Tuesday, January 24, 2006, 1/24/2006 08:24:00 AM

Ninth Circuit Clarifies Trade Secrets Damages Law

In a recent unpublished decision, B. Braun Medical, Inc. v. Rogers, 2006 WL 92879 (9th Cir. Jan. 13, 2006), the Court of Appeals for the Ninth Circuit clarified the law of damages under the California Uniform Trade Secrets Act. The court, in reversing the trial court's reduction of compensatory damages awarded by the jury, ruled that California allowed a trade secrets plaintiff to recover both its actual damages and the defendant's unjust enrichment "as long as there is no double counting." Moreover, the defendant's unjust enrichment -- generally considered its profits from the misappropriation -- need not be entirely traceable to the misappropriation providing there is a causal nexus between the profits and the use of the trade secrets.

Only when a plaintiff can demonstrate niether actual damages nor unjust enrichment does the California act provide for a third form of recovery based on a "reasonable royalty."

The ruling by the Ninth Circuit clarifies that the way is open to significant recoveries using two different types of calculation. Because the California Uniform Trade Secrets Act is similar to Acts adopted in many other states, this ruling may have traction outside California.

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