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Sanctions Imposed in Misappropriation of Trade Secrets Suit Vacated

By FindLaw Staff on April 21, 2010 4:03 PM

BDT Prod., Inc. v. Lexmark Int'l, Inc., No. 08-6140, involved a challenge to the district court's grant of defendants' motion for attorney fees and imposition of sanctions to the extent of those fees, arising from a grant of summary judgment in favor of defendant in a suit brought by its one-time partners claiming that defendant had misappropriated trade secrets in developing a printer tray that substantially resembled a tray developed by plaintiff.

First, because sanctions under 28 U.S.C. section 1927 may be imposed only on individual attorneys, and not law firms, the imposition of sanctions, insofar as they are imposed upon the law firm Meisenheimer, is vacated.  Second, the district court did not abuse its discretion in determining that Meisenheimer pursued a meritless lawsuit, and that it knew or should have known that it was pursuing a meritless suit.  However, because the district court relied in part on a misstatement of Sixth Circuit law and without sufficient evidence imputed plaintiff-company's and the other law firm's improper purpose to Meisenheimer in finding that it had acted in bad faith, the judgment is vacated and remanded. 

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