UnIntellectual Property (UnIP): Trade Secret for Process Used to Transfer Images to Flagstone

The Superior Court of Pennsylvania entertained the appeal from the denial of Appellants’ motion for attorney fees under the Pennsylvania Uniform Trade Secrets Act (“the PUTSA”).  The Appellants had sought attorneys fees related to Appellee Plaintiff’s having included a misappropriation of trade secrets claim in their lawsuit against Appellants, only to ultimately stipulate to its removal after the Appellants filed a motion for partial summary judgment.  The court denied the motion for attorney fees, but this Court reversed (with a dissenting opinion).  In doing so, the Court analyzed whether the Plaintiff’s trade secret misappropriation claim was applied what other courts have applied in similar cases, which is the two-prong test for bad faith: (1) objective speciousness of the claim and (2) subjective misconduct by the plaintiff in making the claim.  It held:

“The trial court’s conclusion flies in the face not only of the facts of record, but of the definition, recognized by the trial court, of the “subjective misconduct” leg of the two-prong test. There was no basis, under existing case law or the law of this case, for the Kraffts to include the Trade Secret Claims in their Amended Complaint. Contrary to the trial court’s finding, the record reflects that the Kraffts were aware, prior to filing the Trade Secret Claims, that the process was the subject of an expired patent and that variations of the process were readily available on the internet and in bookstores. Furthermore, and even more incredibly, the Kraffts filed their Amended Complaint after the trial court found as a matter of fact and as a matter of law that the process used by the Kraffts was in the public domain, and that there was nothing new, unique, or proprietary about it. In other words, the Kraffts filed the Trade Secret Claims after receiving a judicial ruling that the process was not a trade secret.
I question whether knowing that the process claimed as a trade secret was not subject to a patent makes it more objectively specious or subjective misconduct in light of such knowledge.  Nonetheless, I am not surprised by the ruling in what is a continuously evolving area of law.  Plaintiffs should be cognizant that Defendants are more regularly seeking attorneys fees in trade secret misappropriation cases that fail, especially where as here the relationship between neighbors and friends seems to have deteriorated, to say the least.

Krafft v. Downey, 2013 PA Super 119 (Pa. Super. Ct. May 17, 2013).


Leave a Reply

Your email address will not be published.