Schiff Hardin Wins Victory in Trade Secrets Litigation for Logoplaste USA, Inc., and Logoplaste Technical Consultants, B.V.
- Client: Logoplaste USA, Inc. and Logoplaste Technical Consultants, B.V.
- Date: June 2012
- Location: Cook County, Illinois
On June 15, 2012, Judge Mary Anne Mason, Circuit Court of Cook County, Illinois, Chancery Division, entered a memorandum opinion and order finding that the plaintiff in significant multinational trade secrets litigation must pay the defendants' attorney fees for the entire litigation, extending over more than three years. The award of attorney fees was made in the alternative under both the fee-shifting provision of the Uniform Trade Secrets Act and Rule 137 of the Illinois Supreme Court Rules, the Illinois analogue to Rule 11 of the Federal Rules of Civil Procedure. Judge Mason found that the plaintiff had submitted knowingly false affidavits, false verified interrogatory answers and a false verified complaint, each of which had been signed by the plaintiff's general counsel with personal knowledge that the contents were false. The court further found that the plaintiff had prosecuted its claims in bad faith because the plaintiff's sole motive was to use the litigation to injure the defendant's business and gain a competitive advantage. Matthew F. Prewitt led the Schiff Hardin attorney team on the case.
The decision is significant because, as the court notes in its opinion, no Illinois state court has ever addressed in a reported decision the standard for finding "bad faith" against a plaintiff under the Illinois Trade Secrets Act. Cases awarding fees to prevailing defendants and against plaintiffs in trade secrets litigation are very unusual. The case is also unusual because awards of sanctions for litigation misconduct only rarely include the entire defense costs for a suit. The case involved prominent Chicago firms on both sides of the litigation and concerned business interests and discovery in the United States, Canada and Europe.
Discovery included extensive disclosure of the plaintiff's pre-suit litigation strategy analysis, providing an extraordinary window into the plaintiff's internal deliberations that preceded the commencement of a trade secrets litigation against a major competitor. The court held that the plaintiff had waived its attorney-client privilege by designating its general counsel as a trial witness and submitting to the court numerous pleadings, affidavits and discovery answers that were signed and verified by the plaintiff's general counsel. When the court compelled the plaintiff to turn over its privileged communications regarding the suit, these documents revealed embarrassing internal emails and memoranda that contradicted general counsel's sworn submissions to the court and demonstrated a bad-faith litigation strategy.
Among the more unusual facts presented by the case was an attempt by the plaintiff's general counsel to create a disqualifying conflict of interest for the defendants’ Canadian counsel by engaging the Canadian firm for an intellectual property matter shortly before commencing the trade secrets litigation. Discovery revealed a memorandum from the general counsel to the plaintiff's board of directors in which the general counsel explained his scheme to disqualify defendants’ Canadian counsel, and the court relied upon this memorandum as additional evidence of the plaintiff's bad faith in the litigation.
The court issued a strongly worded opinion, finding that the plaintiff's claim was "the very essence of bad faith" and that plaintiff's claims were "objectively specious." The court further found that the claim was "interposed for an improper purpose" and had been asserted in subjective bad faith because the plaintiff had commenced the suit solely "to harass a competitor who successfully lured away a customer."