Walmart defeats contempt bid after losing trade-secrets case - Reuters

A Walmart sign is seen inside its department store in West Haven, Connecticut, U.S., February 17, 2021. REUTERS/Mike Segar

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Web designer won $3 million in trade secrets against retail giant
Appeals court sided with Walmart after designer said violations had continued

(Reuters) - A U.S. appeals court on Thursday denied a web design company's request to open contempt proceedings against Walmart Inc, after the company claimed that Walmart violated a court order to stop using its trade secrets.

An Arkansas federal court was right to reject Cuker Interactive's contempt bid, which the 8th U.S. Circuit Court of Appeals said required more than an expert's "hunch" that Walmart was still using its secrets following a permanent injunction and $3 million fine.

San Diego-based Cuker worked with Walmart to make its grocery websites more accessible across different devices. Walmart sued Cuker for breaching their contract shortly after their work started in 2014, and Cuker countersued for trade-secret misappropriation.

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A federal judge eventually ordered Walmart to pay $745,000 in damages and $2.6 million in attorneys' fees and other sanctions in 2018, and to permanently delete Cuker's trade secrets from its system.

Cuker asked the Arkansas court to hold Walmart in contempt in 2020, arguing it was disregarding the order. Cuker's expert, computer scientist Chuck Easttom, told the court that he believed Walmart was still using Cuker files on its product pages.

The court denied Cuker's request and said giving Easttom access to Walmart's databases could lead to "either a fishing expedition or a hunt for buried treasure."

The 8th Circuit rejected Cuker's appeal, agreeing with the trial judge that the company failed to make the case that Walmart was violating the order.

Cuker's attorney declined to comment. Walmart and its attorney didn't immediately respond to a request for comment.

Cuker suffered another loss on Wednesday when the 9th U.S. Circuit Court of Appeals held that the law firm Pillsbury Winthrop Shaw Pittman had a valid lien on its assets in bankruptcy, based on money owed for the firm's work in the Walmart case.

Cuker had previously sued Pillsbury in Arkansas for malpractice but later dropped the claims.

Pillsbury Winthrop declined to comment, and Cuker and its attorneys in the 9th Circuit case didn't immediately respond to a request for comment.

The cases are Wal-Mart Stores Inc v. Cuker Interactive LLC, 8th U.S. Circuit Court of Appeals, No. 20-3308, and In re Cuker Interactive LLC, 9th U.S. Circuit Court of Appeals, No. 21-55298.

For Walmart: Neal Manne of Susman Godfrey

For Cuker in the Walmart case: Stephen Larson of Larson LLP

For Cuker in the Pillsbury case: Leah Strickland of Troutman Pepper Hamilton Sanders, and Michael Breslauer of Solomon Ward Seidenwurm & Smith

For Pillsbury Winthrop: Callie Bjurstrom and Andrew Troop of Pillsbury Winthrop Shaw Pittman

After award, client can't claim fees were too high – 8th Circuit

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Blake Brittain

Washington-based correspondent covering court cases, trends, and other developments in intellectual property law, including patents, trademarks, copyrights, and trade secrets. Previous experience at Bloomberg Law, Thomson Reuters Practical Law and work as an attorney.

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