Ninth Circuit Reverses Fee Award in DTSA Case

The Ninth Circuit recently added to the small body of appellate court precedent interpreting the Defend Trade Secrets Act (DTSA), reversing an attorney fee award which had been granted by a district court in Washington. The reversal stemmed from the appellate court’s de novo determination that no circumstances existed to support a finding that the suit was brought and maintained in bad faith.

In RJB Wholesale, Inc. v. Castleberry, the plaintiff sued a former sales representative for violation of the DTSA, claiming misappropriation of a customer list and company cell phone programmed with customer contact information. After the close of discovery, the defendant moved for summary judgment that the plaintiff had not proven any damages caused by the alleged misappropriation. The district court granted the motion, and the Ninth Circuit affirmed. The Ninth Circuit reversed, however, the district court’s fee award to the prevailing defendant.

The decision follows on the heels of a decision from the Fourth Circuit, Akira Technologies, Inc. v. Conceptant, Inc., affirming the denial of attorney fees where the plaintiff “had at least some chance of success” on its DTSA claim and the Fifth Circuit in Dunster Live, LLC v. Lonestar Logos Mgmt. Co., LLC, where the court held fees were properly denied because a dismissal without prejudice did not render defendants “prevailing parties” under the DTSA. These decisions underscore the difficulty named defendants have been having in securing attorney fees under the DTSA.

Ms. Stein is a Director in the Gibbons Intellectual Property Department.. She will be presenting a webinar with Gibbons Associate, Jean E. Dassie, on trade secret misappropriation for Clear Law Institute on January 15, 2020 at 1:00 PM. To register for that webinar, click here.

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