IP Law Daily, TRADE SECRETS—1st Cir.: District court correctly struck jury verdict of trade secret misappropriation, (Mar 25, 2026)

By Jonathan Anderson

A parking technology company brought the lawsuit seeking to block a former executive from buying an acquisition target on his own.

The U.S. Court of Appeals for the First Circuit held that a lower court properly struck a jury’s verdict finding misappropriation of trade secrets under Massachusetts law and the Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836. At issue in the decision, by a three-judge panel, was the extent to which a company could assert trade-secret claims over confidential information it acquired from another firm while vetting that firm for potential acquisition. The appeals panel also rejected arguments that the district court abused its discretion or committed legal error in permitting expert testimony, excluding evidence, denying a request for a continuance, and in awarding attorneys’ fees (ZIPBY USA LLC v. Parzych, Nos. 24-1494, 24-1500, 24-1586 (1st Cir. Mar. 19, 2026)).

Background. This appeal stems from a lawsuit filed by ZipBy USA LLC, TMA Group of Companies Limited, and TMA Capital Australia PTY LTD (ZipBy) against Gregory Parzych seeking damages against Parzych and an injunction to prevent him from acquiring the company Q-Free International. Prior to the litigation, Parzych was serving as president of ZipBy, a parking technology company, when he learned of an opportunity to buy his former business, a firm called TCS. Parzych advised ZipBy’s owner not to buy TCS, and instead, sought to acquire TCS himself. When ZipBy learned of Parzych’s actions, the company fired him and filed suit in the District of Massachusetts asserting fiduciary-duty, contract, trade-secret, trademark-infringement, and false-designation claims, and seeking compensatory and injunctive relief.

After a six-day trial, the jury returned a verdict against Parzych on all counts. The district court subsequently found that the evidence could not support the verdict against Parzych on the trade-secret claims. However, the district court otherwise rejected Parzych’s challenges to the verdict, entered a permanent injunction barring Parzych from acquiring TCS, and awarded ZipBy a portion of its attorneys’ fees incurred in the litigation. Parzych appealed, and ZipBy cross appealed the set-aside of its verdict on its trade-secret claims.

Misappropriation of trade secrets. The appeals panel held the district court correctly struck the jury’s verdict that found Parzych misappropriated ZipBy’s trade secrets under both Massachusetts state law and the DTSA. ZipBy argued that the district court erred in striking the verdict for two reasons. First, ZipBy asserted that Parzych’s use of information from Q-Free constituted misappropriation of a trade secret because ZipBy was obligated to keep that information confidential, and therefore ZipBy was a licensee and “owner” of the information under 18 U.S.C. § 1839(4). ZipBy further argued that as an owner, it deemed the information secret. However, the appeals court determined there was no evidence that Q-Free complained about how Parzych used the information, which most companies seeking to be acquired readily provide to suitors. The district court found that any license ZipBy may have had to use Q-Free’s financial data did not entitle ZipBy to stand in Q-Free’s shoes in deciding whether Parzych could use the information.

Second, ZipBy argued the jury could have permissibly found that Parzych misappropriated ZipBy’s “internal strategy to forgo the TCS opportunity.” However, the appeals court concluded that implementing such a strategy would have meant telling Q-Free that ZipBy was not interested in pursuing the opportunity. ZipBy provided no evidence suggesting that information was to be conveyed to Q-Free in confidence.

Expert testimony. The appeals panel said it was not persuaded the district court abused its discretion or committed legal error in permitting an expert witness to testify about the profits ZipBy lost by not acquiring TCS.

Exclusion of evidence. The appeals panel held the district court’s decision to exclude from evidence TCS’ tax returns was not an abuse of discretion. Parzych’s counsel had told the court during the final pretrial conference that she was in the process of subpoenaing the tax records for use at trial. The court rejected this effort, ruling that it was “too late” for those records to come in. Parzych argued this exclusion amounted to an improper discovery sanction.

Trial continuance. The appeals panel found no abuse of discretion in the trial court denying Parzych’s request for a continuance because his lead counsel contracted COVID-19. The panel noted that the district court found Parzych was fully and capably represented at trial.

Attorneys’ fees. The appeals panel rejected Parzych’s claim that the district court erred by awarding ZipBy more than $2 million in attorneys’ fees and $210,000 in expert fees pursuant to a fee-shifting provision in an IP agreement. The appeals panel said it could discern no error of law, and that the district court’s ultimate judgment that two-thirds of ZipBy’s fees and expenses were incurred in successfully enforcing the IP agreement was reasonable.

The Case is Nos. 24-1494, 24-1500, 24-1586.

Judge: Kayatta Jr., W.

Attorneys: John J. Cotter (K&L Gates LLP) for Zipby USA LLC. Kenneth N. Thayer (Conn Kavanaugh Rosenthal Peisch & Ford, LLP) for Gregory Parzych.

Companies: Zipby USA LLC

Cases: TradeSecrets MaineNews MassachusettsNews NewHampshireNews PuertoRicoNews RhodeIslandNews