Damages

Bad Artists Copy. Good Artists Steal: Trade Secrets in the Art World

“Bad Artists Copy. Good Artists Steal” – Pablo Picasso

In the small world of exclusive and upscale art sales, competing galleries inevitably form and maintain relationships with one another.  This is the case for Lévy Gorvey gallery partner Dominque Lévy, and Lehmann Maupin Group co-founder Rachel Lehmann, who have known each other for over 20 years.  Now, Lehmann Maupin is involved in a trade secrets fight with their former sales director, Bona Yoo, who is currently employed by Lévy Gorvey.  In this tightknit artist’s community, the news of a trade secrets lawsuit against a former employee is admittedly more shocking than the typical Silicon Valley trade secret theft story, where employees leave for competitor companies as frequently as they come.  But it should not be surprising that trade secrets in the art industry are just as valuable to their owners as they are to tech industry leaders—because in both worlds, client relationships are key.

That’s why Lehmann Maupin Group is not taking lightly their suspicion that their former sales director destroyed company trade secrets and stole client information upon her departure to a competing gallery.  According to the complaint, when Bona Yoo left Lehmann Maupin to join Lévy Gorvey last fall, she copied files containing valuable trade secrets and “maliciously corrupted” or deleted other files.  Lehmann Maupin alleges that Ms. Yoo did so to gain a competitive advantage in the industry, while simultaneously impeding Lehmann Maupin’s business. The complaint “claims damages from the violation of the Defend Trade Secrets Act, the Stored Communication Act, confidentiality agreements, and New York law.

Dominque Lévy of the Lévy Gorvey gallery has come to Ms. Yoo’s defense, publicly stating that she is “tremendously saddened” by the allegations against Ms. Yoo, and adding that the art world “is not the place for this aggressive behavior.”   Lévy Gorvey gallery is not named as a defendant in this litigation.   Ms. Yoo’s response is due January 29.

This case brings to light some interesting issues that permeate across much larger, more publicized industries.  The first is that no industry is immune from trade secrets litigation.  When key employees bring invaluable and irreplaceable knowledge to the table, they often become embroiled in trade secrets litigation with their former employers.  Regardless of whether Ms. Yoo is liable for the allegations leveled against her in this case, it remains the case that departing employees are often unaware of their obligations with respect to protecting their former employees’ trade secrets.  It is important to counsel individuals on the laws surrounding trade secrets theft prior to their exit from one company to a competitor company—whether they work for an art gallery or a tech-industry giant.

Federal Circuit Illuminates Right to Disgorgement as Remedy for Trade Secret Misappropriation

The Federal Circuit recently issued an opinion, Texas Advanced Optoelectronic Solutions, Inc. v. Renesas Electronics America, Inc., that addressed several interesting issues impacting the calculation of damages in trade secret actions.  Perhaps the Court of Appeals’ ruling of greatest consequence involved its determination that there is no Seventh Amendment right to a jury decision on disgorgement of profits – a remedy also often commonly described as “unjust enrichment.”  The Federal Circuit instead ruled that the calculation of disgorgement damages is for the trial court to decide after making findings of fact and conclusions of law.  If the decision is extended by other federal courts, it could have wide-reaching implications for claims under the Defend Trade Secrets Act, which allows for unjust enrichment damages as a remedy for misappropriation of trade secrets. READ MORE

New York Court Takes Saved Cost Damages off the Table

Plaintiffs in New York state trade secret actions face a new limitation on their damages claims, according to a May 3, 2018 decision from the state’s Court of Appeals.  The 4-3 opinion settles a split in New York state case law.  Going forward, compensatory damages for trade secrets misappropriation are limited to the amount actually lost by the plaintiff, and cannot extend to the “hypothetical” amount saved by the alleged infringer on research or development. READ MORE

Proving “Loss” Under the Economic Espionage Act – Not Always Straightforward

The Obama Administration’s focus on criminal trade secret prosecutions under the Economic Espionage Act (EEA) highlights the legal complexities at the murky intersection between criminal and civil jurisprudence in trade secrets cases. As we previously discussed, when it comes time for sentencing, determining the “value” of the stolen trade secrets is often difficult—and courts have applied different valuation models. READ MORE

The Gloves Are Off: Competing Biopics Battle For Hollywood Purse

Hollywood’s heavy-hitters often enter the ring over unauthorized biographies. Elizabeth Taylor famously invoked her rights of publicity and privacy in an attempt to shut down an unofficial docudrama about her life; Clint Eastwood sued the author and publisher of his unsanctioned biography for libel; and a film production company brought claims for copyright and trademark infringement against the producers of the biopic Lovelace starring Amanda Seyfried. Hollywood’s newest matchup involves misappropriation of trade secrets, a growing concern in the entertainment industry, especially after the recent Sony hack. READ MORE

Money Is Time: A Note on Valuation and Sentencing in Criminal Trade Secrets Cases

Criminal trade secrets prosecutions tend to make national headlines, and for good reason. With fact patterns that often involve international intrigue, high technology, and millions of dollars in play, these cases can read like a James Bond flick. But while astronomical monetary figures make good copy, they also present vexing legal questions that can have drastic impacts on sentencing. READ MORE

Buried at Trial: Supplier of Earthmoving Equipment Gets Hit with $74M Verdict in Trade Secrets Theft Case

In the wake of an 8-week trial, Caterpillar Inc. has received a $74M verdict against it in the Northern District of Illinois after a jury found it guilty of exploiting a supply contract with Miller UK Ltd. to steal the company’s trade secrets. READ MORE

June 29, 2015 Amendments to Article 183 of the Russian Criminal Code: Increased Liability for Disclosure of Trade Secrets in Russia

While Russia has long protected trade secrets through the Federal Law on Information, Information Technologies and Information Protection and the Trade Secret Law, amendments to the Russian Criminal Code on June 29, 2015 now substantially increase liability for disclosure of trade secrets. Illegal disclosure of trade secrets may now result in more serious consequences, including increased fines equal to as much as three years’ wages for disclosure. READ MORE

Once More, With Feeling! Congress Swings for the Fences with the Defend Trade Secrets Act of 2015

On July 28, broad bipartisan support ushered the “Defend Trade Secrets Act of 2015” onto the floor of both the House and Senate. This DTSA treads the well-worn path of many similar (and, to date, hapless) bills that fruitlessly preceded it. TSW has exhaustively covered prior attempts, aptly titling our first post “Pols Gone Wild: Congress Discovers Trade Secret Theft and Cybersecurity Are Problems; We Sort Through the Explosion of Legislation”—chart and all. READ MORE

Will Your Cyber Insurance Respond When You Need It Most?

As many companies are considering purchasing cyber insurance, they often wonder: “Will my insurer be there when I have a data breach?”  Cyber insurers have generally been good in paying claims. But the recent lawsuit featured in this Orrick Client Alert demonstrates that as the landscape evolves, insurers may refuse to cover breach costs by arguing that insureds failed to meet “minimum requirements” for cybersecurity. Tending to cybersecurity policies and procedures before breaches occur is more important than ever. READ MORE