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Cypress Semiconductor Corp. v. Maxim Integrated Products Inc. H038555

Award of attorney fees to prevailing party is proper where plaintiff’s claims of misappropriation of trade secrets were made in bad faith.

D.J. cite: 2015 DJDAR 4682

California Courts of Appeal – 6th District

DAILY JOURNAL SUMMARY

In 2011, Maxim Integrated Products, Inc. (Maxim) was trying to fill several positions relating to touchscreen technology. It used a headhunter who emailed prospective candidates, including employees of Cypress Semiconductor Corporation (Cypress). The headhunter contacted candidates based on information gathered from publicly available online sources. Cypress sued Maxim, alleging misappropriation of trade secrets. Cypress’s complaint failed to allege unlawful conduct or colorable claims supported by evidence. It merely asserted that Maxim was trying to solicit its employees. Cypress eventually dismissed its complaint in its entirety. Maxim sought and was awarded its costs and attorney fees under California Civil Code Section 3426.4. Affirmed. The prevailing party may be awarded reasonable attorney fees if a claim of misappropriation is made in bad faith. Section 3426.4. Bad faith means (1) “objective speciousness of the claim” and (2) bringing the action for an improper purpose (subjective bad faith). Objective speciousness occurs when the action superficially appears meritorious but is completely lacking in evidence. Here, Cypress’s “evasive and conclusory assertions” support a finding of speciousness. Among Cypress’s improper purposes was to scare Maxim from trying to hire any of Cypress’s employees under any circumstances and to magnify Maxim’s legal expenses. The record thus supports the court’s award of attorney fees. Opinion by Justice Rushing.