Can You Recover Attorney Fees for a Trade Secret Lawsuit Filed in Bad Faith in California?

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

Yes, if the court finds the claim was made in bad faith. Civil Code section 3426.4 lets a California court award reasonable attorney's fees and costs, including expert witness costs, to the prevailing party when a trade secret misappropriation claim is made in bad faith. Courts look for two things: a claim that is objectively specious, and an improper purpose in bringing or maintaining it. The award is discretionary. Kolmogorov Law, P.C. defends companies and former employees against these suits in Orange County and Los Angeles.

Call (909) 235-6116 or contact us online to discuss a trade secret claim that looks like it was filed to slow you down.

What Civil Code section 3426.4 allows

The ordinary rule in California litigation is that each side pays its own lawyers unless a statute or contract says otherwise. (Code Civ. Proc., § 1021.) The Uniform Trade Secrets Act is one such statute. The court may award reasonable attorney's fees and costs to the prevailing party in three situations. A claim of misappropriation is made in bad faith. A motion to terminate an injunction is made or resisted in bad faith. Or willful and malicious misappropriation exists. (Civ. Code, § 3426.4.)

The word is "may," so the judge has discretion even after finding bad faith. Recoverable costs include a reasonable sum for outside expert witnesses.

The statute cuts both ways. A plaintiff who proves willful and malicious misappropriation can recover fees under the same section, a point covered on our trade secret damages page.

The two-part bad faith test

The Legislature did not define bad faith. The courts did, with a two-prong standard. The first prong is objective speciousness of the claim. The second is subjective bad faith in bringing or maintaining the action, meaning an improper purpose. (FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1275.)

Objective speciousness is not the same as frivolousness, a word the statute does not use. It exists where the action superficially appears to have merit but there is a complete lack of evidence to support the claim. (Id. at p. 1276.)

Subjective bad faith turns on why the plaintiff sued. Nobody admits to an improper purpose, so courts infer it from circumstances: the timing of the suit, what the plaintiff's own witnesses say about why it was filed, and what the plaintiff did after the weaknesses were pointed out.

A plaintiff's sincere belief in its case is evidence of a proper purpose, but it is not a shield. A subjective belief in the merits will not bar a fee award where an objectively specious claim was maintained for an improper purpose. (Cypress Semiconductor Corp. v. Maxim Integrated Products, Inc. (2015) 236 Cal.App.4th 243, 268.)

Both prongs are required. Losing a claim that was brought on real evidence is not bad faith.

What bad faith looks like in practice

The reported decisions share a few recurring facts.

No secret can be identified. The plaintiff describes its secrets as "proprietary processes" or "confidential business information" and never gets more specific, even when pressed.

No evidence of taking or use. The case rests on the defendant's knowledge and new job, which is the inevitable disclosure theory California rejects. In FLIR, a suit built on that theory ended with an affirmed award of more than $1.6 million in fees and costs against the plaintiffs.

An anticompetitive motive. Executives testify that the real concern was competition. Settlement demands ask for a non-compete or a hiring freeze, terms that have nothing to do with returning information.

Pressing on after the warning. Bad faith may be inferred where opposing counsel identifies the specific shortcomings of the case and the plaintiff goes forward without being able to answer them. That is why our first letter in these cases is specific.

Picture a three-person startup founded by former engineers of a larger company. A week before its product launch, the larger company sues and sends the complaint to the startup's customers. Eighteen months later the plaintiff still cannot name a particular secret. That file is a candidate for a fee motion.

Building the fee record from the first day

A fee award is won with a record, and the record starts early.

Put the defects in writing. A detailed letter explaining why there is no secret, no taking, and no damage may end the case. If it does not, it marks the date after which the plaintiff proceeded with notice.

Enforce the identification rule. Before a trade secret plaintiff may begin discovery relating to the secret, it must identify the secret with reasonable particularity. (Code Civ. Proc., § 2019.210.) Our page on identifying trade secrets explains the procedure.

Test the evidence with a dispositive motion. A summary judgment motion forces the plaintiff to show what it has. Losing that motion does not end the fee question. In FLIR, the trial court denied summary judgment out of caution and still found bad faith after hearing the evidence at trial.

Keep the settlement correspondence. Demands unrelated to protecting information can become evidence of purpose.

If you are the plaintiff

Most trade secret plaintiffs are not acting in bad faith, and losing is not the same thing as bad faith. Ordinary diligence keeps the risk low.

Before filing, write down what the secret is, how it was protected, and what evidence shows the defendant took or used it. If the answer to the last question is "they must have," wait and investigate. Reassess as discovery proceeds. Continuing after the forensic report comes back clean is where exposure tends to grow. Dropping the case late does not necessarily end that exposure, because a court may still treat the defendant as the prevailing party.

The motion, the amount, and other remedies

Statutory attorney's fees are claimed as an item of costs, usually by noticed motion after the defendant has prevailed. (Code Civ. Proc., § 1033.5, subds. (a)(10), (c)(5).) The deadline comes from the California Rules of Court (rule 3.1702), so the motion should be planned before judgment.

In federal court, the Defend Trade Secrets Act has a parallel provision. It permits a fee award to the prevailing party where a claim is made in bad faith, which may be established by circumstantial evidence. (18 U.S.C. § 1836(b)(3)(D).)

A separate lawsuit for malicious prosecution is sometimes available after a win, with its own elements and risks.

What to bring to the first meeting

Bring the complaint, any trade secret identification the plaintiff has served, and the agreements you signed with the plaintiff. Add the correspondence before and after the suit, including settlement demands and anything sent to your customers. A timeline of your departure and what you returned is the single most useful page.

Frequently asked questions

A competitor sued us for trade secret theft with no evidence, just to scare our customers. Can we recover our attorney fees when we win?

Possibly. Under California Civil Code section 3426.4, the court may award fees and costs to a prevailing defendant if the claim was made in bad faith. You would need to show the claim was objectively specious, meaning unsupported by evidence, and that the competitor had an improper purpose such as disrupting your business. Even then, the judge decides whether to award fees.

We sued a former employee over our customer list and his lawyer is now threatening a bad faith fee motion. How worried should we be?

It depends on your evidence. California courts award fees under Civil Code section 3426.4 only when the claim is objectively specious and was brought or maintained for an improper purpose. If you can identify the secret and show taking or use, the threat is weak. If you cannot, reassess the case now, because continuing after a specific warning can support the inference.

What is Civil Code 3426.4?

It is the fee-shifting provision of California's Uniform Trade Secrets Act. It lets a court award reasonable attorney's fees and costs to whichever side prevails, in three situations. They are a misappropriation claim made in bad faith, a bad faith motion over terminating an injunction, and willful and malicious misappropriation. Costs include outside expert witness fees.

What counts as bad faith in a trade secret case?

California courts apply a two-part test: objective speciousness and subjective bad faith. A claim is objectively specious when it appears to have merit on the surface but lacks any supporting evidence. Subjective bad faith is an improper purpose, often inferred from anticompetitive motives, the timing of the suit, or pressing forward after the defects were identified. Believing in the claim does not by itself prevent a fee award.

Are attorney fees automatic if the defendant wins a trade secret case?

No. In California, winning is not enough. The defendant must prove the claim was made in bad faith under Civil Code section 3426.4, and even then the statute says the court "may" award fees. Many defendants who win on the merits recover ordinary court costs but not attorney's fees, because the plaintiff's claim, though unsuccessful, had some evidence behind it.

Talk to a California trade secret defense attorney

If you have been sued on a trade secret claim that lacks evidence, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is located at 327 Magnet, Irvine, CA 92618, and handles trade secret cases for both plaintiffs and defendants in Orange County, Los Angeles, and throughout California.

This page provides general information about California and federal law and is not legal advice. Outcomes depend on the evidence of bad faith, the judge's discretion, and the court.