Unfair Competition and Trade Secrets Damages Limited to Plaintiff’s Losses

June 26, 2018

When a defendant avoids the cost of developing its own technology by stealing proprietary information, can that defendant be required to repay the cost it saved as compensatory damages?

Not under New York trade secret or unfair competition law. In E.J. Brooks Co. v. Cambridge Security Seals, No. 26, 2018 BL 157167 (N.Y. May 3, 2018), a divided New York Court of Appeals announced—over a lively dissent—that compensatory damages for misappropriation of trade secrets and unfair competition are limited to the plaintiff’s own losses and may not include the development costs avoided by defendants. The court further held that an accompanying claim for unjust enrichment does not provide a basis to expand the recovery beyond the plaintiff’s own losses.

To continue reading Robert Quirk and Muhammad Faridi's article in New York Law Journal, 
please click here.