Exemplary Damages for Trade Secret Missappropriation

The Court of Chancery may award exemplary damages only where it is explicitly authorized to do so by statute. Section 2003(b) of Delaware Uniform Trade Secret Act allows the Court of Chancery to award exemplary damages (up to twice the actual monetary award) in cases where the misappropriation of trade secrets was willful and malicious. A showing of both willful and malicious misappropriation is necessary in order to obtain this relief.

The standard for willfulness only requires actual or constructive knowledge of the conduct and a realization of its probable consequences. Malicious conduct, on the other hand, requires a showing of ill-will, hatred or intent to cause injury. The latter is often more difficult to prove, normally requiring some showing of an intent to cause commercial injury.

If the Court finds willful and malicious misappropriation exists, it also may award reasonable attorney’s fees to the prevailing party under 6 Del. C. ยง 2004. The award will usually be limited to those fees actually incurred in connection with litigation of a misappropriation of trade secrets claim.

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