47 F.4th 156
3rd Cir.2022Background
- PPG developed a proprietary plastic technology called Opticor for aircraft windows and kept it confidential.
- Former PPG employee Thomas Rukavina, bound by nondisclosure obligations, emailed PPG’s Proprietary Report and other trade secrets to China-based competitor Jiangsu Tie Mao Glass Co. Ltd. (TMG) after being recruited and offered employment.
- TMG used the Proprietary Report material (removing PPG branding) to solicit molds from a PPG subcontractor and to plan a production facility in China; the subcontractor alerted PPG and the FBI.
- PPG sued TMG (and individual defendants) under Pennsylvania’s Uniform Trade Secrets Act and other claims in 2015; TMG failed to appear for over a year, and the clerk entered default.
- The district court found TMG liable, held PPG lacked proof of lost sales but proved unjust enrichment, used PPG’s R&D costs as a proxy for the development costs TMG avoided, awarded $8,805,929 in actual damages and trebled that to $26,417,787, and issued a permanent injunction; TMG appealed only the damages calculation.
Issues
| Issue | PPG's Argument | TMG's Argument | Held |
|---|---|---|---|
| Proper measure of unjust-enrichment damages for trade-secret misappropriation | Use defendant’s avoided development costs; PPG’s R&D expenditures are a permissible proxy for those avoided costs | PPG’s own development costs are irrelevant to TMG’s unjust enrichment | Court held plaintiff’s R&D costs may permissibly be used as a proxy for the defendant’s avoided development costs and thus as a basis for unjust-enrichment damages |
| Whether TMG ‘used’ the trade secrets (nexus between misappropriation and damages) | TMG used the Proprietary Report to solicit molds and plan production, thus avoiding R&D | TMG claimed it obtained but did not commercially use the trade secrets | Court found ample evidence of use (molds solicitation, facility planning), so damages tied to avoided costs were appropriate |
| Whether awarding damages plus a permanent injunction results in double recovery | Damages compensate past use/avoided costs; injunction prevents future use—both can coexist if non-overlapping | Awarding damages covering the same period as the injunction would be duplicative | Court held damages addressed past avoided R&D costs while the injunction is forward-looking, so no double recovery |
| Sufficiency/certainty of damages evidence after default | PPG provided declarations and cost tables showing R&D expenditures; reasonable certainty suffices where defendant’s conduct precludes more precise proof | TMG argued PPG’s figures were speculative, unexplained, and insufficient | Court concluded evidence supported $8,805,929 in actual damages with reasonable certainty and affirmed trebling to reach final award |
Key Cases Cited
- Chamberlain v. Giampapa, 210 F.3d 154 (3d Cir. 2000) (factors for setting aside default)
- Comdyne I, Inc. v. Corbin, 908 F.2d 1142 (3d Cir. 1990) (allegations deemed true after default; damages must be proven)
- Bailets v. Pa. Turnpike Comm’n, 181 A.3d 324 (Pa. 2018) (damages may rest on probabilities and inferences; reasonable certainty standard)
- Oakwood Lab’ys LLC v. Thanoo, 999 F.3d 892 (3d Cir. 2021) (using trade secrets to accelerate R&D constitutes ‘use’)
- Bohnsack v. Varco, L.P., 668 F.3d 262 (5th Cir. 2012) (misappropriation damages can include development costs defendant avoided)
- GlobeRanger Corp. v. Software AG U.S., Inc., 836 F.3d 477 (5th Cir. 2016) (plaintiff’s development costs can serve as proxy for defendant’s avoided costs)
- Bourns, Inc. v. Raychem Corp., 331 F.3d 704 (9th Cir. 2003) (affirming damages based on plaintiff’s development costs as evidence of defendant’s savings)