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Article: Bad Faith Prosecution in Trade Secrets May Lead to Fee Award (Or Not)

November 5, 2021 | Posted in : Article / Book, Fee Award, Fee Entitlement / Recoverability, Fees & Bad Faith

A recent article by Keith Paul Bishop, “Bad Faith Prosecution of Trade Secrets Theft May Lead to Attorney Fee Award (Or Not),” reports on bad faith and the prosecution of trade secrets theft and attorney fee awards in California.  This article was posted with permission.  The article reads:

In 1984, the California legislature decided to curb "specious" actions for misappropriation of trade secrets by enacting Section 3426.4 of the California Civil Code.  Cal. Stats. 1984, ch. 1724.   That statute provides:

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 attorney’s fees and costs to the prevailing party.  Recoverable costs hereunder shall include a reasonable sum to cover the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the prevailing party.

In 2006, the legislature amended the statute to add "and costs" in the first sentence and to add the second sentence.  Cal. Stats. 2006, ch. 62.

Not all theft of trade secrets claims are made in made faith, however, and such was the case in Dr. V Productions, Inc. v. Rey, 2021 Cal. App. LEXIS 752.   The case involved an attempted appeal from an order denying a motion for attorney's fees after a voluntary dismissal of a misappropriation of trade secrets claim.   The Court of Appeal held that the order was not separately appealable.