![]() The 10th Circuit recognized that “Utah’s trade secret statute. The UTSA provides for three different damages measures: (1) the amount of the defendant’s unjust enrichment, (2) the actual loss sustained by the plaintiff, or (3) a reasonable royalty. His argument did not get far with the 10th Circuit. He also argued that StorageCraft did not try to prove that NetJapan used the source code commercially. And because he did not use the source code for profit, the damages award was improper. Apparently revenge, not profit, was his motive. Kirby argued that royalty damages were unavailable as applied in this case because he did not use the source code he stole for personal profit or gain. According to him, merely disclosing the trade secret was not enough for royalty damages to apply. He argued that the company could not be awarded a “reasonable royalty” as damages unless it first proved that either he or NetJapan made commercial use of or turned a profit on the trade secret-in this case, the source code. Specifically, he attacked StorageCraft’s royalty damages theory. Instead, he focused only on the damages, claiming the award was too high. On appeal, Kirby did not dispute that he had stolen or disclosed the source code. 10th Circuit Court of Appeals (whose rulings apply to all Utah employers). Kirby appealed the jury’s verdict to the U.S. StorageCraft offered testimony from a damages expert who opined that the amount of the royalty should be $2.92 million.Īfter the parties presented their evidence, the jury apparently accepted the damages amount offered by StorageCraft’s expert and awarded $2.92 million to the company. Under the damages theory, the company argued that Kirby should be required to pay it a royalty equivalent to the amount it would have received if it had given him a license to disclose the trade secret. StorageCraft further argued that the disclosure diminished the value of the trade secret and the software products based on it. The company argued to the jury that by taking the source code, Kirby had effectively assumed for himself a license to reveal the trade secret to a competitor. A jury trial was held on StorageCraft’s claims.Īt trial, StorageCraft was allowed to present evidence for a “reasonable royalty” damages theory. ![]() StorageCraft sued Kirby under Utah’s Uniform Trade Secrets Act (UTSA), alleging he had misappropriated the source code, which it deemed a trade secret. The competitor soon introduced what the court called a “coincidentally timed” software product similar to StorageCraft’s. Rather, it appears that he took the code out of spite.īut Kirby’s revenge was not yet complete: He next delivered the source code to one of StorageCraft’s primary competitors, NetJapan. Kirby decided to retaliate, so he copied and stole the source code on which StorageCraft’s products depend.There is no indication that he used the source code for personal profit or gain. The nature of the dispute is unclear from the case, but Kirby apparently felt that his colleagues were not treating him well, and he became angry about it. He worked numerous hours over the course of 15 to 20 months to develop the source code.Īt some point, Kirby had a dispute or “falling out” with his coworkers. Kirby was part of the group that started StorageCraft and served as a director of the company. James Kirby helped create StorageCraft, helped manage the company, and then helped himself to its source code. The company considered the source code a trade secret that it withheld from public dissemination and, more important, from its competitors. Its software developers spent a substantial number of hours creating and developing the source code on which StorageCraft’s software products were based. StorageCraft Technology Corporation is a computer software company. Read on to find out why this case might make good reality television. When the company sued and obtained a multimillion-dollar judgment against him, he complained that the jury awarded too much in damages. In a retaliatory stroke, he stole his former employer’s primary trade secret-its software product source code-and then freely handed it over to a major competitor. Instead, they are the facts of a real-life Utah lawsuit.Īn employee became angry about the way his colleagues at the software company where he was a director had been treating him. But in this case, they are not the makings of a plot found on cable, Netflix, or DVD. Acrimony, anger, revenge, piracy, and a legal battle-these are often the ingredients of a prime-time television drama.
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