exceptional circumstances. A bad faith claim of misappropriation, a bad faith resistance to a motion to terminate an injunction, or a finding of willful and malicious appropriation are exceptional circumstances in which an award of attorneys’ fees may be xlv appropriate. However, courts are generally disinclined to award attorneys’ fees. The attorney fee provision is included to dissuade parties from filing malicious misappropriation actions in bad faith, and considered along xlvi with the need for exemplary damages.

PDF page 187: A court may also award attorneys’ fees to a prevailing party in exceptional circumstances. A bad faith claim of misappropriation, a bad faith resistance to a motion to terminate an injunction, or a finding of willful and malicious appropriation are exceptional circumstances in which an award of attorneys’ fees may be xlv appropriate. However, courts are generally disinclined to award attorneys’ fees. The attorney fee provision is included to dissuade parties from filing malicious misappropriation actions in bad faith, and considered along xlvi with the need for exemplary damages.