Two Circuit Courts Award Millions In Damages In Trade Secrets Cases, Utilizing Different Valuation Methods

Key Takeaways:

• Although calculating damages in trade secrets cases can be challenging, courts have flexibility in fashioning an award to fairly compensate the victim of a trade secret theft.
• The Third and Fifth Circuits recently upheld two very different measures of damages: (1) the benefit conferred on the defendant (unjust enrichment), and (2) the objective value to a reasonably prudent investor for the trade secret (actual loss). Counsel's selection of a damages theory is a critical strategic choice.

Trade secret law affords plaintiffs flexibility in fashioning a damages calculation. As detailed in the Defense of Trade Secrets Act, remedies can include (1) injunctive relief, (2) damages for the plaintiff's actual loss, (3) damages for unjust enrichment of the defendant, (4) assessment of a reasonable royalty for use of the trade secret, payable to the plaintiff, and (5) exemplary damages for up to two times the amount of an actual damages award. 18