The Massachusetts Appeals Court upheld the multi-million dollar judgment imposed by a trial court judge against the company for violating the state's unfair trade practices law (Chapter 93A), even though a jury on the same evidence found no liability for related claims alleging misappropriation of trade secrets and breach of contract.

This ruling means that even where no misappropriation occurs in a strict legal sense, a judge may nonetheless award multiple damages for what he or she deems unfair or deceptive conduct in the acquisition and use of another's proprietary information or trade secrets.

The Appeals Court also upheld a five-year injunction barring the defendant from producing the product at issue, even if by means other than a system based on the plaintiff's trade secret.  This lengthy injunction and the $6 million dollar damages award evidence the peril that companies face when tampering with trade secrets.

In upholding the lower court's decision, the Appeals Court relied on prior case precedent that a jury's verdict on related common law and statutory claims is not binding on a judge related to a Chapter 93A claim.  Massachusetts law doesn't grant the right to a jury trial under Chapter 93A.

The longstanding rule in Massachusetts is that a judge can find a violation of Chapter 93A even without a specific connection to a common law or statutory claim.  However, the Appeals Court ruling tests the limit of that principle since the underlying case was based entirely on the alleged misappropriation of trade secrets and breach of contract.

In essence, the court's decision permits a judge and jury to rule separately on the same evidence, even if the rulings are inconsistent.  An overriding lesson is that parties embroiled in a trial involving Chapter 93A and other claims have to be concerned with persuading a judge as well as the jury, which can potentially complicate how evidence is presented and increases the risk of an adverse ruling.

The underlying case involved the production and sale of plastic sheeting that encapsulate solar cells.  The plaintiff had developed sheeting that resists shrinkage when exposed to the elements, allowing it to capture approximately 25 percent of the market.

The defendant hired the plaintiff's former employee who had headed the division responsible for developing the low-shrinkage wrap.  Within a year, the defendant was producing and selling a similar product for the first time, which prompted the lawsuit.

The jury found that the plaintiff's method of producing the low-shrinkage sheeting was based on a trade secret, but that the defendant hadn't violated it.  However, the trial judge found just the opposite, saying the defendant had misappropriated the trade secret, and had engaged in an unfair and deceptive trade practice as a result in violation of Chapter 93A.  The case is Specialized Technology Resources, Inc. v. JPS Elastrometrics Corp., Mass. Appeals Court No. 11-P-776.