Proofpoint, Inc. v. Vade Secure, Incorporated

Background

Proofpoint, Inc. and Cloudmark LLC claimed that Vade Secure, Inc., Vade Secure SASU, and Olivier Lemarié misappropriated 20 trade secrets in violation of the Defend Trade Secrets Act. Lemarié was formerly employed by Vade as its Chief Technology Officer. After a jury trial, the jury found that Trade Secrets 1–7 and 9–20 qualified as trade secrets, while Trade Secret 8 did not. It found that Vade willfully and maliciously misappropriated Trade Secrets 1–7 and 9–16, but not Trade Secrets 17–20. The jury also found that Vade was unjustly enriched by $13,495,659 and that the plaintiffs suffered no actual loss. The jury found that Lemarié misappropriated Trade Secrets 1–7 and 9–15, but did not do so willfully and maliciously.

Motion and Legal Standard

The plaintiffs sought attorneys’ fees from Vade under the Defend Trade Secrets Act. The statute permits a court to award reasonable fees to a prevailing party when a trade secret was willfully and maliciously misappropriated, but the award is discretionary rather than mandatory.

The court rejected Vade’s argument that fees should automatically be denied because the court had previously denied the plaintiffs’ request for exemplary damages. The court explained that exemplary damages punish and deter wrongful conduct, while attorneys’ fees compensate a prevailing party for litigation expenses. Because the remedies serve different purposes, the factors considered for exemplary damages did not directly control the fee request.

Court’s Analysis

The court concluded that the evidence did not warrant a discretionary fee award. The plaintiffs’ trial presentation focused on Lemarié’s conduct, but the jury had not found that Lemarié acted willfully and maliciously. The court also found that the evidence concerning other Vade personnel was, at most, minimal. For example, an email about spear phishing did not state or suggest that Lemarié had used the plaintiffs’ trade secrets to develop a Vade product. Documents using strong language about competition did not establish willful and malicious misappropriation, particularly because similar language appeared in Cloudmark’s internal documents.

The court also considered evidence involving Trade Secret 16, which concerned Cloudmark licensing reports. Although the reports were forwarded among Vade personnel, they did not contain trade secrets about a Cloudmark product, and the jury had found that Vade did not misappropriate Trade Secrets 17–20 concerning the design and implementation of Cloudmark’s MTA product.

The plaintiffs relied as well on Vade’s discovery conduct, including delayed production of source code and alleged spoliation. The court noted that the plaintiffs had already received monetary sanctions for the production delay and that the delay had not impaired their ability to present their case. The court further stated that the magistrate judge’s spoliation finding was based solely on Lemarié’s conduct.

The court rejected the plaintiffs’ additional arguments that denying fees could discourage future trade-secret enforcement, undermine the purposes of the Defend Trade Secrets Act, or fail to deter Vade from future use of the technology. The court noted the substantial amount of the unjust-enrichment award, Vade’s replacement of its identitymatch program with a program designed by Zenika, the lack of evidence of continuing use, and Vade’s apparent compliance with the court’s protocol for disposing of source-code files.

Disposition

The court denied the plaintiffs’ motion for an award of attorneys’ fees.