Pennsylvania Federal Judge Awards Attorney’s Fees in Related Trade Secrets Cases

Posted by Neal F. Weinrich on

In Hill v. Best Medical International, Inc., Civil Action File Nos. 07-1709, 08-1404, 09-1194, 2011 WL6749036 (W.D. Pa. Dec. 22, 2011), Judge Standish, following his entry of summary judgment against Best Medical International, Inc. (“BMI”), slapped BMI with a substantial attorney’s fees award for pursuing trade secrets claims in bad faith.  Judge Standish based his decision on a provision in the Pennsylvania Uniform Trade Secrets Act which authorizes a court to award reasonable attorney’s fees to the prevailing party in a trade secrets case if a claim of misappropriation is made in bad faith.  Other states’ versions of the Uniform Trade Secrets Act contain similar language, including Georgia’s.  See O.C.G.A. § 10-1-764.

To analyze whether an award of fees was appropriate, Judge Standish adopted a test which had been adopted by the California Court of Appeals.  Under that test, bad faith is established by proof of the following two elements: (1) objective speciousness of the Plaintiff’s claim, and (2) subjective bad faith in bringing or maintaining the claim.  Judge Standish found that by a certain point in the litigation after the Defendants had already made their computers available for BMI’s inspection, BMI could have with reasonable investigation determined that the Defendants did not have any of the Plaintiff’s trade secrets.  Judge Standish also relied on his finding at summary judgment that BMI had failed to identify the alleged misappropriated trade secrets at any point in the litigation, including in response to motions for summary judgment.  Based in part on these findings, Judge Standish found that these two elements were met and bad faith had thus been established.

Judge Standish’s Memorandum Opinion containing his detailed analysis of why it was appropriate to award attorney’s fees for BMI’s bad faith prosecution of trade secrets claims can be reviewed here.  Additionally, an excellent article discussing a similar attorneys’ fees award entered against a plaintiff in a trade secrets case by the Sacramento Superior Court can be reviewed here.  Finally, a blog entry discussing a scathing opinion by the Circuit Court of Cook County, Illinois, which also granted a defendant in a trade secrets case a substantial attorneys’ fees award, can be found here.  One can read the opinion issued by Judge Mason of the Circuit Court of Cook County here.