Pennsylvania Appellate Court Orders Sanctions for Plaintiff’s Bad-Faith Trade Secret Misappropriation Claims

On May 17, 2013, a Pennsylvania appellate court, with one of its judges dissenting, ordered that the trial court award attorneys’ fees to a married couple whose neighbors wrongfully accused them of trade secret misappropriation regarding flagstone artwork. Krafft v. Downey, Pa. Sup. Ct. No. 476 WDA 2012 (Donohue, J.).

According to the majority, plaintiffs Jack and Linda Krafft must have known that they did not have protectable trade secrets in their flagstone imaging processes when they alleged that their neighbors, Larry and Jane Downey, violated the Pennsylvania Uniform Trade Secrets Act (PUTSA) by using those processes in their own business. Thus, the court held, the trial court should have made the Kraffts pay the Downeys’ attorneys’ fees spent in defending against the Kraffts’ PUTSA claims for which, by making them, the Kraffts engaged in “subjective misconduct.”

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