Civil Code Section 3426.4 Allows A Prevailing Plaintiff Recovery For Willful And Malicious Misappropriation.
In trade secrets cases, Civil Code section 3426.4 allows for a discretionary court award of reasonable attorney’s fees and costs to the prevailing party “[i]f a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists.” Most of the case law relates to a prevailing defendant’s discretionary entitlement to fees under the first part of section 3426.4.
What about prevailing plaintiffs? We suggest that you consult two cases on the third part of the fee entitlement under section 3426.4. A recent decision, Bladeroom Group Ltd. v. Emerson Elec. Co. (N.D. Cal. March 11, 2019) by District Judge Edward J. Davila, suggests that the plaintiff inquiry is closely intertwined with proof that a defendant acted willfully and maliciously so as to justify punitive damages under CUTSA. However, that decision also quoted reasoning from Mattel, Inc. v. MGA Entertainment, Inc., 801 F. Supp.2d 950, 956 (C.D. Cal. 2011) (Carter, D.J.), which found that fees to a prevailing party is based on equitable concerns, especially where there is a well-heeled defendant engaging conduct to undermine legitimate competition and innovation. In Bladeroom Group, defendants were alleged to lure plaintiff to divulge trade secrets based on “false pretenses” of a proposed merger/acquisition, only to call things off and use the confidential information later, with one defendant settling during the trial and another defendant riding it out so as to be “stung” with a $30 million lost profits/unjust enrichment adverse jury verdict.