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Damages Issues In Trade Secrets Cases (Part IV)

November 18, 2013

We are blogging on “Non-competes, Trade Secrets, Fiduciary Duties, and the Inevitable Disclosure Doctrine.” Mark Oberti has prepared a detailed paper on all of these issues, which can be found here.

In Rusty’s Weigh Scales and Service, Inc. v. North Texas Scales, Inc., 314 S.W.3d 105 (Tex. App.–El Paso 2010, no pet.), the court noted that damages to the owner of the trade secret are an element of a claim for damages based on a misappropriation claim. Id. at 109. The court held that the evidence was insufficient to support an award of lost profit damages, in an industrial weigh scale company’s action against a competitor for misappropriation of trade secrets based on the competitor’s alleged use of the company’s software. The company’s owner asserted that the company lost $2 million in profits, but did not prove through documentation that such profits were lost, and did not demonstrate that the alleged loss of profits was caused by loss of customers due to the competitor’s use of the company’s software. Id. at 110-11. The court found that such “proof” amounted to mere speculation of lost profits, and was not sufficient to support any award of damages. Id. The court also found that the plaintiff had failed to present clear and convincing proof of “malice,” so no award of punitive damages was justified. Id. at 113.