April 18, 2012 Articles

The Broad Spectrum of Trade Secret Damages

The wide variety of economic facts and circumstances encountered in trade secret cases leads to the need for flexibility in the calculation of damages.

By Glenn Perdue

Compensatory damages for the infringement of intellectual property (IP) may be based on the actual damage suffered by a claimant, a reasonable royalty, the unjust enrichment of an infringer, or some form of statutory damage, depending on the type of IP being infringed. For instance, damages for the infringement of a utility patent are based on the claimant's actual damages (typically measured as lost profits) or a reasonable royalty. However, in cases of trade secret misappropriation, all forms of IP damage remedies may be available, other than statutory damages, which are only available under certain circumstances in trademark and copyright infringement matters.

Unlike patents, trademarks, and copyrights, which are disclosed and substantially governed by federal law, trade secrets are governed by state law and rely on some level of nondisclosure to maintain their status as a trade secret. Indeed, the economic value of a trade secret stems partially from its secrecy. Generally speaking, a trade secret provides economic value to its owner by providing some sort of proprietary competitive advantage.

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