Client ABC calls to complain that their salesman, Bill, left and went to work for a competitor. Now, Bill has called his best ABC customers and convinced them to come to his new employer, XYZ, which will offer the same prices for goods or services generated from the same supply chain developed and kept secret by ABC. Counsel listens and advises ABC there is a legal claim against Bill and XYZ arising from trade secret misappropriation. Let’s look at six ways to translate that claim into specific damages.
1. Defendant XYZ’s profits. Ideally, counsel will want to obtain all of defendant XYZ’s invoices to its customers for perhaps several years before, and then during, the damage period. From these, a schedule can be prepared showing the customers to which the defendant made sales, and specifically which goods or services were sold to each, throughout the period. This will allow identification of whether the defendant sold to these customers before the trade secret was transferred to the defendant, and more importantly, whether sales of the trade secret goods or services began only after the trade secret was transferred, and also whether additional sales of nontrade secret items were made because of those trade secret sales. This allows the determination of whether those sales would not have been made by the defendant “but for” the trade secret misappropriation and therefore represent economic losses to ABC.
