In the 47 states that have adopted The Uniform Trade Secrets Act, a plaintiff who files a lawsuit in bad faith for misappropriation of trade secrets can be ordered to pay the defendant’s attorney fees. Until recently, however, it wasn’t clear whether such a right extended to defendants against whom such a lawsuit was maintained after it is clear plaintiff cannot prevail.
The U.S. Court of Appeals for the Seventh Circuit recently ruled in Tradesman International, Inc. v. John Black, et al., (http://caselaw.findlaw.com/us-7th-circuit/1640920.html) that awarding attorney fees to defendants in such cases is called for by “common sense.” The court wrote: “[r]egardless of her intention at the time of filing, surely a plaintiff makes a claim in bad faith if she continues to pursue a lawsuit – even after it becomes clear that she has no chance to win the lawsuit – in order to cause harm to the defendant.”
It would appear, then, that plaintiffs pursuing a trade secrets case should reconsider the good-faith nature of their ongoing claims during discovery and trial to avoid paying the other side’s fees.