We have previously written about the effects of COVID-19 on the way we currently work, as well as how businesses need to adapt to protect their trade secrets, customer goodwill, and other interests. In ordinary times, emergency injunctive relief is often the first resort for a business after discovering its trade secrets were stolen or  customer relationships are at risk. In the current environment, seeking emergency injunctive relief may not be possible or practicable until courts return to business as usual. Another ancillary effect of COVID-19 is the expected wave of bankruptcy filings. This poses the question: What do you do when a wrongdoer is insolvent or about to file for bankruptcy protection?
Continue Reading Bankruptcy is Not a “Get Out of Jail Free” Card: Enforcing Trade Secret Rights and Restrictive Covenants Against Financially Troubled Wrongdoers

Bankruptcy is intended to provide a fresh start and discharge outstanding debt.  But some debt is not dischargeable in bankruptcy.  A Virginia bankruptcy court held last week that a judgment against the debtor for intentional trade secret misappropriation is not dischargeable.

Summary of the case.  La Bella Dona Skin Care, Inc. obtained a $207,000 judgment

The California Uniform Trade Secrets Act (“CUTSA”) allows for an award of attorney’s fees to the prevailing party on a trade secret misappropriation claim. The statute permits award of attorney’s fees to a plaintiff for a defendant’s “willful and malicious” misappropriation and to a defendant when a plaintiff makes a claim in “bad faith”:

“If

            Once triggered by a debtor’s bankruptcy petition, the automatic stay suspends a parties’ right to commence or continue an action against property of the debtor’s estate. In general, a party can seek relief from the automatic stay for a variety of reasons, including for cause, lack of adequate protection or that the debtor has no