Alabama Federal Court Issues Decision Regarding Measuring The “Amount In Controversy” When The Plaintiff’s State Court Trade Secret Misappropriation Complaint Is Silent As To The Amount Of Damages And The Defendant Removes The Case To Federal Court

A recent Alabama federal court decision discusses how to determine the “amount in controversy” when a state court trade secret misappropriation case is removed to federal court based on diversity of citizenship, but the complaint is silent as to the amount of damages demanded.

In order to place a value on the allegedly misappropriated trade secrets, courts take into account such factors as a reasonable royalty the plaintiff might have charged for licensing the trade secrets, the plaintiff’s lost income resulting from the alleged misappropriation, and the defendant’s gross or net revenue received because of the claimed misconduct. In addition, consideration may be given to the estimated amount of the plaintiff’s attorneys’ fees that might be awarded, and an estimate of potential exemplary damages if the applicable statute permits such an award.

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