Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.

 Skip to Content

Hallmark Cards Awarded $47 Million for Misappropriation of Four-Year-Old Market Research
September 16, 2014

The number of data theft/trade secret cases that go to trial is growing, as are the size of the verdicts. For example, the Eighth Circuit Court of Appeals recently upheld a $47 million total recovery for Hallmark Cards for the misappropriation of the greeting card manufacturer’s four-year-old market research. In Hallmark Cards, Inc. v. Monitor Clipper Partners, LLC, Hallmark brought an action against private equity firm Monitor Clipper Partners, LLC. (Clipper) alleging that Clipper obtained Hallmark’s confidential information from Hallmark’s research consultant, Monitor Company Group, L.P. (Monitor), to facilitate Clipper’s acquisition of greeting card competitor RPG.

Prior to trial, Hallmark won a $3.2 million arbitration claim against Monitor based on breach of contract confidentiality requirements. Monitor had disclosed Hallmark’s proprietary market research to Clipper. A final portion of the arbitration award against Monitor required additional electronic discovery searches. After e-mails revealed the intentional disclosure of information by Monitor to Clipper and the destruction of evidence by Clipper and Monitor, the arbitration was reopened. Hallmark eventually settled with Monitor for $16.6 million on the arbitration claims. Hallmark was later awarded $21.3 million in compensatory damages and $10 million in punitive damages in a jury trial against Clipper.

On appeal, Clipper argued 1) the information disclosed did not qualify as a trade secret, 2) the award against Clipper constituted a "double recovery" for Hallmark, and 3) punitive damages were unwarranted. The appellate court affirmed, finding the market research qualified as trade secrets. It concluded there was no double recovery because Monitor’s disclosure of the information constituted a breach of contract and a separate "misappropriation" from Clipper’s subsequent "use" of the trade secrets. The court characterized the acts of Monitor and Clipper as two distinct injuries, and found Hallmark was entitled to compensation for each. The appellate court also concluded that the e-discovery destruction provided evidence of "reprehensible" conduct by Clipper warranting the finding of punitive damages.
Related Practices
Technology Intellectual Property
Related Industries
Technology
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.