This is a continuation of part 1, which can be found here.


Unjust Enrichment

Unjust enrichment can be determined through at least two different methods: the defendant’s profits or the defendant’s cost reduction. For the first method, the plaintiff must prove the defendant’s revenue. Then, the defendant can deduct expenses to determine the profit. For the second method, the amount of damages is based on the value of the technology.

Unjust enrichment can be awarded in place of lost profits or in addition to lost profits. So, the two different measurements of damages are not necessarily mutually exclusive.


Reasonable Royalty

Damage awards in trade-secret cases that are based on a reasonable royalty usually use the same type of “willing licensor-willing licensee” analysis that is used in patent cases. Mark A. Glick, Lara A. Reymann, Richard Hoffman, “Intellectual Property Damages,” John Wiley & Sons, 2003, at 340; see also Univ. Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518, 537 (5th Cir. 1974); Vermont Microsystems, Inc. v. Autodesk, Inc., 88 F.3d 142, 151-52 (2d Cir. 1996).

In some states, a reasonable royalty is determined by the judge. See, e.g., Ajaxo, Inc. v. E*Trade Fin. Corp., 187 Cal. App. 4th 1295, 1308 (Cal. App. 6th Dist. 2010) (stating that a royalty is a “court-determined fee”). In other states, a reasonable royalty is determined by a jury. See, e.g., Design Innovation, Inc. v. Fisher-Price, Inc., 463 F. Supp. 2d 177, 184 (D. Conn. 2006) (applying New York law and upholding a reasonable royalty award calculated by the jury).


Other Measures of Damages

A California court decision in Ajaxo, Inc. v. E*Trade Fin. Corp, 187 Cal. App. 4th 1295, 1308 (Cal. App. 6th Dist. 2010), indicates that it might be possible for a trade-secret plaintiff to be awarded “full market value,” which is another form of damages. This is based upon a theory of restitution.

However, it appears to be available only when other forms of damages are inadequate because “the plaintiff has been ‘deprived’ of title to or possession of the property.” Due to the intangible nature of trade secrets (and intellectual property, in general), this form of damages may be theoretical.