# Trade Secret Basics

## Remedies Available for the Misappropriation of Trade Secrets


### Learning Objectives

After completing this section, you will be able to
1. Describe how injunctions are used to enjoin actual and threatened misappropriations of trade secrets.
2. Explain how remedies are awarded under the Uniform Trade Secrets Act.

      The UTSA provides a full array of remedies, including
      statutory damages,
      injunctive relief,
      attorneys’ fees, and
      exemplary damages.
        See Unif. Trade Secrets Act §§ 2-5, U.L.A (1985).
      
      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.
      

### Injunctive Relief


      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 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 employee’s work with a new employer.
        See 
      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 the defendant of the benefit of time saved by improper use of the owner’s trade secret.
        See 
    
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 information could be properly obtained through reverse engineering or independent development.
        See, e.g., 
    
To determine what length of time is appropriate, courts may rely on the opinions of experts and the experience of other competitors.
        See, Restatement (Third) of Unfair Competition Section 44, comment f.
      
      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 court.
        See e.g., 
    
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
      be a more limited injunction for a more limited duration.
        See, e.g., 
      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 employer’s business.
        See, 
      However, if the role the employee will assume would inevitably lead to the disclosure of trade secrets, the employment may be prohibited altogether.
        
    

### Damages Awarded


      Damages are often awarded in addition to an injunction and are not an exclusive remedy.
        See e.g., 
      For example, in
      
        , 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 awarded where the court finds that the misappropriation was willful and malicious.
        See, e.g., 

      For example, in
      
        , 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 exceed twice
        the amount of the damage award.
        See Unif. Trade Secrets Act § 3(b), U.L.A (1985).
      
      However, some states have modified this cap on punitive damages, and allow for punitive damages greater than two times the amount of actual damages.
        
    
In exceptional circumstances, an injunction may entitle the owner of the trade secret to a royalty for the period of time during which the use of the trade secret was prohibited. For example, the Supreme Court of Georgia has
      affirmed a trial court’s reliance on a seldom-used provision of the UTSA to impose a “royalty injunction” instead of an injunction prohibiting the use of the plaintiff’s trade secret.
        See 
    
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 appropriate. However, courts are generally disinclined to award attorneys’ fees.
        See, e.g., 
      The attorney fee provision is included to dissuade parties from filing malicious misappropriation actions in bad faith, and considered along with the need for exemplary damages.
        See Unif. Trade Secrets Act § 4 (comment), U.L.A(1985).
      
    