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No VUTSA claim for retaining trade secrets

Where defendant acquired plaintiff employer’s trade secrets through proper means, retained them after she was discharged and has not used or disclosed them or threatened to do so, she has not violated the Virginia Uniform Trade Secrets Act.

However, defendant is liable for damages and attorney fees on plaintiff’s count under the Virginia Computer Crimes Act and will be liable for damages on plaintiff’s conversion count if she does not return plaintiff’s devices.

Background

According to plaintiff Knowesis’s complaint, Herrera was issued a laptop and a personal access card, which she kept at her home, and a desktop computer for office use. She was also given “trade secrets” – confidential personnel and proprietary information. Knowesis alleges that the laptop contained trade secrets. After Herrera was fired for poor performance, Knowesis discovered that files had been deleted from her desktop computer.

When Herrera did not return the access card and laptop, Knowesis filed a multi-count complaint alleging detinue, conversion, and VUTSA and Virginia Computer Crimes Act violations. Herrera answered the complaint but has otherwise not participated in this matter, resulting in summary judgment for Knowesis on the detinue, conversion and VCCA claims.

The court has heard argument from Knowesis but not Herrera (who failed to appear) on damages for those claims and whether VUTSA applies under the facts of this case.

VUSTA

Under VUSTA, an actual or threatened misappropriation of a trade secret “may be enjoined.” Misappropriation can occur in two ways: acquisition of a trade secret by “improper means” and actual or threatened disclosure of an improperly acquired trade secret.

“Knowesis does not allege that Herrera acquired its Trade Secrets by using a computer or computer network without authority. In fact, it specifically alleges she acquired them in furtherance of her employment. … The nub of Knowesis’ Complaint is that while Herrera properly acquired the Trade Secrets, she improperly kept them after she was terminated and after it demanded she return them.

“Unfortunately for Knowesis, the VUTSA does not affect a former employee who properly acquires trade secrets and merely holds them post-employment with no actual or threatened disclosure or use. This statutory principle applies even if the retention is against the will of the employer. …

“Another problem for Knowesis is its failure to specify what precise trade secrets are at issue, and the means by which they were improperly taken. Making specific allegations as to the trade secrets misappropriated and the means of misappropriation is critical to stating a VUTSA claim. …

“Knowesis does not allege what (if any) Trade Secrets Herrera misappropriated onto her personal hard drive. Knowesis admits it has no idea what Herrera used the drive to store. Knowesis does not allege that she stored any Trade Secrets on it. … Knowesis does not allege which, if any, of the items were on any of the referenced devices, other than Knowesis Device #1 [the laptop]. …

“This is why Knowesis cannot win summary judgment on this claim. The VUTSA does not apply to former employees similarly situated to Herrera: an employee who acquires a trade secret by proper means as part of her job, who holds them post-employment against the employer’s will, but who does nothing to disclose, use, or threaten to disclose or use them.”

Damages

Knowesis pleaded detinue and conversion in the alternative, so it is entitled to have its devices returned or to receive a money judgment but not both. Herrera must return the devices within 30 days or pay $25,000. As to the VCCA claim, the court awards Knowesis $25,000. Because Knowesis did not fully prevail, the court will not award the full amount of requested attorney fees but will award $34,685.24 in costs and fees for prevailing on the VCCA claim.

Knowesis Inc. v. Herrera. CL-2019-2807, Oct. 2, 2019; Fairfax Cir. Ct. (Marshall). Sadina Montani, Anand V. Ramana for plaintiff, defendant Bobi Herrera is self-represented. VLW 019-8-087, 11 pp.

VLW 019-8-087

Virginia Lawyers Weekly