Trade Secrets: Indiana Court of Appeals Issues Opinion Involving Fast Tek

The Indiana Court of Appeals issued an opinion (PDF format) on the Product Action International/Fast Tek litigation I wrote about in Non-Competition Agreement and Trade Secrets.

Fast Tek appealed on the issue of the relationship between Indiana's Racketeer and Corrupt Influences (RICO) statute and Indiana's Trade Secrets statute. Actually, I radically condensed the issues for the purposes of my interest in trade secrets.

The Court of Appeals recites the facts and procedural history of the case from pages 3 to 13 (out of 42 pages of the opinion) but this exercise only details the outline published in the press (and reported above in Non-Competition Agreement and Trade Secrets).

Procedurally, we call this kind of appeal an interlocutory appeal. This type of appeal occurs when there is not yet a final judgment. In this case, think of it as an appeal on the preliminary injunction.

The Indiana Court of Appeals examines the history of the Trade Secrets Act's preemption provision. The Court of Appeals also dissects Indiana's RICO statute at 18-20. The opinion hold the trade secrets statute does not preempt use of the RICO statute in conjunction with a trade secrets claim. As the Court of Appeals notes in the opinion, this increases the amount of potential damages. See the opinion at 20 - 21.

I cannot fault the Court of Appeals decision but I tend to be very pro-business in these cases. The policy issues created by the theft of trade secrets fits well with the legal arguments:

... Instead, we believe that permitting a RICO claim along with an IUTSA claim appropriately places a disincentive of a sizable magnitude to potential offenders, thereby providing greater protection for the integrity of Indiana businesses....

Opinion at 21.

The plaintiff used the RICO statute as the basis for the preliminary injunction and the Court of Appeals held the trial court used the wrong legal standard for installing the preliminary injunction. Then the hand of the appellate court gave back to the plaintiff just as it took from them: "...We conclude that the findings Support the trial court's ultimate conclusion when applied to the correct standard for a preliminary injunction under RICO." Opinion at 24.

Fast Tek successfully argued that the Trade Secrets Act does not allow for an attorney fee award at the preliminary injunction stage. Attorney fees need wait for the conclusion of the case on the merits. Opinion at 34-35. Regardless of how I might view an award of attorney fees as a tool for settling a case, Fast Tek has the law on its side:

Inherent in the definition of preliminary judgment is the fact that a judgment on the merits has yet to he made. So here, there is no judgment or settlement among the parties. Rather, the parties are still in the middle of litigating this case. Thus, the prevailing party is yet to he determined. As such, the trial court erred in awarding Product Action attorney's fees at this time.

I am leaving off for another post (or posts) the preliminary injunction and piercing the corporate veil issues addressed in the opinion. These have an interest that only touch on the trade secret issues and I think I will only muddle and increase the size of this blog if I include them here.