Procedural Posture
On Sale
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Plaintiff trade secret owner appealed a judgment from the Superior Court of Santa Clara County (California), which rejected the owner's request to award reasonable royalties under Civ. Code, § 3426.2, subd. (b), after a jury determined that defendant, a potential licensee with whom the owner had negotiated, had willfully and maliciously misappropriated the owner's trade secrets.
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Evidence of the owner's actual loss was excluded as speculative. At trial, the owner relied solely upon an unjust enrichment measure of damages. The jury found that no unjust enrichment had occurred because the value of the benefit obtained by the misappropriation did not exceed the expenses incurred. The court held that unjust enrichment was not provable within the meaning of Civ. Code, § 3426.3, subd. (b), in light of the jury's finding that no profit was gained from the misappropriation of trade secrets. Where a defendant realized no profit or other calculable benefit as a result of misappropriating a trade secret, unjust enrichment was not provable under § 3426.3, subd. (b), whether the lack of benefit was determined as a matter of law or as a matter of fact. Evidence of investment capital received by another corporation that had become defunct was properly found irrelevant under Evid. Code, § 210, and complex financial documents were properly excluded as confusing under Evid. Code, § 352. Judicial estoppel arising from the successful motion to exclude evidence of an actual loss as speculative precluded an argument that the owner could have produced evidence of an actual loss.
The court reversed and remanded with directions to the trial court to exercise its discretion as to whether to order payment of a reasonable royalty.
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Overview
Evidence of the owner's actual loss was excluded as speculative. At trial, the owner relied solely upon an unjust enrichment measure of damages. The jury found that no unjust enrichment had occurred because the value of the benefit obtained by the misappropriation did not exceed the expenses incurred. The court held that unjust enrichment was not provable within the meaning of Civ. Code, § 3426.3, subd. (b), in light of the jury's finding that no profit was gained from the misappropriation of trade secrets. Where a defendant realized no profit or other calculable benefit as a result of misappropriating a trade secret, unjust enrichment was not provable under § 3426.3, subd. (b), whether the lack of benefit was determined as a matter of law or as a matter of fact. Evidence of investment capital received by another corporation that had become defunct was properly found irrelevant under Evid. Code, § 210, and complex financial documents were properly excluded as confusing under Evid. Code, § 352. Judicial estoppel arising from the successful motion to exclude evidence of an actual loss as speculative precluded an argument that the owner could have produced evidence of an actual loss.
Outcome
The court reversed and remanded with directions to the trial court to exercise its discretion as to whether to order payment of a reasonable royalty.