Page 25 - Intellectual Property Disputes

computers was not limited to conduct of outsiders; and (e) the damage claim was stated, even though
appropriation did not affect integrity of secrets within employers’ computers. fn 41

Trade secrets can also include customer lists. For example, in Ed Nowogroski Insurance, Inc. v. Rucker,
the Washington State Superior Court ruled that employees had misappropriated employer’s trade secrets
by retaining and using client lists and other documents. The court awarded damages, except it withheld
relief for one employee’s solicitation of clients based on the misappropriation of memorized
information. fn 42 On appeal, the Supreme Court of Washington, addressing the issue of first impression,
"held that trade secret protection does not depend on whether a customer list is taken in written form or
memorized." fn 43

Enforcement of Trade Secret Rights

Damages under the DTSA and the UTSA are similar, with available remedies, including injunctive
relief, recovery of actual losses, and the award unjust enrichment damages caused by misappropriation
that is not taken into account in computing actual losses. In lieu of damages measured by any other
methods, the damages caused by misappropriation may be measured by imposition of liability for a
reasonable royalty for the unauthorized disclosure or use of a trade secret. Damages up to double the
award may be available upon a finding of willful and malicious misappropriation. Because practitioners
will most commonly address the DTSA and UTSA in damages work, the remedies available under these
trade secret laws are the focus of this practice aid.

Notable differences between the DTSA and the UTSA include the seizure and employment protection
provisions of the DTSA. The seizure mechanism enables the court, in exceptional circumstances, to
issue an order allowing the seizure of alleged stolen information (such as on defendant's computers)
without providing advance notice to the defendant. Under the so-called "employment protection
provision" of the DTSA, although a defendant can be enjoined, a plaintiff cannot prevent a defendant
from taking a competing job simply based on defendant's knowledge of plaintiff's trade secrets unless
there’s actual evidence of threatened misappropriation. As stated earlier, the DTSA does not supersede
state employment law, so states with inevitable disclosure doctrines cannot be preempted.

In 1995, the Seventh Circuit Court of Appeals, in PepsiCo, Inc. v. Redmond, reinvigorated the
"inevitable disclosure" doctrine applicable to trade secrets. Under this doctrine, the owner of the trade
secret can prove trade secret misappropriation by demonstrating that the employee’s new employment
will inevitably lead him or her to divulge the secret, whether consciously or not, because of the type of
work in which the employee will be involved with the new employer. fn 44 One of the complexities of the
inevitable disclosure doctrine lies in differentiating between a protected trade secret, on the one hand,
and the ex-employee’s knowledge and skills retained in his or her memory, on the other.

fn 41 Shurgard Storage Ctrs., Inc. v. Safeguard Self Storage, Inc., 119 F. Supp. 2d 1121 (W.D. Wash. 2000).

fn 42 Ed Nowogroski Ins., Inc. v. Rucker, 137 Wash. 2d 427, 971 P. 2d 936 (Wash. 1999).

fn 43 Id.

fn 44 PepsiCo, Inc. v. Redmond, 1996 WL 3965 (N.D. Ill. 1996).

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