September 27, 2021

Volume XI, Number 270

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September 24, 2021

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Bad Faith Prosecution Of Trade Secrets Theft May Lead To Attorney's Fee Award (Or Not)

“If you want to keep a secret, you must also hide it from yourself.”
― George Orwell, 1984

In 1984, the California legislature decided to curb "specious" actions for misappropriation of trade secrets by enacting Section 3426.4 of the California Civil Code.  Cal. Stats. 1984, ch. 1724.   That statute provides:

If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney’s fees and costs to the prevailing party.  Recoverable costs hereunder shall include a reasonable sum to cover the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the prevailing party.

In 2006, the legislature amended the statute to add "and costs" in the first sentence and to add the second sentence.  Cal. Stats. 2006, ch. 62.

Not all theft of trade secrets claims are made in made faith, however, and such was the case in Dr. V Productions, Inc. v. Rey, 2021 Cal. App. LEXIS 752.   The case involved an attempted appeal from an order denying a motion for attorney's fees after a voluntary dismissal of a misappropriation of trade secrets claim.   The Court of Appeal held that the order was not separately appealable.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 257
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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