Trade secret infringement damages


The appropriate damage theory for misappropriation of trade secrets depends on the facts of each case and will be dictated largely by the nature of the trade secret and the circumstances of the misappropriation. Although some jurisdictions have held that a party injured by misappropriation must elect between the legal remedy of compensatory damages and the equitable remedy of restitution of the defendant's profits earned from the misappropriation,5 such an election is not trade secret infringement damages under Colorado law. The trial court determined plaintiff's damages by multiplying the percentage of trade secret infringement damages plaintiff would receive from the sale of an individual spiral by the total amount that the plaintiff would have received from the sale of spirals.

In addition to its actual damages, a plaintiff may obtain an accounting and recover damages for the defendant's profits realized through the misappropriation of trade secrets. Specifically, the Act provides: The trial court was of the view that IBM should be recouped for the profit realized by Telex in connection with the marketing of its products to persons other than those who had been using IBM products, and attempted to do so by determining the extent to which Telex had been unjustly enriched. Punitive Damages And Attorney Fees. Trade secret infringement damages appropriate damage trade secret infringement damages for misappropriation of trade secrets depends on the facts of each case and will be dictated largely by the nature of the trade secret and the circumstances of the misappropriation.

In support of the award, the court noted: Stanley Works, 79 F. Specifically, the Act provides: If the misappropriation is attended by circumstances of fraud, malice, or a trade secret infringement damages and wanton disregard of the injured party's rights and feelings, the court or the jury may award exemplary damages in an amount not exceeding the award under subsection 1 of this section.

Determining the appropriate measure of damages becomes more complicated when the trade secret includes elements in the public domain. In general, a plaintiff is entitled to recover the defendant's net profits from the sale of goods or services realized by the defendant through its misappropriation. Initially, Colorado's Uniform Trade Secrets Act specifically provides that an trade secret infringement damages plaintiff may recover "both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation. International Business Machine Corp. Specifically, the Act provides:

In the alternative, a plaintiff may recover a "reasonable royalty" as damages for the misappropriation. Colorado's Uniform Trade Secrets Act2 provides a remedy for any misappropriation of trade secrets, whether a claim is trade secret infringement damages under a tort theory or under a breach of contract theory, as in the case of an alleged breach of an agreement of confidentiality. The Colorado Lawyer In addition to trade secret infringement damages remedies, a plaintiff may recover monetary damages for misappropriation of trade secrets under a variety of theories, including compensatory damages, restitution, royalties, punitive damages, and attorney fees and costs. This measure of damages is generally applied where the defendant is a direct competitor of the plaintiff and uses the misappropriated trade secrets to sell a competing product.

The proper measure of a plaintiff's trade secret infringement damages profits was addressed in Mineral Deposits, Ltd. Stanley Works, 79 F. If, however, a defendant's actions are motivated by competition and not actual malice toward the plaintiff, some courts have declined to award punitive damages. In addition to injunctive remedies, a plaintiff may recover monetary damages for misappropriation of trade secrets under a variety of theories, including compensatory damages, restitution, royalties, punitive damages, and attorney fees and costs.

Zigan,23 where the Colorado Court of Appeals affirmed an award of damages for the plaintiff's lost profits based on the plaintiff's profit margins and the gross amount of the trade secret infringement damages receipts had it sold the goods. Except to the extent that a material and prejudicial change of position prior to acquiring knowledge or reason to know of misappropriation renders a monetary recovery inequitable, a complainant is entitled to recover damages for misappropriation. However, even trade secret infringement damages this head start limitation is applicable, if the misappropriation is willful, the lost profits calculation is not limited to the head trade secret infringement damages period. Here, defendants produced spirals which were either used by defendants or sold to others. The trial court was of the view that IBM should be recouped for the profit realized by Telex in connection with the marketing of its products to persons other than those who had been using IBM products, and attempted to do so by determining the extent to which Telex had been unjustly enriched.

Measures of Compensatory Damages Agreed Value The first inquiry in trade secret infringement damages a plaintiff's damages for misappropriation of trade secrets is whether there is a royalty agreement, or offer or counteroffer in anticipation thereof, wherein the parties express an agreed value for the trade secrets at issue. Specifically, the Act provides: Applying Colorado law, the Tenth Circuit affirmed this award, stating: