Proofpoint, Inc. v. Vade Secure, Incorporated

Background

Proofpoint, Inc. and Cloudmark LLC sued Olivier Lemarié, a former Cloudmark employee, and Vade Secure, Incorporated and Vade Secure SASU (collectively, the “Vade Defendants”). The claims included violations of the Defend Trade Secrets Act and Copyright Act, as well as breach of Cloudmark’s Employee Proprietary Information and Inventions Agreement. After a jury trial, the jury found that all three defendants violated the trade-secret and copyright laws and that Lemarié breached the agreement.

The jury awarded plaintiffs $13,975,659 in total compensatory damages: $13,495,659 for unjust enrichment, $480,000 for breach of contract, and $0 for actual loss. The Clerk later entered judgment stating that the $13,495,659 award was owed jointly and severally by all defendants, while Lemarié separately owed $480,000.

Lemarié’s Motion for Relief from Judgment

Lemarié argued that the judgment contained a clerical error under Rule 60(a) of the Federal Rules of Civil Procedure. He contended that the $13,495,659 unjust-enrichment award represented profits realized by the Vade Defendants from sales of products developed using plaintiffs’ trade secrets, not a benefit Lemarié received. Therefore, he argued, only the Vade Defendants should be jointly and severally liable for that award.

The court rejected plaintiffs’ argument that payment of the judgment made the dispute moot. The court noted that the Vade Defendants’ payment did not eliminate the possibility that they could seek contribution from Lemarié. On the merits, the court explained that unjust enrichment generally requires a defendant to have received the property or benefit supporting the award. The court found no authority allowing Lemarié to be held liable for benefits realized only by the Vade Defendants. It therefore granted Lemarié’s motion for relief from judgment and corrected the liability allocation.

Renewed Motion for Judgment as a Matter of Law

A renewed motion for judgment as a matter of law asks the court to resolve a claim when, after the evidence presented at trial, a reasonable jury would lack a legally sufficient basis to find for the opposing party. Lemarié argued that plaintiffs had not shown that he earned his salary because he breached the agreement or quantified any unjust enrichment attributable to that breach.

The court agreed that the evidence supported the finding that Lemarié used Cloudmark’s confidential information in violation of the agreement. But plaintiffs offered no evidence that Vade hired or paid Lemarié because he would use that information. They also offered no evidence that his compensation was tied to Vade’s sales or profits from products developed using plaintiffs’ trade secrets. In addition, the evidence did not allow the court or jury to determine what portion, if any, of Lemarié’s salary resulted from the alleged misuse. The court therefore granted the renewed motion for judgment as a matter of law as to the $480,000 unjust-enrichment award.

The court did not eliminate the finding that Lemarié breached the agreement. Instead, it explained that California law permits nominal damages when a breach occurred but the plaintiff cannot prove a compensable loss. The court directed that the award against Lemarié be $1.

Disposition

The court granted Lemarié’s Motion for Relief From the Judgment and granted his Renewed Motion for Judgment as a Matter of Law. It directed the Clerk to enter an amended judgment awarding Proofpoint and Cloudmark $13,495,659 against the Vade Defendants and $1 against Lemarié.