By Paul Freehling

When the evidence of trade secret misappropriation and resulting substantial damages is compelling, defendants should expect to get hammered in court. A recent Massachusetts case is in point. There, despite a jury verdict for the defendants, the trial court entered judgment for the plaintiff which included a permanent injunction prohibiting the defendants from using the plaintiff’s manufacturing process trade secret and an order directing the defendants to dismantle the production line where the trade secret had been used. Defendants were forbidden from manufacturing a competing product for five years by any means and were assessed $8 million in damages, fees and costs. 

STR’s common law and statutory trade secret misappropriation claims were tried in the Superior Court simultaneously, the former to a jury and the latter to a judge. At trial, STR described its five-year effort to develop “an innovative method to produce a specialized encapsulant used in making solar cells.” STR showed how its 25% share of worldwide sales of that product declined when JPS begin making and selling a competing product, using the identical process, within one year after a key STR employee defected to JPS.   An expert witness calculated JPS’ profits resulting from the wrongdoing. 

Answering a special interrogatory, the jury found that STR’s trade secret had not been misappropriated. The trial judge disagreed. In addition to granting equitable relief, she awarded STR more than $1 million in damages (which she trebled pursuant to the applicable state statute), $3.9 million in attorney’s fees, and costs in excess of $1.1 million. The Appeals Court of Massachusetts affirmed and indicated that STR also would be entitled to reimbursement of its fees and costs incurred on appeal. Specialized Technology Resources, Inc. v. JPS Elastomerics Corp., No. 11-P-776 (Mass. App. Court, Nov. 23, 2011).

Several Massachusetts cases hold that (a) there is no right to a jury trial on statutory claims of the type involved here, and (b) the jury’s verdict with respect to common law causes of action parallel to the statutory claims is not binding on the judge in deciding whether the statute has been violated. So, the Superior Court judge was permitted to disregard the jury verdict. The defendants maintained, however, that no Supreme Judicial Court decision authorizes a trial judge, in a case where the statutory and common law actions are tried together, to decide questions of fact contrary to the findings of the jury as reported in special interrogatory answers. Nevertheless, one prior appellate court ruling upheld a trial judge’s finding, in a breach of warranty lawsuit, that the defendants were not liable notwithstanding the jury’s directly contrary answers to special verdict questions. Relying on that precedent, the decision below in favor of STR was affirmed. The entirety of the trial judge’s award of injunctive and monetary relief was determined to be within her discretion.