De Lage Landen Operational Services, LLC v Third Pillar Systems, Inc.
2010 WL 5093880 (E.D. Pa. Dec. 10, 2010.)
PROCEDURAL POSTURE: The case is in United States District Court for the Eastern District of Pennsylvania. Plaintiff De Lage Landen Operational Services, LLC (“DLLâ€) sued Defendant Third Pillar Systems, LLC’s (“Pillarâ€) for trade secret misappropriation under the California Uniform Trade Secrets Act (“CUTSAâ€) and breach of contract. Before the court is Pillar’s motion for summary judgment on the issue of damages.
FACTS: DLL hired Pillar to develop a software program called “Beacon†project for DLL to use in their vendor finance lending and leasing business. In a permanent injunction hearing, the court found that DLL owed twelve “use cases,†detailed step-by-step models of DLL’s trade secret business practices created during the Beacon project and that Pillar had misappropriated DLL’s trade secrets in the twelve use cases that DLL owned. The court issued a preliminary injunction requiring that Pillar return and/or destroy all twelve copies.
ISSUE: Are actual damages essential elements of a breach of contract claim and a claim for misappropriation under CUTSA, such that a claim not seeking them in the form of lost profits may be dismissed in a motion for summary judgment?
HOLDING: No, the CUTSA provisions pertaining to misappropriation of trade secrets do not limit recovery to actual damages in the nature of lost profits. Rather, the CUTSA specifically provides for an order of reasonable royalty when neither lost profits nor unjust enrichment are provable.
ANALYSIS: “DLL may establish its damages by proving that Pillar has been unjustly enriched or,†if unprovable, “by asking the court to order payment of a reasonable royalty for Pillar’s unauthorized use of DLL’s trade secrets.†Because Pillar’s project manager testified that Pillar earned approximately $18 million from the sale of software containing DLL’s trade secret use cases, a genuine issue of material fact exists as to the issue of DLL’s damages.
2010 WL 5093880 (E.D. Pa. Dec. 10, 2010.)
PROCEDURAL POSTURE: The case is in United States District Court for the Eastern District of Pennsylvania. Plaintiff De Lage Landen Operational Services, LLC (“DLLâ€) sued Defendant Third Pillar Systems, LLC’s (“Pillarâ€) for trade secret misappropriation under the California Uniform Trade Secrets Act (“CUTSAâ€) and breach of contract. Before the court is Pillar’s motion for summary judgment on the issue of damages.
FACTS: DLL hired Pillar to develop a software program called “Beacon†project for DLL to use in their vendor finance lending and leasing business. In a permanent injunction hearing, the court found that DLL owed twelve “use cases,†detailed step-by-step models of DLL’s trade secret business practices created during the Beacon project and that Pillar had misappropriated DLL’s trade secrets in the twelve use cases that DLL owned. The court issued a preliminary injunction requiring that Pillar return and/or destroy all twelve copies.
ISSUE: Are actual damages essential elements of a breach of contract claim and a claim for misappropriation under CUTSA, such that a claim not seeking them in the form of lost profits may be dismissed in a motion for summary judgment?
HOLDING: No, the CUTSA provisions pertaining to misappropriation of trade secrets do not limit recovery to actual damages in the nature of lost profits. Rather, the CUTSA specifically provides for an order of reasonable royalty when neither lost profits nor unjust enrichment are provable.
ANALYSIS: “DLL may establish its damages by proving that Pillar has been unjustly enriched or,†if unprovable, “by asking the court to order payment of a reasonable royalty for Pillar’s unauthorized use of DLL’s trade secrets.†Because Pillar’s project manager testified that Pillar earned approximately $18 million from the sale of software containing DLL’s trade secret use cases, a genuine issue of material fact exists as to the issue of DLL’s damages.