Sanctions

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Litigators know it is generally not easy to recover attorneys’ fees in defense of a trade secret misappropriation action. The Federal Defend Trade Secrets Act (“DTSA”) permits a court to “award reasonable attorneys’  fees” to the defendant when a claim of misappropriation  is “made in bad faith,” which “may be established by circumstantial evidence.”[1] But what exactly does bad faith mean and what is the threshold?
Continue Reading A High Mountain to Climb: Filing DTSA Claims Without any Evidence is Not Enough to Meet “Bad Faith” Standard for Awarding Attorneys’ Fees to Opponent

The recent case of Multimedia Sales & Marketing, Inc. v. Marzullo, et al., — N.E.3d —-, 2020 IL App (1st) 191790 (1st Dist. Dec. 21, 2020), demonstrates the peril that attorney fees sanctions present for litigants who bring trade secret misappropriation claims in bad faith.
Continue Reading Illinois Appellate Court Upholds Sanctions Against Radio Advertiser For Bad Faith Trade Secrets Claims

On September 2, 2020, the Fifth Circuit declined to void a fee award of nearly $2.3 million in favor of an employer that had prevailed on its trade secret theft claim against its former employee, because the employee willfully failed to comply with the bankruptcy court’s “extremely explicit” order regarding his objections to the award.
Continue Reading Fifth Circuit Affirms Attorney’s Fee Award of $2.3 million in Misappropriation Case Against Former Employee who Failed to Comply with Court’s Objections Order

As previously noted in this forum: “[p]reservation of electronically stored evidence (ESI) may be critical in trade secret cases.”  See 3 Steps in Furtherance of Avoiding Devastating Spoliation Sanctions in Trade Secrets Misappropriation Litigation.  This is true for both plaintiffs and defendants, as the fate of modern trade secrets claims regularly turns on the existence or absence of a digital trail left by the accused appropriator.  Given the often transitory nature of this evidence, potential litigants must carefully and proactively preserve it in order to mount an effective case or defense.  This is especially true for early-stage entities with limited resources, as the “consequences for spoliation of electronically stored information may be severe” – including case terminating sanctions that may be devastating to such an entity’s continued operation.  See id.
Continue Reading Self-Driving Cars and Auto-Deletes: An Epic E-Discovery Mismatch

Here, we provide a cautionary tale of what can happen to a business that fails to preserve documents that are potentially relevant evidence to pending or threatened trade secrets litigation, and offer some takeaways for businesses that would like to avoid such dire straits.[1]
Continue Reading A Cautionary Trade Secrets Tale: Failure To Preserve Potentially Relevant Evidence