It's always good to know where the lines are. Today, Judge Williams awarded attorneys fees after the plaintiff in a Defend Trade Secrets Act action maintained an "objectively specious" argument after the close of fact discovery:
A claim is objectively specious where there is a complete lack of evidentiary proof from the party suing. . . . [T]he Court agrees with [defendant] Backer that [plaintiff] ZIM litigated this matter with knowledge that its claims were objectively specious. While Backer contends that ZIM knew that its claims were objectively baseless when it filed the Complaint, the Court finds that ZIM understood that its claims were objectively specious by the close of fact discovery on January 12, 2022.
Why? The Court quoted its summary judgment opinion, which we wrote about when it issued. As the Court explained in that opinion, the plaintiff's allegations related to the improper use of a "file" called the "Zoppas Plan" to develop a product—but failed to show that the plan actually included trade secrets used in the product:
On November 13, 2017, [plaintiff] ZIM requested that Whirlpool return or destroy all copies of documents that contained ZIM's confidential information. On December 12, 2017, [third party] Whirlpool told ZIM that all documents containing ZIM' s confidential information had been returned or destroyed. However, ZIM later determined that Whirlpool employees continued to access a file called the "Zoppas Plan." The "Zoppas Plan" file contained information relating to a medallion design created by ZIM; it contained no information relating to a leg thermostat design of the type developed by Backer. . . . ZIM's theory as plead is that Backer acquired certain of ZIM's trade secrets from Whirlpool and used those trade secrets to design, engineer, and manufacture Revised UL 858 compliant heating elements. . . . Whirlpool is not involved in this action.
Zoppas Industries de Mexico, S.A. v. Backer EHP Inc., C.A. No. 18-1693-GBW, at 2-3 (D. Del. Oct. 3, 2022).
In granting fees, the Court simply quoted a footnote from its summary judgment decision, which explains that the trade secret "Zoppas Plan" simply had no information about the design the defendant pursued:
ZIM plead that Whirlpool sought an extension until September 2018 to comply with Revised UL 858 because Backer was struggling to complete its design. . . . ZIM also plead that Backer's design was a 'near copy' of the confidential ZIM design that it had provided to Whirlpool. . . . And ZIM plead that Whirlpool had access to a confidential file during a time when Whirlpool had switched to work with Backer. . . . This Court credited each of those allegations as lending plausibility to ZIM' s misappropriation claim. . . . But the parties now agree that there is no evidence Whirlpool sought an extension, that ZIM and Backer's designs were different, and the Zoppas File did not contain information about the design Backer chose to pursue.
Zoppas Industries de Mexico, S.A. v. Backer EHP Inc., C.A. No. 18-1693-GBW, D.I. 164 at 3 (D. Del. Nov. 13, 2023).
The Court rejected the idea that the filings were "per se specious" as of the filing date, though—it limited its fee award to after the close of fact discovery.
Failure to Challenge Reasonableness = Waiver
The Court also held that the plaintiff had waived its opportunity to challenge the reasonableness of the fee award by failing to do so in the briefing:
ZIM concedes the reasonableness of Backer's attorneys' fees because, as Backer points out, ZIM does not challenge "the size or composition of Backer's legal team, the hourly rates charged by Backer's attorneys, or any of the time spent by those attorneys in defending this case." D.I. 161 at 7; see D.I. 155. ZIM has now waived any opposition thereto. . . . The Court will award attorneys' fees incurred after January 12, 2022 consistent with the Court's analysis in Sections A and B, supra.
Id. at 5.
Short Fee Period
The Court awarded fees from the close of fact discovery through summary judgment and the fee motions. I don't see anything on the docket about experts, so it looks like this fee award may be relatively narrow, encompassing only summary judgment briefing and maybe the fee briefing itself.
Still, it's good to know the risks and how the Court may view parties' actions in maintaining an unsupportable action.
If you enjoyed this post, consider subscribing to receive free e-mail updates about new posts.
