Damages Issues In Trade Secrets Cases (Part II)

We are blogging on “Non-competes, Trade Secrets, Fiduciary Duties, and the Inevitable Disclosure Doctrine.” Mark Oberti has prepared a detailed paper on all of these issues, which can be found here.

In Bohnsack v. Varco, L.P., 668 F.3d 262 (5th Cir. 2012), the Fifth Circuit affirmed a $600,000.00 damages award in a trade secrets misappropriation case, based on what a reasonable investor would have paid for the secrets, observing that:

Damages in misappropriation cases can take several forms: the value of plaintiff’s lost profits, Jackson v. Fontaine’s Clinics, Inc., 499 S.W.2d 87, 89–90 (Tex. 1973); the defendant’s actual profits from the use of the secret, Elcor Chem. Corp. v. Agri–Sul, Inc., 494 S.W.2d 204, 214 (Tex.Civ.App. 1973); the value that a reasonably prudent investor would have paid for the trade secret, Precision Plating & Metal Finishing Inc. v. Martin–Marietta Corp., 435 F.2d 1262, 1263–64 (5th Cir. 1970); the development costs the defendant avoided incurring through misappropriation, Univ. Computing Co. v. Lykes–Youngstown Corp., 504 F.2d 518, 535–36 (5th Cir. 1974) (applying Georgia law); and a “reasonable royalty,” Elcor Chem. Corp., 494 S.W.2d at 214. This variety of approaches demonstrates the “flexible” approach used to calculate damages for claims of misappropriation of trade secrets. See Univ. Computing, 504 F.2d at 535.

Id. at 280.

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