Source: https://trellis.law/ca/issue-type/misappropriation-of-trade-secrets-103
Timestamp: 2020-07-11 00:40:50
Document Index: 690587748

Matched Legal Cases: ['§ 3426', '§ 437', '§ 3426', 'art 1', '§ 3426', '§ 3426', '§ 3426', '§ 3426', '§3426', '§ 3426']

What is the misappropriation of trade secrets?
To prevail on a claim for misappropriation of a trade secret and to recover damages, Plaintiff must prove:
the existence of a trade secret;
that the plaintiff made reasonable efforts to protect the secrecy of the trade secret;
defendant’s misappropriation of the trade secret;
the date on which the misappropriation began or that it began within the period of the statute of limitations;
damages proximately resulting from the misappropriation;
if justified by the facts, plaintiff’s entitlement to exemplary damages and to attorney’s fees; and
facts justifying the request for injunctive relief.
Diodes v. Franzen (1968) 260 Cal.App.2d 244, 250.
“‘A trade secret may consist of any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.’” Diodes, supra, 260 Cal.App.2d at 251 (citation omitted).
Misappropriation of Trade Secrets under Civil Code § 3426 and the Uniform Trade Secret Act
“It is critical to any (UTSA) cause of action—and any defense—that the information claimed to have been misappropriated be clearly identified. Accordingly, a California trade secrets plaintiff must, prior to commencing discovery, ‘identify the trade secret with reasonable particularity.’” Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 221, disapproved on another ground. “[U]ntil the content and nature of the claimed secret is ascertained, it will likely be impossible to intelligibly analyze the remaining” elements that constitute the cause of action. Id. at 220.
The trade secret must be described “with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons who are skilled in the trade, and to permit the defendant to ascertain at least the boundaries within which the secret lies.” Diodes, supra, 260 Cal.App.2d at 253; accord Brescia v. Angelin, 172 Cal.App.4th 133, 144 (noting that Code Civ. Proc., Sec. 2019.210 was intended to codify Diodes); Advanced Modular Sputtering, Inc. v. Super. Ct. (2005) 132 Cal.App.4th 826, 835; Altavion, Inc. v. Konica Minolta Sys. Lab. Inc. (2014) 226 Cal.App.4th 26, 43-44.
Preemption Under California Uniform Trade Secrets Act (CUTSA)
CUTSA preempts common law claims that are “based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.” K.C. Multimedia, Inc. v. Bank of America Tech. & Oper., Inc. (2009) 171 Cal.App.4th 939, 958-959. Common law claims for conversion, interference with contract, unjust enrichment, negligence and “unfair competition” under Business and Professions Code section 17200 have thus been held preempted where based on the same nucleus of facts as the misappropriation of trade secrets claim. Id. (finding claim that defendants “engaged in intentional acts designed to induce a breach or disruption of plaintiff’s contractual relationship” by “helping” and “encouraging” him to misappropriate trade secrets and then luring him to become an employee was premised upon trade secrets claim and derived from “the same nucleus of facts” as the trade secrets claim, and was thus preempted); Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 236 (disapproved on other grounds in Kwikset Corp. v. Super. Ct. (2011) 51 Cal.4th 310, 337).
However, the CUTSA does not preempt contract claims even if based on misappropriation of a trade secret. Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 506; Civ. Code Sec. 3426.7(b)(1). Nor does it preempt non-contract claims that, although related to a trade secret misappropriation, are independent and based on facts distinct from those that support the misappropriation claim. Angelica Textile Services, Inc. v. Park, supra, 220 Cal.App.4th at 506.
The prevailing plaintiff in an action for the misappropriation of trade secrets may recover for the “actual loss caused by misappropriation,” and may also recover “for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss.” Cal. Civ. Code Sec. 3426.3(a). “A defendant’s unjust enrichment is typically measured by the defendant’s profits flowing from the misappropriation,” not from those profits a defendant would have otherwise earned. Ajaxo Inc. v. E*Trade Fin. Corp. (2010) 187 Cal. App. 4th 1295, 1305; see also Restatement (Third) of Unfair Competition Sec. 45 cmt. f (1995) (“The traditional form of restitutionary relief in an action for the appropriation of a trade secret is an accounting of the defendant’s profits on sales attributable to the use of the trade secret”). Consequently, “[w]here the plaintiff’s loss does not correlate directly with the misappropriator’s benefit,” the calculation of unjust enrichment damages “becomes more complex,” and “[t]here is no standard formula to measure it.” Ajaxo Inc., 187 Cal. App. 4th at 1305. “The royalty that the plaintiff and defendant would have agreed to for the use of the trade secret made by the defendant may be one measure of the approximate portion of the defendant’s profits attributable to the use.” Restatement (Third) of Unfair Competition Sec. 45 cmt. f (1995).
As a matter of proof, “[t]he plaintiff has the burden of establishing the defendant’s sales,” whereas “the defendant has the burden of establishing any portion of the sales not attributable to the trade secret and any expenses to be deducted in determining net profits.” Id.
Useful Rulings on Misappropriation of Trade Secrets
CONTINENTAL VITAMIN COMPANY, INC. VS. ALI ALAVI
CONTINENTAL VITAMIN COMPANY v. ALAVI CASE NO.: VC066356 HEARING: 09/27/18 JUDGE: LORI ANN FOURNIER #6 TENTATIVE ORDER Defendants Motion for Summary Judgment is DENIED. Summary Adjudication is DENIED in part, and MOOT in part. CCP § 437c Moving Party to give Notice. Code of Civil Procedure section 437c, subdivision (p), clause (2), provides that where a defendant presents evidence showing o...
..e satisfaction of the court itself as though it were sitting as the trier of fact.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, fn.11.) First Cause of Action: Misappropriation of Trade Secrets under Civil Code § 3426 and The Uniform Trade Secret Act To prevail on a claim for misappropriation of a trade secret and to recover damages, Plaintiff must prove: (1) the existence of...
Momentous Insurance Brokerage, Inc. v. Grace Evelyn Neumann, et al.
Nature of Proceedings: Demurrer First Amend. Comp. (2) /Motion Strike First Amend. Comp.(2) (1) Demurrer of Defendant Grace Neumann to First Amended Complaint (2) Demurrer of Defendant Chivaroli Premier Insurance Services to First Amended Complaint (3) Motion of Defendant Grace Neumann to Strike Portions of First Amended Complaint (4) Motion of Defendant Chivaroli Premier Insurance Services to...
..ied in their entirety. (3) Defendants Grace Neumann and Chivaroli Premier Insurance Services shall file and serve their answers to the first amended complaint on or before June 1, 2016. Background: Plaintiff Momentous Insurance Brokerage, Inc. (Momentous) hired defendant Grace Neumann as an assistant vice president to start work on April 29, 2009, as a salaried employee to sell personal lines i...
Smile Brands, Inc. v. Juarez, et al.
Defendants Luz Juarez and West Coast Dental Services, Inc.’s demurrer to Plaintiff Smile Brands, Inc.’s Complaint, is sustained in part and overruled in part. The demurrer as to the third through sixth causes of action, is sustained with 15 days leave to amend. The demurrer as to the first and second causes of action is overruled. Compliance With Code of Civil Procedure Section 430.41 Code of Civi...
..’s responsibility to familiarize themselves with these statutory requirements that have been effective as of January 1, 2016. Plaintiff argues that the demurrer should be overruled because Defendants failed to meet and confer as required by Code of Civil Procedure section 430.41. The letters sent by defense counsel do not meet the standard that a demurring party “meet and confer in person or by te...
Chukran Management Group, LLC vs. Moxy Solutions, LLC
TENTATIVE RULING: Defendant Moxy Solutions LLC demurs to all 5 causes of action in the First Amended Complaint filed on 11/21/17 by Plaintiff Chukran Management Group LLC dba American Protection Corp. The FAC alleges 5 causes of action: 1. Misappropriation of Trade Secrets 2. Negligent Hiring and Supervision 3. Negligent Interference with Prospective Economic Advantage 4. Intentional Interference...
..ade Secrets OVERRULED on this ground. Defendant Moxy argues that the first cause of action states a common law claim for misappropriation of trade secrets, and that it is therefore pre-empted by CUTSA (the California Uniform Trade Secret Act -- CC 3426, et seq.). (Cacique Inc. v. Robert Reiser & Co. (9th Cir. 1999) 169 F.3d 619, 624; Cf. Balboa Ins. Co. v. Trans Global Equities (1990) 218 Cal.App....
AAA SOLAR ELECTRIC INC VS DANIEL RODRIGUEZ
Defendant’s Motion for Attorneys’ Fees is DENIED. Background: On December 16, 2015, Plaintiff filed this action against its former employee, Daniel Rodriquez. The operative First Amended Complaint (“FAC”) alleged five causes of action for (1) breach of loan agreement and promissory note; (2) breach of non-disclosure agreement; (3) breach of employee confidentiality agreement; (4) negligent inter...
..8,500.00. Rodriquez breached this agreement by failing to timely make payments on the loan in that Rodriquez made only one payment of $100.00. On December 3, 2015, Plaintiff made a written demand for payment in full. Rodriquez did not respond. Additionally, during his employment, Rodriquez executed a Non-Disclosure Agreement and an Employee Confidentiality Agreement that required him to keep inf...
D Software, Inc. v. Francis Adanza, et al.
This is an action primarily alleging misappropriation of trade secrets brought by an employer, Plaintiff D Software, Inc. dba Zephyr (“Plaintiff”), against a former employee, Defendant Francis Adanza (“Defendant”) who left Plaintiff to work for non-party Testim, an alleged direct competitor of Plaintiff. The operative First Amended Complaint (“FAC”) states 10 causes of action: 1) Breach of Contrac...
..ading up to the announcement of his resignation on July 1, 2017, and in the days following that announcement but prior to his last day of employment on July 14, 2017, [Defendant] sent 68 emails with attachments from his Zephyr email account . . . to his personal email account . . . The documents attached to those emails constitute some of [Plaintiff’s] most sensitive trade secrets and confidential...
Recent Rulings on Misappropriation of Trade Secrets
Civil - Unlimited (30)
Demurrer / Motion To Strike (27)
Elizabeth Allen White (5)
James Di Cesare (7)
John C. Gastelum (5)
Judith F. Hayes (11)
Los Angeles County, CA (89)
San Diego County, CA (75)
OXFORD ROAD INC VS AD RESULTS MEDIA LLC
The misappropriation of trade secret claim fails because the information alleged to constitute a "trade secret" does not meet the statutory requirements. Oxford's purported "trade secrets" are neither unique when comparable to ARM's. Further, the "trade secrets", including the rates paid by one agency or the schedules of advertising campaigns, are available to others. There is no "secret" at issue.
BELVEDERE HOTEL PARTNERSHIP VS HOUSSEM TASCO
The Court, however, already ruled that the intentional interference cause of action was superseded by CUTSA.
Discovery Requirements for Misappropriation of Trade Secret Actions Code of Civil Procedure section 2019.210 provides: “In any action alleging the misappropriation of a trade secret under the Uniform Trade Secrets Act (Title 5 (commencing with Section 3426 ) of Part 1 of Division 4 of the Civil Code), before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under
PERFECTED ROSES LLC V. WESTERLAY ORCHIDS LP, ET AL.
California Uniform Trade Secrets Act Preemption: Defendants argue that the four causes of action are preempted by California’s Uniform Trade Secret Act (“CUTSA”), which is codified in Civil Code §§ 3426-3426.11. The CUTSA “does not affect … (2) other civil remedies that are not based upon misappropriation of a trade secret….” Civil Code § 3426.7. This “preempts common law claims that are ‘based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.’” K.C.
CROWDFOOD, INC. VS ALEX CANTER, ET AL.
COA 9: Violations of CUTSA The ninth cause of action is for violations of CUTSA by Plaintiff against Defendants Canter, Fuhr, Jacobs, Ordermark and Does 1-10. Defendants argue that Plaintiff has failed to state a claim under CUTSA. Defendant argues that the allegations in the complaint do not amount to a trade secret as a matter of law.
Defendants argue this cause of action is preempted by Uniform Trade Secrets Act ("UTSA"), Civil Code section 3426 et seq. Except as expressly provided, the UTSA does not affect (1) contractual or criminal remedies, whether or not based upon misappropriation of a trade secret, or (2) other civil remedies that are not based upon misappropriation of a trade secret. Civ. Code, § 3426.7, subd. (b).
SEAFLOOR SYSTEMS, INC. V. TAMPLIN
As used in the Uniform Trade Secrets Act (Civil Code, §§ 3426, et seq.) “‘Trade secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: ¶ (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and ¶ (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
Plaintiff contends that defendants have continued to misappropriate the trade secret by continued use of the trade secret and has filed an action in the Sacramento County Superior Court asserting causes of action for misappropriation of trade secret, conversion by interference with plaintiff’s lien rights, and fraudulent transfer of property to avoid the judgment entered in this case. (Riesenman v. RoachKing, LLC, Case Number 34-2018-00246239.)
NGUYEN VS. LEE
Facts pled in the 66th and 73rd paragraphs of the SAC establish that these causes of action are separate and distinct from misappropriation of trade secret claims. (Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 506.) Defendants to file an Answer within 20 days. Plaintiff to give notice. Defendant’s sole argument for demurrer to the 3rd, 4th, and 7th COAs is that is that they are superseded by the CUTSA.
VENKAT KONDA V. DEJAN MARKOVIC, ET AL.
Preemption Defendants demur to the first, second, third and fifth causes of action on the basis that the California Uniform Trade Secrets Act (“CUTSA”) preempts causes of action based on the misappropriation of confidential, trade secret information. CUTSA, or Civil Code sections 3426 through 3426.11, “provides the exclusive civil remedy for conduct falling within its terms, so as to supersede other civil remedies ‘based upon misappropriation of trade secret.’” (Silvaco Data Systems v.
BBB BONDING CORPORATION VS ASHLEY PILLING-MILLER ET AL
Cal. 2011) 782 F.Supp.2d 911, 994--CUTSA “does not supersede the intentional interference with contractual relations counter-claim to the extent it arises out of conduct unrelated to the misappropriation of [trade secret].” See also Civ. Code, §3426.7, subd. (b)(1)--CUTSA does not preempt or displace breach of contract claims that are based on misappropriation of trade secrets.)
SIMPLIFIED LABOR STAFFING SOLUTIONS INC ET AL VS TRINITY RIS
FARMERS INSURANCE EXCHANGE ET AL VS VENKATESH KAMATH ET AL
The non-CUTSA claims therefore do not genuinely allege ‘alternative legal theories’ but are a transparent attempt to evade the strictures of CUTSA by restating a trade secrets claim as something else.”).) Farmers argues that preemption cannot be resolved at the pleading stage because the Court cannot yet untangle the distinction between Farmers’ allegedly misappropriated trade secret information and its non-trade secret information. (Opp. at 15 (citing Amron Intern. Diving Supply, Inc. v.
ADVANCED ENGINEERING SERVICES, LLC V. LUMASENSE TECHNOLOGIES, INC.
CUTSA Exclusivity In support of Lumasense’s previous demurrer, it argued the CUTSA provides the exclusive remedy for alleged instances of trade-secret misappropriation such that Plaintiff’s claims for constructive fraud and violation of the UCL cannot be asserted. But Lumasense did not adequately analyze the allegations to support its position.
O’CONNOR & SONS, INC. V. MARK SIMMONS, ET AL.
Thus, any claims aside from misappropriation under the CUTSA are preempted, according to Defendants. The determination of whether a claim is based on trade secret misappropriation is largely factual. (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 954-955.) Moreover, the CUTSA does not displace tort claims that are “independent and based on facts distinct from the facts that support the misappropriation claim.” (Angelica Textile Services, Inc. v.
CMB EXPORT LLC ET AL VS AMERICAN DEVELOPMENT CENTER LLC ET A
CUTSA is one of those exceptions to the general rule: it “occupies the field” in California, “[a]t least as to common law trade secret misappropriation claims.” (Id. at 954 (bold emphasis added).) As to statutory causes of action, CUTSA provides that it “does not supersede any statute relating to misappropriation of a trade secret, or any statute otherwise regulating trade secrets.” (Civil Code § 3426.7(a).)
TIANO V. GREENTH, INC.
The second cause of action for misappropriation of trade secrets in violation of common law is based on the same nucleus of facts as the first cause of action for misappropriation of trade secrets in violation of Civil Code Section 3426. Cross-Complaint, ¶¶ 24-28, 33-35, and 37. Demurrer is sustained with 10 days leave to amend. Case Management Conference is continued to March 16, 2020 at 9:00 a.m. in Department C32.
Under the CUTSA, a plaintiff must allege that: (1) the plaintiff owned a trade secret; (2) the defendant acquired, disclosed, or used the trade secret through improper means; and (3) the defendant's actions damages the plaintiff. (Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1665.) Judicial notice of the Standard Terms and Conditions for Internet Advertising for Media Buys One Year or Less, Version 3.0 – Exhibit A.
SPIKES INC VS JOHN YOON ET AL
This is a complaint for misappropriation of trade secret and injunctive relief arising out of Plaintiff, Spikes, Inc., doing business as Hollywood Body Jewelry (“HBJ”) wholesale jewelry business. HBJ alleges that it only sells product from its website to merchants for placement in retail stores, and that information regarding HBJ’s clients is kept confidential on their server, on which information is kept confidential through various security measures HBJ undertakes.