The Ninth Circuit recently issued an opinion that serves as a reminder of the importance of developing robust affirmative evidence of damages suffered as a consequence of trade secret misappropriation, including the causation of those damages. In Joshua David Mellberg LLC v. Will, the plaintiffs filed an action against its former employees and their new company for misappropriation of trade secrets and unjust enrichment. The district court granted summary judgment to defendants and the Ninth Circuit affirmed.
The Court’s decision on the trade secret misappropriation claim was based on its assessment that the plaintiffs failed to provide sufficient evidence that the defendants caused the damages. Although the plaintiffs submitted an expert report supporting their claim to more than $16 million in monetary damages from the loss of trade secrets, the Court observed that the expert’s opinion was insufficient because it “assumed liability on the part of the defendants and opined only on the amount of damages.”
The Court also affirmed the district court’s grant of summary judgment to the defendants on the plaintiffs’ unjust enrichment claim. Despite the plaintiffs’ citation to disclosed financial documents and deposition testimony that millions of dollars had been spent by plaintiffs on developing the trade secrets in question, the Court dismissed the testimony as “lay opinion” and “general allegations.” The Court excluded the plaintiffs’ later supplemental declaration concerning a theory of unjust enrichment based on development costs as untimely, and accordingly found that the plaintiffs had failed to satisfy Rule 26a (1)(A)(iii), which requires a computation of each category of damages and making available the supporting evidentiary material.
The Court’s decision reminds plaintiffs of the rigorous standard of proof they will be tested against with respect to proof of damages and causation when pursuing misappropriated information.