A few weeks ago, I wrote about a law firm that was sued by two former employees of the firm’s former client for filing a trade-secret lawsuit against them, allegedly without having any good-faith reason to do so. Last Monday, a former employee similarly asked the U.S. District Court for the Northern District of California in a different case to force his former employer to pay his attorney’s fees spent defending himself against a lawsuit brought by his former employer for trade-secret theft.
The defendant, David Cheung, managed a software team for a subsidiary of Brocade Communications Systems Inc. His boss, Lee Chen, left Brocade and started a competing company, A10 Networks Inc., in 2004. In late 2004, Cheung visited his former boss “to find out what he was working on” and claims he did not disclose any of Brocade’s confidential information. Even so, in 2010 he was sued by Brocade (along with Cheung and other former employees) for theft of trade secrets. Brocade claims Cheung had technical discussions with Chen at the meeting and revealed Brocade proprietary information. After document discovery and depositions in the case, however, on May 3, 2012 Cheung filed a motion to dismiss the lawsuit against him, claiming there was no evidence supporting Brocade’s allegations. Four days later, Brocade filed a motion to dismiss its own claims against Cheung, without an explanation. Cheung then requested that the court force Brocade to pay his attorney’s fees in defending against the lawsuit for the past two years, allegedly because it was frivolous from the start. A decision is pending.
As I wrote before, Massachusetts case law supports punishing plaintiffs that file trade-secret lawsuits that are frivolous, and the proposed Uniform Trade Secrets Act would allow awards of attorney’s fees to defendants forced to defend against lawsuits brought in bad faith. This new case simply reminds us once again that trade-secret lawsuits are serious business and should only be filed for a good reason.