CKE’s L.A. Daily Journal Article: Treble Damages for Breach of Oral Contract

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The article “Breach of Oral Contract, Treble Damages,” was published in the Los Angeles Daily Journal on August 13, 2013.  The article discusses the importance for manufacturers, distributors and sales representatives of the published decision of Reilly v. Inquest Technology, Inc., 2013 DJDAR 10164 (Cal. App. 4th Dist. July 31, 2013).  The Reilly decision is the first precedent in California to uphold a jury verdict and judgment of treble damages and attorney fees against a manufacturer who failed to pay all sales commissions owed to an independent sales representative.  Eric S. Engel and H. Kim Sim represented Peter Reilly, the sales representative, at trial in Orange County Superior Court.  They obtained a unanimous jury verdict awarding Reilly $2.1 million in unpaid commissions.  Using the Independent Wholesale Sales Representatives Contractual Relations Act, CK&E then obtained an order from Judge Frederick Horn multiplying the jury’s award by a factor of three, for a judgment of $6.2 million plus attorney’s fees and interest.  That judgment was fully upheld by the California Court of Appeal in its July 31, 2013 decision.  The decision provides a template for future cases seeking treble damages for breach of commission contracts made with independent sales representatives, and can serve as a guide to manufacturers and distributors who want to avoid exposure to such liability.

Click here for the full text of the article, “Breach of oral contract, treble damages”:  Reilly v Inquest Daily Journal Article

Click here for the full copy of the California Court of Appeal decision:  Reilly v Inquest Court of Appeal Decision, Case No. G046291 (July 31, 2013)

 

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Turning an Agreement for Use of Public Information into a Trade Secret Misappropriation Case

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A recent New Jersey case is an example of how claims of misappropriation of trade secrets can arise in unexpected ways, and of the importance of the terms used in agreements for use of information.  The case shows that trade secret misappropriation can occur even when the information is “public” and the recipient was authorized to have the information.

In Events Media Network, Inc. v. The Weather Channel, Events Media had collected and compiled information about public events into a database.  Events Media then licensed the compilation to The Weather Channel to list events on The Weather Channel’s website.  Events Media claimed that The Weather Channel used the database for purposes other than listing events on its website.  Events Media sued The Weather Channel, but not just for a breach of the licensing agreement – Events Media also sued for trade secret misappropriation.

Although trade secrets are generally thought of as valuable information that no one else knows (of course, that is why it is secret), compilations of information that is available to the public, such as the Events Media database, can receive trade secret protection.

Events Media serves as a demonstration of how important the license agreement terms can be to whether a misappropriation of trade secrets claim can be pursued.  In finding that the Events Media database could be a protectable trade secret, the New Jersey court relied in part on the licensing agreement itself.  The court concluded that Events Media’s database was valuable – why else would The Weather Channel agree to pay for it?  The court also found the compilation was “secret,” because it was provided under a license agreement that affirmed its confidentiality and limited its use and disclosure, and because the data compilation was not known to others even though individual items of data were public.

Events Media further shows that trade secret misappropriation can occur even where a party has rightfully acquired the information under an agreement.  All that is required is unauthorized “use or disclosure” of the secret information, which can be shown by demonstrating that the use or disclosure was not permitted under the terms of a limited licensing agreement.

Finally, the case demonstrates that trade secrets need not be revealed to a third person in order to have misappropriation.  Trade secrets cases frequently involve a person who has impermissibly disclosed trade secrets to another, such as an employee who takes trade secrets from a former employer to a new employer.  But Events Media claimed only that The Weather Channel misappropriated trade secrets just by using the information for purposes not authorized by its licensing agreement.

In short, the ability to assert trade secret misappropriation can be based in large part on the terms of agreement between the parties.  As this case demonstrates, trade secrets laws protect a broad array of information, from customer lists to product formulas, and misappropriation can occur in circumstances that few would imagine.  CK&E’s lawyers have decades of experience in drafting agreements to protect and use trade secrets, as well as litigating trade secrets cases for both plaintiffs and defendants.  We always stand ready to provide clients with forward-thinking legal representation on these matters.

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