Silver Fern Chemical v. Lyons — $1.25 Million Fee Award, but No Exemplary Damages

Background

A jury found that former employees and their new chemical company willfully and maliciously misappropriated Silver Fern Chemical’s trade secrets, awarding approximately $1.9 million. After the court upheld the verdict, Silver Fern sought more than $1.26 million in attorney fees, about $42,000 in costs, and exemplary damages under the federal Defend Trade Secrets Act and Washington’s trade-secret statute.

The Court’s Holding

Judge Tana Lin awarded $1,247,634.50 in attorney fees and $42,022.78 in costs. Both trade-secret statutes permit fee awards after willful and malicious misappropriation, and the jury’s finding was supported by substantial evidence. The court generally approved counsel’s hours and market rates but reduced amounts attributable to clerical filing work billed at lawyer or paralegal rates.

The court denied exemplary damages. Although the conduct was intentional and repeated, the harm was economic, did not threaten health or safety, and was not directed at a financially vulnerable victim. The existing damages, fee award, costs, and interest already placed the individual defendants and small company at risk of paying more than $3.2 million. The court found that amount sufficient for punishment and deterrence and declined to select an additional figure without a principled calculation method.

Key Takeaways

• A willful-and-malicious verdict can support substantial fee shifting under both the DTSA and state law.
• Courts may trim otherwise reasonable fee requests when lawyers or paralegals bill clerical filing tasks at professional rates.
• Enhanced damages remain discretionary even after willfulness; courts may consider proportionality, deterrence, and defendants’ financial circumstances.

Why It Matters

The order shows that the financial consequences of trade-secret theft can extend well beyond the jury’s compensatory award. At the same time, willfulness does not make exemplary damages automatic. Prevailing plaintiffs should document fees carefully and offer a concrete, principled method for calculating any requested enhancement.