Fighting back against trade secret claims with a counterclaim of bad faith

So you’ve been sued for misappropriating trade secrets. How do you go on the offensive?

One way to fight back is by launching counterclaims. Of the facts are right, one of those counterclaims should be attacking the plaintiff’s complaint itself—that the trade secret claim is made in bad faith, and you are entitled to legal fees because of that.

You’re probably going to face a legalease opposition from the plaintiff. Technically, they’ll say, that’s not a cause of action. It’s an issue to be addressed post-judgment—and only if you (the defendant) prevail.

But not so, per at least one court. Phase Four Industries, Inc. v. Marathon Coach, Case No. 04-cv-04801, 2005 WL 8177483 (N.D. Cal. July 18, 2005), recognizes that defendants can assert counterclaims for bad faith assertion of a trade secrets claim.

This is what you want.

It forces the plaintiff (not just its lawyers) to be painfully aware of the consequences of pursuing marginal trade secret claims motivated out of emotion rather than reason. They’ll pay not only their lawyers’ fees, but yours as well.