by Dennis Crouch
I expect that 2016 will be the year that Congress to creates a federal cause of action for trade secret misappropriation. Acting in rare unanimous fashion, the Senate recently passed the Defend Trade Secret Act (DTSA) with republican leadership. The house is expected to follow with President Obama also indicating support. In his most recent State of the Union Address, President Obama noted that “[n]o foreign nation, no hacker, should be able to . . . steal our trade secrets.”
Meanwhile, state-law trade secret and business tort claims continue to wield power.
In Epic Systems v. Tata Group, a W.D.Wisc. jury has awarded Epic just shy of $1 billion on state-law trade-secret misappropriation, computer-fraud (trafficking in passwords under the CFAA), breach-of-contract claims, and unfair competition. The damages included $240 million for compensatory damages and $700 million in punitive damages.
Tata Group (one of India’s largest companies) is accused of downloading documentation for hospital management software and then providing that documentation to its subsidiary Med Mantra. This appears to be a case of exceeding authorization. Thus, although Tata employees were permitted access the documentation, the breach came when the documentation was shared beyond what was contractually permitted. If it collects, the verdict will more than double Epic’s annual profits.
Following any post-verdict decisions, the appeal will be handled by the 7th Circuit. The damages theory of the case is tricky — it is unclear to what extent Epic should be permitted to use Wisconsin (or US) law to collect for damages either caused or felt in India.