You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 28, 2014

Damages in Trade Secret Litigation

Subscribe to Updates
Informed Counsel

Calculating damages is a difficult process in all variants of litigation. Assessing damages in cases involving trade secrets is, however, a far more arduous undertaking, riddled with complexities and obscurities that become particularly apparent when compared to assessments in cases relating to other forms of intellectual property rights.

In instances where a historical baseline has already been established—through the plaintiff and defendant developing and selling products to which the trade secret relates—if actual damages can be proven, then a loss of profits may be recoverable. A loss of profits is typically calculated as net profits, which is gross profits minus overhead and expenses. The majority of courts tend toward using the plaintiff’s lost profits or the defendant’s profit gains as the measure for assessing damages in trade secret cases. If neither the plaintiff nor the defendant has a sales history on which to base such a calculation, then the courts will most likely find the measure of lost profits to be too speculative for the purpose of recovering damages.

The court assessing damages calculates the plaintiff’s lost profits through a range of methods, which vary from relatively straightforward to extremely complex. The following factors are taken into consideration by the court when making such an assessment:

  • The nature of the misappropriated trade secret;
  • Research and development costs;
  • Competition between the businesses of the plaintiff and the defendant; and
  • The size of the markets and other factors which are difficult to quantify.

Bearing in mind the above, it is therefore highly advisable for the plaintiff—during the trial—to demonstrate to the court that it has made significant investments in trade secrets related to technology, time, money, intellectual property, security measures, people, etc., over the course of many years. The plaintiff may present evidence to prove such factors to the court, with which the court can make considerations to determine the amount of damages to award.

In our firm’s experience, the Intellectual Property and International Trade Court (IP&IT Court) has specified damages for the plaintiff in the following terms:

1. The compensation for benefits conferred on the defendant from, or because of, such infringement is calculated from the sales of the defendant’s goods produced from the machine and procedure of infringement on the plaintiff’s trade secret. It was further held by the IP&IT Court that, in accordance with Section 13(1) of the Trade Secrets Act B.E. 2545 (2002), the Court is empowered to determine only damages for the actual damage suffered.

The plaintiff claimed that it had suffered a loss of revenue from the distribution of products produced by the defendant from the machine and procedure of infringement. The Court, however, determined that the plaintiff was not claiming for actual damage suffered. Further, the plaintiff’s loss of revenue could not be said to have been wholly caused by the defendant’s product distribution, because the customers who bought products from the defendant may not have otherwise purchased them from the plaintiff. The plaintiff’s actual damages were therefore uncertain. Due to the trade secret infringement committed by the defendant against the plaintiff, however, the plaintiff inevitably incurred damages. Therefore, it was deemed expedient on this ground to determine the amount of compensation of damages for the plaintiff.

2. In order to prove damages for the expenses incurred by the plaintiff in this lawsuit against the defendant, to maintain the secrecy of the plaintiff’s trade secrets, and to show legal proceedings costs, detective costs, transportation costs, lawyer fees, and other expenses, the plaintiff must show the Court documentary evidence such as the receipts of transportation costs, lawyer fees, and other expenses.

Despite these supporting documents, the Court may not necessarily determine damages in accordance with the plaintiff’s request.

3. Damages caused to the plaintiff from the day the complaint is filed until the defendant ceases to infringe on the plaintiff’s trade secrets depend on the plaintiff’s evidence. It is at the discretion of the judge. 

Notwithstanding the above, in the last trade secret case handled by our firm, the IP&IT Court ordered the defendant to pay the plaintiff compensation for damages in the amount of THB 20,000,000 (USD 666,666) plus 7.5% interest per annum, calculated from the filing date of the lawsuit until the payment is made in full. This is the highest-ever amount of compensation ordered by the Court and is indicative of its flexibility when it comes to awarding damages. While this flexibility has its advantages, it further deepens the trench of unpredictability and obscureness that overshadows damages in trade secret litigation. Predictable outcomes are yet to be seen, but are certainly hoped for.

Download Full Article
Related Professionals

Practices

Dispute Resolution and Litigation

Intellectual Property

Location

RELATED INSIGHTS​ 

August 20, 2026
Vietnam’s Law on Bankruptcy and Rehabilitation No. 142/2025/QH15, passed by the National Assembly on December 11, 2025, does something many regional counterparts do not yet attempt: it instructs parties and arbitral tribunals on exactly what happens to an arbitration once a debtor becomes insolvent. Together with the Law on Commercial Arbitration No. 54/2010/QH12, the new law improves upon what used to be an uncertain area of practice, now providing an explicit, mandatory sequence of procedures. Suspension and Termination of Arbitration Proceedings Under article 40(2) of the law, once a Vietnamese court accepts a bankruptcy petition, any arbitration that concerns the debtor’s financial obligations must be temporarily suspended as soon as the tribunal receives the court’s notification. If the court subsequently issues a decision commencing bankruptcy proceedings, article 59(2) takes a further step: the suspended arbitration is terminated outright, and the underlying case file is transferred to the court handling the insolvency for resolution. The two provisions work as a sequence: first suspension, then termination and transfer, rather than as independent triggers. Meanwhile, article 60(4) reinforces this effect by vesting the bankruptcy court with exclusive jurisdiction over all claims against the debtor from the date the petition is accepted. Notably, this mechanism operates automatically, without the need for the insolvency court to issue a separate anti-arbitration order. The tribunal simply suspends or terminates the proceeding by operation of law once notified; however, Vietnamese law currently provides no procedure by which a party can apply to the insolvency court for permission to continue the arbitration despite the statutory effect. Practitioners with a Vietnamese counterparty in arbitration should treat notification of a bankruptcy filing as something to flag to the tribunal immediately since continuing to arbitrate a claim that has become subject to article 40(2) or 59(2) risks producing an award vulnerable
Read More
August 20, 2026
Thai law contains no provision that speaks directly to what happens to an arbitration when one of the parties becomes insolvent. The interaction between arbitration and insolvency is derived instead from the general operation of two separately drafted laws: the Bankruptcy Act B.E. 2483 (1940) and the Arbitration Act B.E. 2545 (2002). Because Thai courts have had few opportunities to interpret how these two statutes apply together, the practical answer to many questions, such as who represents an insolvent party in arbitration, whether an award will be enforced, and what happens to a foreign proceeding, depends on inference from general principles of insolvency, arbitration, and procedural law rather than on settled rules. Liquidation and Restructuring The Bankruptcy Act governs both liquidation, which winds up a debtor’s affairs, and restructuring (rehabilitation), which aims to preserve a business. The consequences for arbitration differ accordingly. In liquidation, the debtor’s assets vest in the official receiver, who alone can conduct or continue any arbitration affecting the estate; the debtor loses the authority to act on its own behalf. In restructuring, the plan preparer or administrator takes over that role, but there is more room for the debtor to remain involved, since the objective of rehabilitation is to keep the business operational. Restructuring carries an automatic stay that takes effect once the Bankruptcy Court accepts the restructuring petition. This stay can halt an arbitration regardless of where it is seated. In contrast, liquidation does not work through a stay; instead, the debtor’s loss of authority over its own assets and disputes is what constrains the arbitration. Neither proceeding provides a party a formal route to apply for permission to continue arbitrating—the Bankruptcy Act contains no such mechanism—though in restructuring cases the Bankruptcy Court may allow proceedings to continue where doing so will not prejudice
Read More
August 20, 2026
As part of its membership in Lex Mundi, Tilleke & Gibbins has released the latest edition of its Guide to Doing Business in Thailand, providing an overview of the legal, regulatory, and commercial considerations for companies establishing or expanding operations in Thailand. The 2026 edition offers practical insight into the country’s business environment, investment framework, and operational requirements. The guide covers a wide range of topics relevant to foreign and domestic investors, including: Investment incentives and promotion schemes Financial facilities and banking regulations Exchange controls and money transfers Import and export regulations Business structures and incorporation options Requirements for establishing a business Operational and compliance considerations Business cessation and insolvency procedures Employment and labor laws Taxation Immigration and visa requirements Prepared by Tilleke & Gibbins lawyers across multiple practice areas, the publication outlines key aspects of doing business in Thailand, including foreign investment restrictions, regulatory compliance obligations, corporate structures, employment requirements, and recent legal and economic developments affecting investors. The publication forms part of Lex Mundi’s Country Guides series, a global collection of jurisdiction-specific reference materials prepared by member firms around the world. Together, these guides help companies evaluate opportunities, compare regulatory environments, and plan international business activities across multiple markets. The full Guide to Doing Business in Thailand 2026 is available through the button below.
Read More
August 19, 2026
Arbitration clauses and national court jurisdiction have long existed in a delicate equilibrium, and nowhere is that equilibrium tested more often than in the drafting of multitier dispute resolution clauses. Such clauses—requiring negotiation before arbitration—are ubiquitous in international construction contracts, and they frequently employ permissive vocabulary at the arbitration tier. The formulation “either party may submit the dispute to arbitration” is intended to signal that either side is entitled to initiate proceedings. Yet it is periodically seized upon by claimants who prefer national courts, on the theory that “may” preserves a parallel right to litigate. Each apex-court pronouncement on this question is therefore significant for drafting practice and forum predictability. In 2019, the Thai Supreme Court delivered Thailand’s clearest answer to date (Judgment No. 3427/2562). Reversing an appellate court decision, the Supreme Court held that permissive wording at the point of commencement does not dilute the parties’ antecedent agreement to withdraw their disputes from the courts—doing so in regard to an International Chamber of Commerce (ICC) arbitration clause seated in Singapore, a configuration typical of foreign-invested projects in Thailand. This article examines the court’s reasoning, situates the decision within comparative jurisprudence, and draws out its practical lessons for parties and drafters operating in the Thai market. Background of the Dispute The dispute arose from a subcontract for civil engineering and architectural works concluded on September 25, 2014. Clause 19 of the subcontract governed dispute resolution. Clause 19.1 required the parties, at the request of either, to seek to resolve any dispute “in connection with, arising out of, or relating to” the subcontract through mutual consultation within sixty days of written notice. According to clause 19.2.1, if the dispute could not be resolved within that period, “either party may submit the dispute to arbitration,” to be conducted under the ICC
Read More