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Law Firm Wins Reversal of $1 Million in Sanctions

(CN) - A San Diego law firm won reversal of $1 million in sanctions in a trade secrets case against Lexmark. The 6th Circuit said Lexmark failed to prove that the firm had acted in bad faith in "pursuing this meritless lawsuit."

Meisenheimer Herron & Steele represented BDT Products in a lawsuit accusing Lexmark, BDT's former partner, of swiping BDT's trade secrets for a printer tray.

The federal appeals court in Cincinnati pointed out that BDT's printer tray "was commercialized and sold before BDT even transmitted some of its information to Lexmark."

Thus, "BDT and its attorneys pursued a suit based at its heart on misappropriation of 'trade secrets' that were, in fact, not secret at all," the court ruled.

Finding the suit meritless, the district court imposed $5 million in sanctions on BDT, Meisenheimer and another firm.

Meisenheimer appealed the $1 million fine against it, arguing that courts can only sanction individual attorneys, not firms, and that Lexmark failed to prove that it had acted in bad faith.

The 6th Circuit agreed on both counts.

Though the claims were clearly meritless, the three-judge panel ruled, the lower court relied on a misstatement of 6th Circuit law in its bad-faith finding.

"Lexmark has simply been unable to point to any such evidence demonstrating that Meisenheimer acted in bad faith or with improper purpose," Judge David McKeague wrote.

The court vacated the sanction against Meisenheimer and remanded, telling the lower court to deny sanctions against the firm.

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