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Court of Chancery Finds Misappropriation of Trade Secrets and Awards Attorneys' Fees for Defendants' Willful and Malicious Misappropriation

Posted In Business Torts

NuCar Consulting, Inc. v. Doyle, 2005 WL 820706 (Del. Ch. April 5, 2005). Plaintiff NuCar Consulting, Inc., claimed that Defendants, former employee Timothy Doyle and Doyle's newly created company, Dealer Rewards, Inc., misappropriated certain of NuCar's trade secrets. NuCar requested that the court determine whether Defendants misappropriated NuCar's trade secrets under the Delaware Uniform Trade Secrets Act and the extent to which NuCar should receive monetary damages or injunctive relief for the alleged misappropriation. NuCar also sought an award of attorney's fees pursuant to 6 Del. C. - 2004 for Defendants' allegedly willful and malicious misappropriation. The Court granted NuCar's request for a permanent injunction prohibiting Defendants' further use of the contract used for automotive deals and found Defendants liable for $69,750 in unjust enrichment damages for their misappropriation of the potential client list. Finally, the Court found that Defendants' misappropriation was willful and malicious and awarded NuCar its reasonable attorney's fees expended on its misappropriation of trade secrets claims.

To prove misappropriation of a trade secret by a former employee under the Delaware Uniform Trade Secrets Act, there is no requirement that the employee be shown to have had a written employment contract or noncompete agreement with the former employer. Plaintiff alleged misappropriation of trade secrets for its: (1) rewards program; (2) potential client list; and (3) form contract used for automotive deals. The court found that the nature and scope of Plaintiff's alleged trade secrets in its rewards program was so general that it was readily ascertainable by interested persons through, for example, publicly available promotional material; thus, NuCar failed to meet its burden of proof on its claim that its rewards program qualified as a trade secret under the Act. On the other hand, the automotive dealer portion of the potential client list both derived independent economic value from not being generally known or readily ascertainable and had been the subject of reasonable efforts to maintain its secrecy. The list, therefore, qualified as a trade secret under the Act. Likewise, the form contract also qualified as a trade secret because it had independent economic value. The court concluded that the Defendants' misappropriation of trade secrets relating to the potential client list was willful and malicious under 6 Del. C. - 2004. Having reached that conclusion and finding no persuasive mitigating evidence, the Court held that NuCar was entitled to be reimbursed for its reasonable attorney's fees in prosecuting its misappropriation of trade secrets claim.

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