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Trade Secret Theft Cases Can Result in Big Jury Verdicts

December 30, 2015

Posted in Business Litigation

photo - trade secrets verdictsYour business probably relies on a variety of information that you wouldn’t want disclosed to outside parties. That disclosure could make you less competitive and harm your business. If another company gains access to that information by an illegal method, you may have a basis to file legal action. That lawsuit can ask a judge to order that the use of that information cease and that you obtain money damages for lost profits.

If your company takes reasonable measures to protect information and that information has value because it’s secret, the California Uniform Trade Secrets Act (UTSA) recognizes that not just product formulas or designs are trade secrets, but also more common pieces of data can be protected as well. This information can include customer lists, business plans, corporate minutes and bid specifications.

The UTSA doesn’t use the word “theft” it uses the word “misappropriation” which includes,

  • The acquisition by improper means (“(T)heft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means.” Civil Code section 3426.1(a)), and
  • The use or disclosure of trade secrets (such as a former employee using trade secret information to generate business for a competitor).

Depending on the circumstances trade secrets verdicts in favor of the plaintiff can run into the tens of millions of dollars. Here are some examples,

  • A Nebraska state court jury awarded an Omaha software developer $43.8 million in September in a case where a competing software firm was accused of violating antitrust laws and breaching a nondisclosure agreement, according to the Washington Times. The two parties were involved in prior litigation where the plaintiff disclosed software manuals to the defendant as part of the process to determine if software had been pirated. That information was not supposed to be later used for business purposes, but a second lawsuit found that it was, resulting in damages to the plaintiff.
  • A jury in state court in Georgia awarded $30 million to the plaintiff in September in a lawsuit involving alleged stolen trade secrets, broken contracts and breached legal duties. A Massachusetts company sued ten defendants, including four former executives, according to the Daily Report. The plaintiff showed that these former executives conspired and planned to leave to work for competitors taking with them confidential information, customer lists and business opportunities. The plaintiff claimed defendants suffered tens of millions of dollars in lost profits and hundreds of employees were laid off as a result.
  • GenScript USA, Inc. and affiliated companies won a $10 million jury verdict in a trade secret case against GeneWiz Inc. in December, Reuters A New Jersey jury found the defendant illegally obtained and used trade secrets involving a confidential DNA technology procedure plaintiff uses for scientific research in the fields of vaccines, pharmaceuticals and biofuels. The information came from a former GenScript employee whom GeneWiz illegally hired, according to the jury verdict.

A dispute over trade secrets doesn’t need to be worth eight figures in order to justify legal action. Smaller businesses are often involved in trade secret issues where thousands of dollars may mean the difference between a business succeeding or closing. Whether you feel your business has suffered due to the misuse of trade secrets, or your business has been accused of trade secret misappropriation, contact our office so we can talk about your situation, how the law could be applied and your best options to protect your rights and interests.