Welcome to WilmerHale’s bulletin on recent trade secret case law and relevant news items. We’ve affectionately nicknamed it “Readily Ascertainable” because, unlike a trade secret, it should be easy to figure out. If you have any questions about these cases or the legal questions they implicate, our trade secret team would be delighted to answer them.
This month’s cases involve multiple cases about exemplary damages for willful and malicious trade secret misappropriation, a cert petition to the U.S. Supreme Court on the issue of data scraping, and an interesting application of confidential business information as it relates to an EPA regulation.
Propel Fuels Inc. v. Phillips 66 Co., No. 22CV007197 (Cal. Super. Ct. Dec. 16, 2024):
Propel Fuels seeks an additional $1.2 billion in damages for “willful and malicious” trade secret misappropriation by Phillips 66.
Our October 2024 bulletin covered a California jury’s $604.9 million award to Propel Fuels Inc., a retailer of low-carbon fuels, in its trade secret suit against Phillips 66. Propel has since moved for an additional $1.2 billion in damages, arguing that the jury’s finding that the trade secret misappropriation was willful and malicious merits exemplary damages. The California Uniform Trade Secrets Act allows for exemplary damages up to twice the amount of actual damages when misappropriation is found to be willful and malicious.
Environmental Defense Fund v. EPA et al., No. 23-1166 (D.C. Cir. Dec. 20, 2024):
D.C. Circuit strikes down EPA regulation, reasoning that it puts trade secrets at risk.
A D.C. Circuit panel struck down a portion of a rule issued by the Environmental Protection Agency under the Toxic Substances Control Act on the grounds that the rule “impermissibly allows for the unlawful disclosure of protected confidential information.”
The TSCA requires the EPA to maintain and publish an inventory of chemical substances manufactured, processed, or imported into the United States. Manufacturers can claim information as confidential business information (“CBI”) as long as they assert and substantiate the CBI claim.
The panel found that the EPA’s new ruled for CBI claims imperiled confidentiality protections insofar as downstream users of a confidential chemical, including processors or importers, could inadvertently waive confidentiality when reporting to the EPA. As argued by the American Chemistry Council and American Fuel and Petrochemical Manufacturers, and accepted by the panel, those downstream users lack knowledge of a chemical’s identity and therefore would be unable to substantiate a CBI claim to the EPA, leaving the information at risk of disclosure. Furthermore, downstream users could also intentionally waive competitors’ CBI under the existing rule.
Teradata Corp. et al. v. SAP Se et al., No. 23-16065 (9th Cir. Dec. 19, 2024):
Ninth Circuit revives Teradata Corp.’s trade secret claim, saying that lower court improperly granted summary judgment.
A unanimous Ninth Circuit panel revived data analytics company Teradata Corp.’s trade secret claims against German software company SAP. The district court granted SAP’s motion for summary judgment on the basis that Teradata did not provide sufficient detail to identify what information it wished to protect in a key design document. The Ninth Circuit concluded that the parties’ non-disclosure agreement did not require a detailed description and that it was for a jury to decide whether the level of detail Teradata included was sufficient.
Binyomin Rutstein v. Compulife Software Inc. et al., No. 24-634 (S. Ct. Nov. 27, 2024):
Insurance agent asks Supreme Court to take up case regarding data scraping.
This dispute arose from Binyomin Rutstein and other insurance agents’ obtaining life insurance data by scraping the Compulife website. The Eleventh Circuit found that even though scraping may be “perfectly legitimate” in the abstract, defendants were liable for misappropriation because their specific scraping means were “improper” and deceptive under the law—“they copied the order of Compulife’s copyrighted code and used that code to commit a scraping attack that acquired millions of variable-dependent insurance quotes.” Notably, the Eleventh Circuit relied on E. I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970), a well-known case in which the court found that taking aerial photographs amounted to misappropriation. Rutstein has filed a petition for a writ of certiorari to the United States Supreme Court asking the court to consider “whether an action that is not unlawful under the federal Defend Trade Secrets Act (‘DTSA’) when performed manually by a human (or humans) is unlawful when performed by a computer robot.” Rutstein argues that there are signs of a “looming split” among the circuit courts of appeal on this issue.
I-Mab Biopharma v. Inhibrx Inc. et al., No. 1:22-cv-00276, (D. Del. Nov. 1, 2024):
Jury finds no trade secret misappropriation after trial with $460 million of potential damages at issue.
I-Mab Biopharma, a formerly Chinese turned Maryland-based biotech company, sued California biotech startup Inhibrx, alleging that its co-founder Brendan Eckelman obtained and misused confidential information regarding cancer treatment antibodies while employed as an expert in an unrelated international arbitration proceeding.
Eckelman previously worked as a testifying expert for Tracon Pharmaceutical in a case against I-Mab at the International Chamber of Commerce. I-Mab was ultimately ordered to pay Tracon $23 million in that case. I-Mab sued Eckelman shortly thereafter, alleging that he misused confidential information he obtained by virtue of his expert witness status. I-Mab claimed $153 million in actual damages, plus an additional $306 million in exemplary damages.
With respect to trial strategy, Eckelman and Inhibrx put forth an independent development defense. Inhibrx scientists testified to the company’s commitment to independent development, securing proprietary knowledge, and protecting intellectual property. The jury ultimately found that that I-Mab did not prove that it possessed trade secrets or that any secrets were misappropriated.
