Cases from Washington

Court of Appeals of the State of Washington, Div. I
Plaintiff's Burden to Show Sales but not Damages from Sales

According to a Washington state appeals court, once a plaintiff in a trade secrets misappropriation case has established sales, the burden then shifts to the defendant to establish what portion of those sales were not attributable to the misappropriated trade secret.

The appeals court overturned a jury's finding of no damage from the misappropriation on the grounds that the jury instructions had misstated the law, and in doing so had improperly shifted the burden of proof from the defendant to the plaintiff.

The instruction, the appeals court held, was a “misstatement of law” given that “the plaintiff's initial burden is to prove only ‘sales,' not ‘damages from sales,' before the burden shifts to the defendant.”

Washington Superior Court, King County
Washington Trial Court Refuses to Invoke Inevitable Disclosure Doctrine

On March 5, 2014, Errol Samuelson was hired by Zillow. He had worked at Move, Inc. for over a decade and most recently was its Chief Strategy Officer, a position that resembled head of sales with the added responsibility of running newly acquired business units.

The Washington state trial court found no evidence of actual trade secret misappropriation. It refused to grant an injunction under the inevitable disclosure doctrine, but did not explain why.

The case continues. Samuelson's attorneys have asked the court to grant them access to the trade secrets that Samuelson allegedly misappropriated.

Western District of Washington
W.D. Wash. Rules NFL Scouting Grades May be Trade Secrets

Defendant Rang, a sports writer, published NFS’s proprietary “Player Grades” intended for use by its customer football teams. The Western District of Washington denied cross-motions for summary judgment finding questions of material fact as to whether plaintiff's subjective assessments represented by the player grades were protectable as trade secrets.

The court first addressed the issue of whether Rang had violated copyright law through release of the National’s player grades. Finding three of the four fair use factors weighed in Rang’s favor, the court decided that while the grades were copyrightable, Rang’s use of the grades constituted fair use. On the issue of trade secret misappropriation, the court found that the grades did constitute “information” under the relevant trade secrets statute, and therefore, could be considered trade secrets. However, the court found that any determination on whether the grades were in fact trade secrets was an issue for a jury, since questions remained over whether National made reasonable attempts to protect the secrecy of the grades.

Circuit Court of Fairfax County
Virginia Appeals Court Overturns "Lost Goodwill Damages" Award

In 2009, Perot Government Services, Inc (“Perot”) brought suit against 21st Century Systems, Inc. et al. (“Century”). Perot’s claim included several causes of action (including trade secret misappropriation) stemming from the alleged theft of Perot’s confidential information by ex-employees, who went to work for Century. Prior to trial, Dell purchased Perot; Perot’s statement of damages thus included the effect that the alleged theft had on Perot’s valuation (i.e. “lost goodwill damages”).

Although the jury returned a verdict in favor of Perot, the Circuit Court of Fairfax County overturned a large percentage of the damages award – specifically approximately $11 million in damages related to Perot’s diminution in value. The trial court had allowed Perot’s expert to testify to the effect of Century’s actions on Perot’s valuation, over Century’s objection. However, the Virginian appeals court held that the trial court should not have denied Century’s motion to strike the “speculative” testimony, and further ruled that Perot had failed to actually demonstrate that Century’s conduct in any way decreased Perot’s valuation. However, the Court upheld the jury’s verdict in regards to punitive and treble damages, as well as the extensive computer forensics work Perot incurred as a result of Century’s theft.

Court of Appeals of the State of Washington, Div. II
Attorney Obtains Rival's Prices and Customer List

Vincent Gresham, a securities attorney in Atlanta, prevailed in Washington State's Court of Appeals, Division 2, winning access to prices and customer lists of securities law firm Robbins, Geller, Rudman & Dowd. Robbins, Geller had provided the information to the State of Washington's Attorney General's Office (AGO) as part of a bid to represent the Washington State Insurance Board in litigation.

The trial court had permanently enjoined the state's attorney general from releasing the information. Gresham prevailed in his argument that the trial court wrongly decided that the information was a trade secret under Washington's UTSA. If the information were a trade secret, then under the state's Public Records Act (PRA), the state could not release the information.

The court found that the information was partially disclosed; that Robbins, Geller had agreed to the release of the information under the PRA when it made its bid; that Robbins, Geller had failed to take reasonable precautions to protect the secrecy of the information; and that Robbins, Geller had not proven that it would be harmed by the release of the information.

United States District Court for the Western District of Washington (Seattle)
Baden Sports, Inc. claims Wilson Sporting Goods Co. misappropriated secrets behind its ball inflation technology

Wilson Sporting Goods Co., one of the world's leading manufacturers of sports equipment, has been sued by a competitor, Baden Sports Inc., for patent infringement, unfair trade practices, and misappropriation of trade secrets. At issue in this case is Baden's inflation table, which is used to inflate and package inflatable balls. Baden claims that Wilson solicited confidential and proprietary information from a retired Baden employee regarding Baden’s inflation table and basketball products. According to Baden’s complaint, Wilson used the information to develop a “soft”-feel basketball that is manufactured with a cellular sponge layer. Baden claims that the product infringes its patent covering cushion-control technology.

On May 23, 2011, Wilson moved to dismiss the complaint for failure to state a claim. It argues that Baden failed to show a plausible trade secret since Baden’s method of ball inflation is common among manufacturers. Additionally, Wilson requests the court to bar Baden’s common law unfair competition claim, arguing that it is preempted by the Washington Uniform Trade Secrets Act. Wilson argues that the underlying facts of Baden’s unfair competition claim are the same as those giving rise to its trade secrets claim.

On July 26, 2011 the court granted Wilson's second claim in the earlier motion to dismiss, combating the allegations that defendant contacted a former employee and offered him consulting fees, causing subsequent disclosure of information about the operation and design of Baden’s inflation table. Importantly, the court dismissed Baden's claim of trade secret misappropriation in finding that Baden's inflation table did not constitute a valid trade secret under Washington Uniform Trade Secret law. The court further contended that the allegedly novel inflation table was not described with enough accuracy or detail so as to highlight any trade secret components or features. Thus, in failing to plead any details about inflation table that make it a trade secret, Baden did not meet the pleading requirements for the claim of trade secret misappropriation, dismissing Baden's third claim of unfair competition as well. Both claims were dismissed without prejudice, while the court gave leave for Wilson to eventually amend it's complaint on September 7, 2011.

With Baden's October 19th answer, the basketball inflation table litigation entered a discovery and deposition phase, with both parties trading opening briefs and filing declarations with the court. In late July, 2012 Baden Sports filed its motion for summary judgment on the pleadings and limited discovery, countered by Wilson's own motion for summary judgment days later. Wilson replied in late August 2012 to Baden's motion for summary judgment, and on September 6, 2012 a stipulation and order was entered for extension of ongoing mediation proceedings by the parties. This stipulation was granted and the mediation deadline was extended until October 4, 2012 to the parties to reach a potential mediated settlement.