AirFacts, Inc. v. Diego De Amezaga
30 F.4th 359
4th Cir.2022Background
- AirFacts develops TicketGuard revenue-accounting software; Diego de Amezaga was a product-development director who signed an employment agreement with confidentiality (¶¶2.2, 4.2) and an indemnification clause limiting recovery to material breaches.
- Amezaga printed pseudocode and, on his last day, emailed proration documents to his personal account; weeks later he downloaded and sent AirFacts flowcharts from Lucidchart to a prospective employer, Fareportal.
- District court originally entered judgment for Amezaga; this Court in AirFacts I (909 F.3d 84) held the flowcharts are trade secrets and revived certain contract claims, remanding for further proceedings.
- On remand the district court found Amezaga breached ¶2.2 (flowcharts) and ¶4.2 (retained sales diagram and commission table) but called those breaches de minimis and awarded nominal damages under the indemnification clause; it also found misappropriation of the flowcharts but denied reasonable royalties because Amezaga had not put them to commercial use.
- The Fourth Circuit affirmed the nominal-damages/materiality determination, reversed the district court on the proration-documents retention (finding a ¶4.2 breach), and vacated the district court’s rule requiring “commercial use” as a prerequisite for reasonable-royalty damages under the Maryland Uniform Trade Secrets Act (MUTSA); the case was remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether breaches of ¶2.2/¶4.2 were material, affecting entitlement to indemnification (fees/costs) | AirFacts: breaches of confidentiality provisions undermined contract purpose and justify recovery of fees/costs | Amezaga: breaches were minor/technical and caused no harm, so immaterial | Court: Breaches were immaterial (no proven harm); nominal damages affirmed, indemnification for fees/costs denied |
| Whether accessing/downloading flowcharts (via Lucidchart after termination) violated ¶4.2 (return requirement) | AirFacts: ¶4.2 required return of confidential info upon resignation; using login or accessing materials after termination violated ¶4.2 | Amezaga: ¶4.2 applies only to returning physical/material records upon termination; access after leaving doesn’t violate ¶4.2 absent retained records | Court: No ¶4.2 violation — accessing/downloading in Lucidchart post-termination did not show retention of a covered physical/material record; ¶4.2 not breached on this basis |
| Whether emailing proration documents to personal email on last day breached ¶4.2 | AirFacts: proration documents were confidential and must be returned; sending them to personal email violated ¶4.2 | Amezaga: had implicit authority as creator/co-creator and was asked to be available for questions after leaving | Held: Reversed — retention of proration documents violated ¶4.2; no implicit-authority exception; remand to assess materiality and remedies |
| Whether a plaintiff must prove the defendant put a trade secret to "commercial use" to obtain reasonable-royalty damages under MUTSA | AirFacts: reasonable royalties are available because defendant disclosed trade secret; no need to show commercial use | Amezaga: University Computing requires actual commercial use as a threshold for royalties | Held: Vacated district court’s commercial-use requirement — MUTSA allows reasonable royalties for unauthorized disclosure or use; commercial use is not a categorical prerequisite; remand to calculate any royalty (fact-specific) |
Key Cases Cited
- AirFacts, Inc. v. de Amezaga, 909 F.3d 84 (4th Cir. 2018) (prior appellate decision holding flowcharts are trade secrets and reviving certain contract claims)
- University Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518 (5th Cir. 1974) (articulated reasonable-royalty framework and discussed commercial-use factor)
- StorageCraft Tech. Corp. v. Kirby, 744 F.3d 1183 (10th Cir. 2014) (statutory royalty damages under trade-secret law do not require proof of commercial use)
- Moore v. RealPage Util. Mgmt., Inc., 264 A.3d 700 (Md. 2021) (principles of statutory interpretation; read statutes by plain meaning)
- Owens-Illinois, Inc. v. Cook, 872 A.2d 969 (Md. 2005) (contract interpretation requires giving effect to all clauses)
- Harry's Thrifty Tavern, Inc. v. Pitarra, 166 A.2d 908 (Md. 1961) (attorney fees and litigation expenses not recoverable absent contractual authorization)
- Weichert Co. of Md., Inc. v. Faust, 19 A.3d 393 (Md. Ct. Spec. App. 2011) (materiality of breach is a factual inquiry)