The Houston [14th] Court of Appeals has reversed a $750,000 attorney’s fee award to a defendant in a trade secrets misappropriation case who alleged that plaintiff filed the suit in bad faith.
Teligistics, Inc. v. Advanced Personal Computing, Inc. d/b/a Liquid Networx, Travis Wood, and Robert Short (No. 14-23-00953-CV; October 30, 2025) arose from a dispute between Teligistics, a telecom company that assists clients with selecting vendors to handle their telecommunications-service needs, and a competitor, Liquid Networx. Teligistics developed an e-procurement tool called Telebid, which it used to create digital RFPs and manage the RFP process. In 2013 Teligistics used Telebid to create an RFP for its client, NRG. In 2019 Teligistics became aware of emails that led it to believe Liquid had obtained a printout of the NRG RFP. It sued Liquid for trade secret appropriation, alleging that the NRG print out was a trade secret and that Liquid had improperly used it with one Liquid’s clients, OXY. The trial court granted Teligistics’ request for a TRO. Liquid sought leave to designate a former employee of Liquid as a responsible third party, which the trial court granted.
The case dragged on for four years, and the trial court four times denied Liquid’s motion for summary judgment. On the first day of trial, Teligistics filed notices nonsuiting, with prejudice, Wood and Short, Liquid’s employees at the time the controversy arose. It also moved to strike Liquid’s RPT designation, which the court granted. After a trial characterized by a lot of conflicting testimony by various officers and employees of the parties, the jury determined that Teligistics did not own a trade secret in the NRG RFP. It further found that Teligistics made a bad faith claim against Liquid. Wood and Short assigned their rights of recovery, if any, to Liquid. The trial court held a bench trial on attorney’s fees based on the jury’s bad-faith finding and awarded Liquid $764,977.50 for legal services Liquid incurred through the entry of final judgment and another $25,000 for the period between the judgment and the expiration of the trial court’s plenary power. It also awarded pre- and post-judgment interest on the fees, as well as conditional appellate attorney’s fees. After the trial court denied Teligistics’ JNOV, it appealed.
In an opinion by Justice Wise, the court of appeals affirmed in part and reversed in part. Teligistics argued that the jury’s finding of no trade secret was not supported by legally and factually sufficient evidence, and that the trial court abused its discretion by awarding Liquid attorney’s fees without legally and factually sufficient evidence of bad faith. As to the jury’s trade secret finding, the court rejected Teligistics’ sufficiency challenge. The court focused on the “independent economic value” of the definition of “trade secret.” It observed that Telegistics failed to object to Liquid’s testimony that “the prompts in the NRG Print Out are generic, common terms in the telecom industry that are generally available and can be found on the Internet.” Liquid’s witness testified further that the only confidential information in the print out was NRG’s information, and that the jury could find from the witness’s testimony that “all information in the NRG Print Out was not specific to NRG—whether in isolation or as a compilation—is generally known and readily ascertainable.” Teligistics’ CEO’s testimony as to the value of Telebid, however, was pretty general and nonspecific. The court concluded that given this conflicting evidence, “the jury was allowed to credit [Liquid’s] testimony and disbelieve [Teligistics’] testimony…. The jury was also empowered to resolve any conflicts in the evidence and to judge the weight of the evidence.” The jury’s finding that Telegistics didn’t own a trade secret in the NRG print out was thus supported by sufficient evidence.
But the same could not be said for the trial court’s attorney’s fees award. Pursuant to § 134A.005(1), CPRC, the trial court may award attorney’s fees to a prevailing party if the trade secret misappropriation claim was made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists. Here the court determined that the trial court abused its discretion in awarding fees because of the lack of legally and factually sufficient evidence to support the jury’s finding of bad faith. It again reviewed conflicting evidence and concluded that the evidence “does not conclusively negate [Teligistics’] misappropriation claims against [Liquid].” Consequently, “[Teligistics] could not have acted in willful ignorance of facts conclusively negating those claims by continuing to pursue them.” Absent conclusive evidence that Teligistics acted “in willful ignorance of the facts” when it filed suit against Liquid, the jury’s bad faith finding could not stand.
Liquid argued further that “because [Teligistics] chose not to sue other potential parties involved in [Liquid’s] alleged acquisition and use of the NRG Print Out, the jury could have believed [Telegistics] ‘was not motivated to file suit for the purpose of holding wrongdoers accountable or recovering losses actually suffered.’” The court held that that wasn’t a reasonable inference for the jury to make. Indeed, Liquid’s argument could apply equally to just about any lawsuit in which a plaintiff has to decide who to sue and who not to. Simililarly, Teligistics’ decision to nonsuit Wood and Short at trial did not constitute evidence of bad faith standing alone. Additionally, Liquid contended that Teligistics’ damages model was “misguided or greedy” and “telegraphed to the jury with certainty that the litigation was not brought for the reason of righting a wrong or recovering from harm.” To this baffling argument the court responded, “[w]e fail to see how the acknowledgement of an error in an original damages calculation and the offer of a smaller damages model could support a reasonable inference of an impermissible reason for making a claim. We are similarly unconvinced the jury could have reasonably inferred [Teligistics] made its misappropriation claims for an impermissible reason because it used the development cost for the tool that created the NRG Print Out as its measure of damages.” The trial court thus abused its discretion by awarding attorney’s fees, and the court rendered judgment denying Liquid’s attorney’s fee request.
