Massachusetts Court Finds There Was No Trade Secret. Should Defendants be Awarded Attorney’s Fees?

by Lee Gesmer on February 12, 2014

We’ve been telling clients for decades that if you think you have trade secrets or confidential information, you need to protect them. Far and away the best way to ensure you’ve done that is to require anyone who receives access to the information to sign a non-disclosure agreement, an “NDA.”

In a Massachusetts state case reported on the front page of this week’s Massachusetts Lawyer Weekly, the plaintiff didn’t do that. In fact, it appears that the plaintiff, CRTR, Inc., did next to nothing to protect its allegedly confidential information from an independent contractor to whom it provided access, and then later sued for trade secret misappropriation.

To quote from the court decision:

[The first CRTR employee] states that she knew the customer lists were confidential, though no one had ever told her so, and [a second CRTR employee] states that on one occasion, she was told not to bring work out of the office. This is not adequate evidence that CRTR took any meansures to protect its purported trade secrets. There is no evidence of a policy regarding confidential information. …  It is undisputed that CRTR never required any of the defendants to sign a confidentiality agreement. …

On this basis, the court granted the defendants summary judgment.

It is often said that in America, you can sue anyone for anything. This is true, as far as it goes, but under Massachusetts state law a frivolous litigant risks paying the prevailing party’s attorney’s fees under M.G.L. c 231, Section 6F. This statute sets a difficult standard – the prevailing party  must establish that the claims for which it seeks counsel fees were “wholly insubstantial, frivolous and not advanced in good faith.”

The prevailing defendants in this case just might have a shot at that.

CRTR, Inc. v. Lao (Plymouth Sup. Ct. Dec. 30, 2013)

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