FALL 2010

Trade Secrets


Course No. 9200-704 (& 804)-801

ID No. 85737 & 85736

Time:  W 6:30 - 9:30 p.m.
Room:  W-215
Professor Jay Dratler, Jr.
Room Across from 231D (IP Alcove)
Home: 330-835-4537
Copyright © 2000, 2002, 2003, 2006, 2008, 2010   Jay Dratler, Jr.   For permission, see CMI.

Questions and Notes on the UTSA’s Remedial Provisions

1. The fundamental goal of all Anglo-American legal remedies is to put the plaintiff in the position that the plaintiff would have occupied had the wrong never occurred.  This is called the "rightful position."  A remedy that does more than put the plaintiff in the rightful position gives the plaintiff a windfall, while one that does less undercompensates for the wrong.

2.  Courts applying the "rightful position" standard often encounter two difficulties.  First, it imay be unclear what the rightful position is, either because the substantive law is unclear or because changes in circumstances unrelated to the wrong (such as changes in general economic conditions) have affected the plaintiff and obscure the injury done by the wrong.  Second and more fundamentally, there are some wrongs, such as wrongful death, that the law is powerless to reverse.

Where these difficulties arise, courts do the best they can.  Tailoring remedies is not an exact science, and often courts make reasonable approximations in determining how best to put the plaintiff in the rightful position.  Once the plaintiff has demonstrated both the fact of injury and its causative relationship to the wrong, most courts give the plaintiff the benefit of the doubt in tailoring remedies.

In a complex antitrust case, the United States Supreme Court explained why.  See Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 90 L. Ed. 652, 66 S. Ct. 574 (1946).  The plaintiffs, a chain of movie theaters, had proved that the defendants had engaged in a conspiracy in the distribution of films, in violation of the antitrust laws.  The conspiracy denied the plaintiffs' theaters access to first-run movies.  Obviously it had damaged the plaintiffs' ability to earn income, but by how much?  Because of the defendants' own wrongful conduct, no competitive market, free of the antitrust conspiracy, existed against which to measure the plaintiffs' "rightful" profits.  Moreover, changes in general economic conditions may have contributed to the injury during the years of interest.  See 327 U.S. at 262-264.  Acknowledging that the jury's award of damages, based upon experts' attempts to estimate the magnitude of the injury, was necessarily imprecise, the Supreme Court upheld it:
    "In such a case, even where the defendant by his own wrong has prevented a more precise computation, the jury may not render a verdict based on speculation or guesswork.  But the jury may make a just and reasonable estimate of the damage based on relevant data, and render its verdict accordingly.  In such circumstances juries are allowed to act upon probable and inferential, as well as direct and positive proof. . . . Any other rule would enable the wrongdoer to profit by his wrongdoing at the expense of his victim.  It would be an inducement to make wrongdoing so effective and complete in every case as to preclude any recovery, by rendering the measure of damages uncertain. [*265]  Failure to apply it would mean that the more grievous the wrong done, the less likelihood there would be of a recovery.
327 U.S. at 264-265 (citations and internal quotation marks omitted.)

3.  As you read through the remedial provisions of the Uniform Trade Secrets Act, consider two questions.  First, does the specified remedy put the plaintiff in the "rightful position," i.e., the position in which the planitiff would have been absent the wrong?  Does the statute do so without significant risk of undercompensating the plaintiff or giving her a windfall?  Second, how easy is it for courts to apply the statutory standards and determine, for example, the length of an injunction or the amount of damages?  What evidence should litigants introduce to assist courts in making those decisions?

4.  Some of the UTSA's remedial provisions have special flexibility, allowing courts to do equity on a case by cases basis.  These provisions reflect, inter alia, the equities of a defendant who has used or invested in another's trade secret before receiving notice that it had been misappropriated.  What circumstances might invoke these provisions, and how should courts balance the equities?  For example, how would/should these provisions affect the remedies against the defendant in Altai, or the defendant in Fourtek (if it had used the furnace it built to provide services for customers)?  How would they have affected the remedy agaisnt Pillsbury in Forest Laboratories, if Pillsbury had not discovered the misappropriation until it was sued?

Back to Top