[3] In trade secret cases it is common for a plaintiff to seek royalty damages when they are unable to show an actual loss or that the defendant received some inequitable benefit from the misappropriation.

In 2010 the California courts of appeal once again remanded the case back to the trial court[5] reasoning that in such cases an exact quantitative measure of wrongful enrichment damages incurred by the plaintiff might not be sufficient to reject the claim of reasonable royalties based damages[2] E*Trade, an online financial services company, was found liable for misappropriation of trade secrets pertaining to wireless stock trading technology that it had acquired from software company Ajaxo.

[3] The trial court denied the request because Ajaxo was unable to show that it had suffered any lost profits from the misappropriation or that E*Trade had received any inequitable benefit.

This resulted in all parties appealing the decision, and on December 21, 2005, the California Court of Appeal affirmed the above-described award against E*Trade for violation of the NDA but remanded the case to the trial court for determining the additional damages that Ajaxo could be entitled to as a result of the jury's previous finding in favor of Ajaxo on its claims against E*Trade and Everypath.

[3] Facts The events began unfolding in September 1999, when E*Trade, an online financial services based corporation, signed a Non-Disclosure Agreement (NDA) with Ajaxo, Inc.

The terms of this NDA stated the level of details up to which E*Trade required to maintain confidential information it received pertaining to Ajaxo's wireless stock-trading software.

The strange thing is that E*Trade made that agreement even though Everypath did not at that time have a proper wireless product to serve its purpose.

[5] Further digging into the matter during the first trial provided ample proof for asserting that E*Trade was indeed connected to Everypath, both financially and through its personnel.

The trial court allowed the jury to evaluate liability under the CUTSA, recognizing that Ajaxo might be entitled to reasonable royalties if defendants were in fact involved in misappropriation of plaintiff's trade secrets pertaining to its wireless technology.

The jury also validated that both defendants had with complete intent wrongfully misappropriated the trade secrets, but it did not award any monetary compensation as it was not a part of the plaintiff's claims.

The same proof Ajaxo had presented to prove its cumulative losses would have been sufficient to verify unjust enrichment due to E*Trade's misappropriation.

In the second case, the court committed a mistake by allowing the defendants' motion for nonsuit on Ajaxo's claim for a fair royalty due to wrongful enrichment.

In the last case, Ajaxo claimed that the court had committed an error by not asking the defendants to compensate for the attorney fees involved in pre-trial work.

In the first case, Everypath claimed that the court had committed a mistake by rejecting its motion for summary judgment notwithstanding the verdict on the jury's findings that Everypath had purposefully misappropriated Ajaxo's wireless stock trading technology trade secrets and had completely authorized that malicious misappropriation.

The jury also found Everypath to guilty of acquiring and misappropriating Ajaxo's trade secret without any implied or officially expressed consent.

To hold otherwise would place the risk of loss on the wronged plaintiff, thereby discouraging innovation and potentially encouraging corporate thievery where anticipated profits might be minimal but other valuable but nonmeasureable benefits could accrue.

For the second explanation, he used Everypath's valuation based on Ajaxo's misappropriated technology to arrive at a figure of $60 million as a measure of unjust enrichment losses.

[5] E*Trade was able to persuade the Trials Court to discern Walter Bratic's testimony on measure of wrongful damages incurred by Ajaxo since, as Arrowpath's VC funding that was put forth in Everypath was not relevant to E*Trade and was certainly not relevant for measurement of wrongful enrichment damages incurred by Ajaxo.

[5] The trial court refused to include Form 10-K as a part of the evidence citing its irrelevance as unnecessary in the case put against the jury.

In such cases where it is not possible to measure the exact losses arising from wrongful enrichment, a royalty assessment in favor of plaintiff can help to fairly evaluate the value of its misappropriated trade secrets.

Generally speaking a feasible value of royalty assessment should be done by expert who can measure the extent of misappropriation and can arrive at a fair conclusion accordingly.

Such cases related to corporate stealing, can hamper the morale of small companies trying to come up with innovative ideas to shape and define the new trends in different technology sectors.