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NYC Litigation Blog

Thursday, January 28, 2016

Cross It Off the Bucket List - Caterpillar To Pay $73.6 Million for Stealing Trade Secrets

What are the details of the trade secret lawsuit involving Caterpillar?

In December 2015, the construction equipment maker Caterpillar was ordered by a federal jury to pay $73.6 million for stealing the design of one of its vendors, Miller U.K., Ltd. The vendor had designed a coupling device that links heavy buckets to hydraulic excavation machines and the manufacturing method was deemed to be a trade secret. Caterpillar apparently entered into an agreement to buy the coupling device, but used the design and manufactured the coupling devices instead.

What is a Trade Secret?

A trade secret is confidential information that gives a business a competitive advantage in the marketplace, arising from its manufacturing processes, business practices, formulas, designs or patterns.

The essential elements of trade secret claims include:

  • Information that is generally unknown to the public
  • Information that gives the business an economic advantage over competitors
  • Information the business reasonably attempted to keep confidential
  • Information acquired by a competitor through misconduct

In this case, because Caterpillar had entered into an agreement with Miller, Caterpillar gained access to confidential information about the manufacturing process of the vendors coupling device. The $73.6 million verdict has been reported to be the largest award under the Illinois Trade Secret Act.

One controversial aspect of this case is the growing industry of so-called litigation financing which involved a consulting firm that bankrolled Miller's lawsuit, in return for a percentage of the jury award. Proponents of litigation financing argue that it grants small litigants legal recourse against wealthy defendants.  On the other hand, critics believe that giving investors a stake in the outcome of a case can unduly influence the litigant's decision-making. In any event, Caterpillar intends to appeal the decision.

What can I do if my trade secrets are stolen?

There are a number of ways to protect a trade secret, but even if precautions are taken to keep it confidential, a trade secret can still be stolen. As was the situation in this case, a trade secret can be obtained through breach of confidentiality.  If you believe a trade secret belonging to your business has been stolen, a qualified attorney can file a lawsuit to both obtain monetary damages and obtain an injunction to stop the thief from using the trade secret.


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