Opinion ID: 743588
Heading Depth: 3
Heading Rank: 3

Heading: The Proper Measure of Damages

Text: 65 The district court based its calculation of Softel's trade secret damages on Dragon's profits. Softel III at C.L. pp 9-16. This was an appropriate measure of damages under New York law. See, e.g., David Fox & Sons, Inc. v. King Poultry Co., 23 N.Y.2d 914, 246 N.E.2d 166, 298 N.Y.S.2d 314 (1969). It then found that these damages were coextensive with the damages it had already awarded for copyright infringement, and that Softel therefore could not take its trade secret damages, as that would amount to double recovery. Softel III at C.L. p 17 (citing Altai, 982 F.2d at 720). 66 On this appeal, Softel seeks to avoid this result in two ways. First, it argues that its should have been awarded a reasonable royalty on its trade secret claim rather than lost profits. It calculates this royalty as its development costs multiplied by 3.5 to 5.5 (essentially to estimate profit). Alternatively, it argues that it should be granted the amount it would have charged for a source code license, because Dragon took its source code as well as its object code. It then goes on to argue, in essence, that selling such a license would have been like selling the store, because Dragon took the core technology of Softel's company. Therefore, claims Softel, it should be compensated for all of the potential damage that Dragon could have inflicted by stealing the code. In making this argument, Softel points out that University Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518 (5th Cir.1974), listed the total value of the secret to the plaintiff, including the plaintiff's development costs and the importance of the secret to the plaintiff's business as a factor (among several) to be considered when calculating a hypothetical license as a measure of trade secret damages. See id. at 539. 67 This argument is flawed. University Computing itself rejected Softel's proffered measure of damages: it stated that such a measure usually was appropriate only where the defendant had destroyed the value of the secret. See id. at 535. Here, Dragon did not publish Softel's secrets, and therefore did not destroy their value to Softel, other than to the extent that Dragon itself used them. 68 Softel's second legal challenge to the calculation of the trade secret damages calls attention to the fact that its trade secret claim differs from its copyright claim in that the trade secret claim contains the additional element of secrecy. Without more, this is irrelevant: an element of liability does not, of its own force, generate damages. 69 We have recently stated that [a]lthough the deference owed by an appellate court to a trial court's factual findings is a well established principle of law, in few areas of the law is this rule so generously applied as it is in the field of damages. Vermont Microsystems, Inc. v. Autodesk, Inc., 88 F.3d 142, 151 (2d Cir.1996) (citations omitted). Given this deference, and the fact that Softel has failed to establish that the district court miscalculated its trade secret damages, we affirm the district court's calculation, except insofar as it may be affected by our limited remand of the trade secret claim, above at section II(C)(2).