A Quick Guide to Amplifying Recovery, or Risk, in Massachusetts Trade Secret Misappropriation Cases

In Massachusetts, the intersection of trade secret law and Chapter 93A (93A), has important implications for businesses dealing with misappropriation claims. The Massachusetts Uniform Trade Secrets Act (MUTSA) and the federal Defend Trade Secrets Act (DTSA) both establish clear standards for misappropriation, and violations can lead to significant legal repercussions. But those legal repercussions may be amplified even more in Massachusetts through use of its Chapter 93A.

1. Misappropriation Liability Amplified

Under both MUTSA and DTSA, willful and malicious misappropriation can result in double actual damages and attorney fees, emphasizing the seriousness of such violations.

However, a savvy plaintiff may amplify trade secret misappropriation liability further in Massachusetts by invoking the powerful rights and remedies of its more general statutory scheme, Chapter 93A. Cases generally hold that MUTSA does not preempt a related 93A trade secret claim. While a company must be careful to qualify under 93A, misappropriation of trade secrets alone can constitute a 93A violation under Massachusetts law. Section 2 of 93A proscribes “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”

A “willful or knowing” violation of 93A, under, for example, Section 11, allows for up to treble damages (of all damages foreseeably flowing from the unfair or deceptive act or practice). Further, the prevailing plaintiff is entitled to attorney fees and costs.

2. The Governo Case and the “Marketplace Test”

While Chapter 93A liability ordinarily exempts disputes between employers and employees that arise out of their employment relationship, the Massachusetts Supreme Judicial Court (SJC) in Governo Law Firm LLC v. Bergeron clarified in 2021 that employees who misappropriate trade secrets during employment do not enjoy immunity from 93A liability if they subsequently use those secrets to compete against their former employer. The SJC established a "marketplace test," focusing on whether the misappropriated trade secrets were used competitively. This broad standard allows for a wider range of liability under 93A, shifting away from a purely employment-based shield. Some earlier splits in authority exist regarding whether 93A claims apply in various contexts, including suits involving former employees and/or the competitors who hired the employee.

3. Seeking Injunctive Relief

Under 93A, plaintiffs can seek injunctive relief even without demonstrating a loss of money or property. This is particularly relevant for cases involving trade secrets, as injunctive relief can prevent further misuse of confidential information. However, it’s important to establish that the information qualifies as a protected trade secret.

4. Sham Litigation Concerns

Claims of sham trade secret litigation—baseless lawsuits intended to disrupt a competitor's business—can also constitute a violation of 93A. Businesses must be cautious not to engage in litigation that may be viewed as retaliatory or frivolous, as such actions can lead to counterclaims under 93A.

5. Conclusion

Businesses and individuals faced with filing, or responding to, trade secret misappropriation claims should proceed deliberately and strategically in light of federal and state law. In Massachusetts, understanding the nuances of misappropriation standards, the implications of the Governo decision, and the circumstances under which 93A claims may arise and liability may be amplified or mitigated is essential for both protecting and defending proprietary information and navigating competitive relationships. Engaging legal counsel familiar with trade secret law and 93A can help craft strategies to safeguard intellectual property, minimize litigation exposure, and maximize recovery when wronged.