Trade Secret Report
Irell & Manella LLP
TRADE SECRETS – CONSTITUTIONALITY OF PUNITIVE DAMAGES
After trial, the district court reduced a blockbuster $940 million award to plaintiff (including $700 million in punitive damages) for misappropriation of its trade secrets under Wisconsin law to $320 million. The final award included $280 million in punitive damages. The Seventh Circuit held that the award of $280 million in punitive damages was excessive under the Fourteenth Amendment. The court concluded that while defendant’s "conduct justifies punishment," it does not justify $280 million in punishment. "In sum, we conclude that the federal constitution prohibits a punitive-damages award here exceeding a 1:1 ratio with the $140 million compensatory award."