Attorneys’ Fees under the GTSA: Willful and Malicious Misappropriation

Posted by Daniel H. Park on

Continuing our discussion on attorneys’ fees under the Georgia Trade Secrets Act (GTSA), in addition to the circumstance in which fees are awarded where a GTSA claim is made in bad faith, fees may also be awarded to the prevailing party where “willful and malicious misappropriation exists.” 

Georgia is one of many states that has adopted the Uniform Trade Secrets Act.  Codified as O.C.G.A. section 10-1-760, et seq., the GTSA provides a statutory cause of action for a misappropriation of trade secrets.  

The GTSA sets forth a statutory exception to the general rule that each party in litigation bears its own attorneys’ fees, permitting an award of attorneys’ fees to the prevailing party under certain circumstances.  Specifically, the GTSA states: “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 attorneys’ fees to the prevailing party.”  O.C.G.A. § 10-1-764.  Whether to grant such fees is fully within the discretion of the court.

One circumstance in which fees may be awarded is where willful and malicious misappropriation exists.  For example, a plaintiff prevailing in his or her misappropriation of trade secrets claim under the GTSA may seek fees for a defendant’s willful and malicious misappropriation.

The GTSA does not define “willful and malicious” and few published opinions discuss willful and malicious misappropriation under O.C.G.A. section 10-1-764.  Nevertheless, the limited case law provides some insight into what constitutes willful and malicious misappropriation under the GTSA.  What we can glean from these cases is that the bar is high if you are seeking fees.  For example, one Georgia Appellate Court found willful and malicious misappropriation where the evidence showed the defendant hired four of the plaintiff’s employees who stole computer software which formed the basis of its operations.  Brandenburg v. All-Fleet Refinishing, Inc., 252 Ga. App. 40, 40 (2001).  The computer software allowed defendant to gain an unfair advantage over the plaintiff in bidding for jobs and dealing with customers.  Id.  The court also found that the defendant’s “actions in hiring [plaintiff’s] employees, stealing its software, and actively soliciting its customers, were wilful and malicious.”  Id. at 43. 

Although the GTSA does not define “willful and malicious” misappropriation, the limited case law demonstrates that a misappropriation may be considered willful and malicious where the defendant intentionally takes and uses a trade secret without legal justification and does so with ill will or conscious disregard of the plaintiff’s rights to the trade secrets.

It is important to be mindful of the attorneys’ fees provision when litigating a GTSA claim.  Whether an alleged misappropriation may be considered willful and malicious is an important consideration when assessing a claim for both the potential plaintiff and defendant.