Proofpoint, Inc. v. Vade Secure, Incorporated
- Maxine Chesney
- 3:19-cv-04238
- U.S. District Court · Northern District of California
- 3
In Proofpoint v. Vade Secure, Judge Chesney denied plaintiffs’ motion to add prejudgment interest because the awards reflected disgorgement, not actual loss.
Proofpoint, Inc. and the other plaintiffs were denied additional prejudgment interest on the jury awards against Vade Secure, Incorporated, Vade Secure SASU, and Olivier Lemarié.
What happened
In Proofpoint, Inc. v. Vade Secure, Incorporated, a jury found that Vade Secure misappropriated trade secrets and that Olivier Lemarié breached an employment contract. It awarded plaintiffs $13,495,659 in profits from Vade Secure and $480,000 from Lemarié.
Plaintiffs asked the court to add interest to the entire award. They argued that prejudgment interest would compensate them for the time they were unable to use the money. The court found that the awards were based on giving up defendants’ profits and part of Lemarié’s salary, not on losses plaintiffs actually suffered.
Judge Maxine M. Chesney denied the motion. She also said the balance of fairness did not support adding interest because the award exceeded $13 million, was enough to deter future misconduct, and Vade Secure paid the amount within five weeks after judgment was entered.
The detailed version
- Proofpoint, Inc. v. Vade Secure, Incorporated · No. 3:19-cv-04238
- Maxine Chesney
- Apr. 18, 2023
Background
A jury trial began on July 26, 2021, and the jury returned its verdict on August 20, 2021. The jury found that defendants violated the Defend Trade Secrets Act by misappropriating certain trade secrets claimed by plaintiffs. It also found that plaintiffs had not established any actual loss from the misappropriation. Instead, the jury found plaintiffs entitled to $13,495,659, representing profits that Vade Secure, Incorporated and Vade Secure SASU were unjustly enriched by receiving from products containing the misappropriated trade secrets.
The jury separately found that Olivier Lemarié breached his employment contract with Cloudmark LLC and awarded plaintiffs $480,000 from Lemarié. That amount represented part of the salary Vade Secure paid him.
Motion for Prejudgment Interest
Plaintiffs filed a motion under Federal Rule of Civil Procedure 59(e), which allows a party to ask the court to alter a judgment. Plaintiffs sought prejudgment interest on the entire jury award. Prejudgment interest compensates for the loss of use of money between the time a claim arises and the entry of judgment. The court explained that deciding whether to award it is discretionary and requires balancing the equities, meaning the fairness of granting the relief in the circumstances.
Court’s Analysis
The court concluded that the jury awards were based on disgorgement—the surrender of profits or other benefits obtained by defendants—rather than compensation for actual losses suffered by plaintiffs. The court stated that such awards ordinarily are not the type of damages for which prejudgment interest is appropriate. It also noted that disgorgement does not restore something plaintiffs previously possessed.
The court further stated that, even assuming a court could add prejudgment interest to an unjust-enrichment award, the balance of equities did not favor doing so here. The disgorgement award was well over $13 million and was sufficient to deter future misappropriation. In addition, Vade Secure paid the entire amount it was required to disgorge within five weeks after judgment was entered.
Disposition
Judge Maxine M. Chesney denied plaintiffs’ motion for prejudgment interest. The opinion does not add any prejudgment-interest amount to the judgment.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.