In June 2022, a federal decide sitting within the Southern District of New York issued an order denying defendants Lionbridge Applied sciences, Inc. (“Lionbridge”) and its guardian firm HIG Center Market, LLC (“HIG”) attorneys’ charges and prices associated to their assertion that plaintiff Transperfect International, LLC (“Transperfect”) introduced a misappropriation of commerce secrets and techniques declare underneath the Defend Commerce Secrets and techniques Act (“DTSA”) in unhealthy religion. The 2019 lawsuit was filed roughly 15 months after completion of a bidding struggle for the sale of half of Transperfect in a Delaware court-supervised public sale. One of many members within the public sale was HIG, which had acquired Lionbridge—a competitor of Transperfect—in February 2017. In its go well with, Transperfect alleged that HIG engaged in “pretend bidding” through the public sale in order that it may entry commerce secrets and techniques within the type of confidential pricing knowledge and buyer lists and improperly share them with Lionbridge to poach two of Transperfect’s greatest shoppers.
Throughout the course of the lawsuit, Transperfect sought to find proof in help of its claims. Nevertheless, the court docket granted abstract judgment in favor of the defendants, noting that Transperfect didn’t adduce any proof that the defendants used its commerce secrets and techniques for any function apart from what was permitted by the phrases of the public sale, and additional failed to point out that HIG disclosed any commerce secrets and techniques to unauthorized people at Lionbridge. Subsequent to its success on abstract judgment, defendants sought $11,604,469 in attorneys’ charges and $259,791 in prices from Transperfect primarily based on a declare of misappropriation “made in unhealthy religion” which “could also be established by circumstantial proof.” 18 USC 1836(b)(3)(D). To satisfy its burden of proof to advantage such an award, the defendants wanted to fulfill a two-prong normal: (1) that the declare was with none colorable foundation underneath the legislation; and (2) that the declare was introduced in unhealthy religion (ie, motived by improper function). Below the legislation, each parts have to be supported by a “excessive diploma of specificity within the factual findings.” See Opinions and Orders at 5-6.
Finally the court docket denied defendants’ request for charges and prices, holding that whereas they actually made a robust exhibiting, they failed to satisfy the rigorous two-prong normal to advantage the requested award. The denial, nonetheless, didn’t save Transperfect from harsh phrases by the court docket, which famous that although Transperfect “felt” that Lionbridge was unfairly competing in opposition to it, “emotions” don’t present an excellent religion foundation for submitting a lawsuit. id. at 6-7. The court docket acknowledged that even after it grew to become clear Transperfect didn’t have a viable declare and couldn’t show it suffered damages from any alleged commerce secret misappropriation, it continued to pursue its declare, making it an “unsavory enterprise.” id. at 7-8.
This ruling is necessary for not less than two causes. First, regardless of the court docket’s criticisms with respect to the absence of official bases for Transperfect’s misappropriation of commerce secrets and techniques claims, and the corresponding lack of proof of damages, the court docket was nonetheless reluctant to grant the defendants the requested aid and make a discovering of unhealthy religion. Second, this illustrates the plain rigidity between the flexibility to exhibit unhealthy religion by circumstantial proof and what meets the undefined “one thing extra” normal to advantage sanctions of attorneys’ charges and prices. That is significantly true on condition that federal courts appear to be cut up on whether or not goal unhealthy religion, subjective unhealthy religion, or a exhibiting of each, are required to ascertain “unhealthy religion” misappropriation claims. See, eg, Aday v. Westfield Ins. Co., No. 21-3115, 2022 WL 203327, at *14 (sixth Cir. Jan. 24, 2022) (requiring subjective unhealthy religion such {that a} occasion defending in opposition to a misappropriation declare should show that “the claims superior have been meritless, that counsel knew or ought to have identified this, and that the motive for submitting the go well with was for an improper function resembling harassment.”) in comparison with Akira Techs., Inc. v. Conceptants, Inc., 773 F. App’x 122, 125 (4th Cir. 2019) (as a result of declare not objectively meritless, sanctions not warranted); Insurent Company Corp. v. Hanover Ins. Co., 2020 WL 86813 (SDNY Jan. 8, 2020) (declare have to be “wholly with out advantage” to be entitled to attorneys’ charges underneath the DTSA).