In any action alleging the misappropriation of a trade secret under the Uniform Trade Secrets Act . . ., before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code
Under the Code, the party alleging trade secret misappropriation must file a 2019.210 statement before beginning discovery. I am sure many would complain that 2019.210 does not protect companies from frivolous (anticompetitive) suits enough. (I would be in that camp.) And, there are many frivolous trade secret suits that proceed anyway. (Moreover, abuse of process or malicious prosecution actions in California tend not to be too helpful.)
Corporate Counsel has recently reported about a trade secret case between Eaton and Triumph Group that has piqued my interest. The case has facts similar to many trade secret cases—employees depart to competitor and trade secret suit is filed. However, here, after 10 years of litigation, the party who brought the trade secret misappropriation claim is paying the defendant (alleged misappropriator) $147.5 million to settle the case. That’s right. The alleged misappropriator is getting $147.5 million. Wow. Interestingly, the trade secret action appears to have some merit—although I doubt the plaintiff knew that for certain when they filed the action—because numerous documents of plaintiff’s were found with the defendant during a later criminal investigation. Whether the documents contained trade secrets, or merely information readily accessible, already possessed by the defendant or in the public domain is another question. The defendant’s counterclaims included allegations that plaintiff’s trade secret claims were “exaggerated.” Notably, plaintiff’s conduct in the litigation allegedly was very poor and perhaps would make the plaintiff look very, very bad in front of the jury. The conduct is described by Corporate Counsel, here. Triumph Group’s (the alleged misappropriator) press release concerning the settlement is here. Do you have any leads to other statutes or regulations designed to curb or punish frivolous trade secret law suits? Have you heard of any other apparently egregious cases like this one?
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