Can companies recover lost profits under Utah's trade secrets law? Water & Energy Systems Technology v. Keil Explained

The Utah Supreme Court’s decision in Water & Energy Systems Technology v. Keil provides crucial guidance on damages available under the Uniform Trade Secrets Act and reinforces important appellate practice requirements for challenging jury verdicts.

Background and Facts

Steven Keil worked as a water treatment chemical sales representative for Water & Energy Systems Technology (WEST) for over a decade, managing key industrial accounts including Alliant Techsystems, Cargill, and MagCorp. During his employment, Keil had access to confidential customer-specific pricing lists and chemical formulae. When Keil left to join competitor Brody Chemical Company (BCC), he used WEST’s confidential pricing information to develop a strategy offering equivalent chemicals at ten percent below WEST’s prices. Within two weeks of Keil’s departure, three major customers ceased purchasing from WEST and began buying from BCC.

Key Legal Issues

The case presented two primary issues: whether sufficient evidence supported the jury’s finding of trade secret misappropriation, and what damages are recoverable under Utah’s Uniform Trade Secrets Act. Defendants argued that WEST should be limited to recovering only the benefit defendants received, rather than WEST’s lost profits.

Court’s Analysis and Holding

The court affirmed the jury verdict, holding that Utah Code § 13-24-4 permits recovery of both actual losses and unjust enrichment in trade secret cases. The statute’s plain language specifically contemplates that successful plaintiffs may recover losses suffered due to trade secret disclosure. Regarding the sufficiency challenge, the court found that defendants failed to properly marshal the evidence supporting the jury’s verdict, instead merely rearguing their case with evidence construed favorably to them.

Practice Implications

This decision establishes that Utah’s trade secrets law provides robust damage remedies, allowing recovery of lost profits in addition to other forms of relief. For appellate practitioners, the decision reinforces that challenging jury verdicts requires meticulous marshaling of all supporting evidence, not selective citation of favorable facts. The court also demonstrated that inadequately briefed arguments on cross-appeal will not be considered, emphasizing the importance of thorough legal research and argument development in appellate briefs.