Court Opinion

ID: 6321734
Source: CourtListenerOpinion
Date Created: 2022-03-09 23:01:56.740989+00
Date Added: 2024-06-11T09:20:26.939146
License: Public Domain

Filed 3/9/22 SoCal Diesel v. Extrasensory Software CA2/1
Opinion following rehearing
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
opinions not certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                      SECOND APPELLATE DISTRICT

                                    DIVISION ONE

SOCAL DIESEL, INC.,                                             B290062, B293020

        Plaintiff and Appellant,                                (Los Angeles County
                                                                Super. Ct. No. BC597857)
        v.
                                                                PUBLIC—REDACTED
EXTRASENSORY SOFTWARE,                                          VERSION OF OPINION
INC., et al.,
                                                                Redacts material from sealed
        Defendants and Respondents.                                        *
                                                                record. (Civ. Code, § 3426.5;
                                                                Cal. Rules of Court, rules 8.45,
                                                                8.46(f)(1) & (f)(2).)

        *
        This case involves material from a sealed record. In
accordance with Civil Code section 3426.5 and California Rules of
Court, rules 8.45, 8.46(f)(1) and (f)(2), we have prepared both
public (redacted) and sealed (unredacted) versions of this opinion.
We hereby order the unredacted version of this opinion sealed.
      APPEAL from orders of the Superior Court of Los Angeles
County, David Sotelo, Judge. Affirmed in part and reversed in
part and remanded with directions.
      Hacker Law Group, Jeffrey A. Hacker and Kristen E.
Green for Plaintiff and Appellant.
      Karish & Bjorgum, A. Eric Bjorgum and Marc Karish for
Defendants and Respondents.
              ___________________________________
      SoCal Diesel, a manufacturer of devices that communicate
with computers on truck engines, sued Extrasensory Software, a
competitor, and Ira and Robyn Emus, its principals, for trade
secret misappropriation, alleging defendants stole an algorithm
used in SoCal’s products. After presentation of the plaintiff’s
evidence, the court granted nonsuit as to Robyn, finding no
evidence supported the allegation that she misappropriated any
trade secret. After a jury verdict in favor of SoCal, the trial court
granted Extrasensory’s and Ira’s motion for new trial, finding no
evidence suggested the algorithm in their product was (1) similar
to SoCal’s algorithm or (2) wrongfully acquired.
      We conclude the court properly granted a new trial because
a reasonable fact finder could conclude from the evidence both
that defendants’ algorithm was not substantially similar to
SoCal’s and that it was reverse engineered by proper means. We
further conclude nonsuit was improperly granted as to Robyn,
whom evidence suggested oversaw Extrasensory’s operations and
knew that Ira had reverse engineered SoCal’s algorithm, possibly
by improper means. Accordingly, we affirm the court’s order
granting a new trial, reverse the order granting nonsuit, and
remand the matter with directions to vacate nonsuit and order a
new trial.

                                  2
                         BACKGROUND
A.     EFILive and Ira and Robyn Emus
       1.     Engine Control Module
       A modern truck engine is controlled by a computer, called
an Engine Control Module (Control Module), which receives
signals from sensors throughout the vehicle, interprets them, and
uses the results to communicate with actuators that adjust such
factors as ignition timing, air-fuel ratios, and idle speed. The
Control Module thus “tunes” the engine, while it is running, to
meet desired performance and emissions goals. Embedded
software in modern Control Modules is complex and
sophisticated, able to monitor and regulate hundreds of
parameters to optimize performance.
       The group of calibrations—for example, water temperature,
air pressure, or engine speed—necessary to achieve a particular
performance profile is called a “tune.”
       A Control Module can be accessed by way of an “Onboard
Diagnostics” (OBD2) port usually found under the driver’s-side
dashboard. A mechanic can attach a data cable between the
OBD2 port and a scanning device, and from that device to a
personal computer, to receive information from and convey
commands to the Control Module.
       Data streams to and from the Control Module may also be
intercepted by a “can analyzer,” which gathers the data in binary
(1’s and 0’s) or hexadecimal form.
       The performance and emissions goals established by a
truck manufacturer are achieved by the “stock” tune, which the
manufacturer pre-programs into the Control Module before it
leaves the factory. Because an engine must meet various

                                3
environmental, fuel-use, and longevity standards, the stock tune
is relatively conservative.
       But some modern Control Modules can be programmed by
truck owners to carry more than simply the stock tune.
       An owner who has modified an engine with nonstandard
equipment—for example a turbo- or supercharger, or high
performance spark plugs or fuel injection—or who wishes to
operate the vehicle in nonstandard conditions—such as in racing,
towing, or offroading—may want to select a tune different from
the stock tune, then later revert to the stock tune for standard
conditions.
       2.    EFILive
       Paul Blackmore started EFILive, Ltd. (EFI) in the late
1990’s to develop and sell computer hardware and software that
monitors and modifies the performance characteristics of engines
for competition and racing. (EFI, a New Zealand company is not
a party here.) As pertinent here, EFI developed two pieces of
hardware and associated software.
             a.    FlashScan
       EFI’s “FlashScan” is a scanning tool that attaches to a
Control Module by a Controller Area Network (CAN) “can
connection” through the OBD2 port and to a PC by USB cable.
The FlashScan pulls calibrations from an engine’s Control
Module to a PC, which displays them in the form of graphs and
charts. A technician can edit these reported calibrations on the
PC and upload the resulting modified tune through the
FlashScan to the Control Module. The FlashScan can thus be
used in connection with a PC to switch between tunes while the
vehicle is being tested on a Dynamometer in a workshop.

                               4
             b.    AutoCal
       EFI also manufactures the “AutoCal,” a device smaller
than but similar to a FlashScan, which allows a technician to
transfer a custom tune to a vehicle owner. The technician creates
the custom tune in the workshop with a FlashScan and PC as
described above, downloads the tune from the PC to an AutoCal
by USB cable, then sends the AutoCal to the owner, who then
connects it to a vehicle through the OBD2 port and transfers the
custom tune to the vehicle’s Control Module. Each AutoCal can
be linked with only one FlashScan device and one Control
Module.
             c.    EFI Software
       The FlashScan and AutoCal must be configured and loaded
with proprietary software from EFI, which must also be installed
on a PC. The software can be obtained either from a CD sold
with the devices or by download. At the beginning of both the
configuration and installation an End User License Agreement
(EULA) will be displayed and must be affirmatively accepted.
Only after the devices have thus been configured may they be
loaded with custom tunes.
       Once a now-configured and tune-loaded FlashScan or
AutoCal is connected to a vehicle’s Control Module through the
OBD2 port, the tunes and EFI software are flashed to the Control
Module.
             d.    2013 CSP5 Software
       A Control Module is normally able to house only one tune
at a time. In 2013, EFI modified its software—now calling it
“CSP5,” for Cummins Switchable 5 position tuning—to load up to
five different tunes onto a Control Module at one time, thus
expanding the module’s stock capabilities.

                                5
       EFI licensed its CSP5 software to SoCal.
             e.    Security Identification Algorithm
       However, to prevent accidental or unauthorized switching,
the CSP5 software previously flashed to the Control Module will
not accept a tune change without first completing a security
protocol that authenticates any switch attempting to alter a tune.
This protocol is effected by a CSP5 security identification
algorithm, which we describe below.
       3.    SoCal’s “Switch”
       SoCal manufactures diesel racing parts, assembles racing
engines, and distributes competition performance vehicle parts.
       Under racing conditions it is impossible to navigate a
computer menu and press keys to change between tunes. To
make it possible to change tunes, SoCal manufactures the
Cummins Engine CSP5 Switch (the Switch), a large physical
device that can quickly select between tunes loaded on the
Control Module of a Cummins diesel engine, such as is found in
late model Dodge Ram trucks, while driving. The Switch
attaches to a truck’s dashboard and can implement any one of
five preset tunes loaded onto the Control Module simply by
turning a knob.
       4.    Trade Secret: Security Identification
Algorithm
       Before SoCal’s Switch can access the tunes loaded onto a
Control Module, it must initiate the CSP5 security identification
algorithm also loaded onto the module, causing the module to
recognize the Switch user as an authorized tuner. Without this
authorization, the Control Module will be “locked,” i.e., will reject
any switching attempt.

                                  6
      That identification algorithm is part of the trade secret
alleged here.
      The identification algorithm “unlocks” the Control Module
by [REDACTED].
      [REDACTED]
      (At the time of trial, EFI had licensed only two CSP5 ID
Codes, one to SoCal and one to Starlite Diesel, which is not a
party here. Starlite’s device operates similarly to SoCal’s, but
uses a mobile device rather than a Switch.)
      In the first step of the algorithm, [REDACTED].
      [REDACTED]
      [REDACTED]
      [REDACTED]
      [REDACTED]. If it corresponds, the Control Module
recognizes the Switch as an authorized input device, and will
accept its selection between tunes already programmed into the
module.
      SoCal identifies as its trade secret, licensed from EFI, the
combination of the security algorithm, including the methods and
the values (constants) it uses to compute [REDACTED] values,
and SoCal’s ID Code.
      Defendants concede that they [REDACTED] SoCal’s ID
Code into each of their own switches.
B.    The End User License Agreement
      In 2005, Ira and Robyn Emus distributed EFI devices in
the United States. Ira also worked for EFI as a tester of its
devices. As part of the distributorship arrangement Ira signed a
confidentiality agreement with EFI, and as part of his duties
downloading and testing EFI software he had to agree to EFI’s

                                7
EULA many times. The EULA stated it was governed by New
Zealand law.
      The relationship between the Emuses and EFI ended
acrimoniously in March 2012.
      EFI released its CSP5 software in 2013.
      As discussed above, using any device with CSP5 software
requires that the software first be installed on a PC. After
downloading CSP5 software from EFI or obtaining it on a CD
sold by EFI, a user must accept an End User License Agreement
(EULA) to install it. This is done by selecting the “I Do Accept”
option displayed at the beginning of installation.
      The EULA prohibits use of CSP5 software, including any
piece of it and any file it produces, or any connected device, for
purposes of decompiling, accessing or otherwise reverse
engineering the CSP5 algorithm. The agreement provides: “By
connecting the EFILive software to any electronic control module,
you confirm that you have read and agreed to the EFILive Terms
and Conditions. [¶] If you do not agree with the EFILive Terms
and Conditions, you must not use the EFILive software to
connect to any electronic control module.” It provides that the
user may not “modify, reverse engineer, decrypt or decompile the
EFILive software or configuration files, or any part of them.”
      When an AutoCal is sold to a technician, the EULA will pop
up on the technician’s computer screen during configuration.
When the technician sends the tuned AutoCal to an end user,
however, the EULA will not follow.
      EFI assigned its rights to enforce the EULA to SoCal.

                                8
C.     Alleged Misappropriation of the Trade Secret
       Ira and Robyn Emus are the sole officers, directors,
shareholders, and employees of Extrasensory, which like SoCal
manufactures tuning accessories for diesel engines.
       In 2014, Ira, Robyn and Extrasensory began manufacturing
and selling switches that defeated EFI’s CSP5 security
identification algorithm.
D.     Litigation
       On October 14, 2015, SoCal sued Ira, Robyn, and
Extrasensory for misappropriation of trade secrets (and other
claims) under Civil Code section 3426, alleging they
misappropriated the Switch security identification algorithm.
After summary adjudication of other claims, the matter went to
jury trial only on this claim.
       At trial, Paul Blackmore, a software developer and the
owner and CEO of EFI, testified that EFI developed its CSP5
software in 2012 and released it in 2013.
       SoCal presented evidence that Robyn ran Extrasensory’s
operations, while Ira was its technical expert. Robyn planned
with Ira to acquire and use SoCal’s security identification
algorithm. Specifically, Robyn testified that Extrasensory’s
switch needed EFI’s software to operate, and that EFI’s altering
its software in 2013 caused the switch to cease working. She had
written, “There is no way to screw with our switch functionality
and not also screw with [SoCal’s Switch],” and testified that she
knew that Extrasensory’s switch used SoCal’s ID Code. Robyn
testified, “They had changed the protocol, in my opinion, when
they realized that we knew how to do it. So they changed it and
then Ira figured it out again.” Robyn knew about the EULA
through her tenure as an EFI distributor up to 2012.

                                9
       Ira testified that in 2013 he [REDACTED] and advertised
on Craigslist for a “hacker” to help him [REDACTED] derive an
algorithm that would overcome the EFI security identification
algorithm lock. That effort proving fruitless, Ira placed another
ad on an international job Web site for engineers and
programmers, and over the next months interviewed several
individuals until he found Pavel Simonov, a programmer based in
Russia, to whom he sent the same information. Simonov agreed
to “reverse engineer” the software for $5,000, and was ultimately
successful. (The parties characterize Ira’s efforts as “reverse
engineering.” We utilize this terminology for purposes of the
appeal, without deciding whether it is accurate.)
       Ira modified and incorporated Simonov’s algorithm into
switches he then manufactured and sold.
       It was undisputed at trial that Ira’s new algorithm caused
his switch to [REDACTED], just as SoCal’s algorithm did
([REDACTED]), employed the same [REDACTED] SoCal’s
algorithm used, and [REDACTED].
       Ira admitted his efforts required decompiling EFI’s
intellectual property, and when asked whether his efforts
violated the EULA, he responded, “no one has ever respected the
end user license agreement.” When asked a second time, Ira
responded, “the EULA was never enforced. In all my years of
working with EFILive, the EULA was never enforced.” However,
no evidence indicated that he downloaded or installed CSP5
software, nor that he agreed to the EULA after his relationship
with EFI ended in 2012, almost a year before EFI released the
CSP5 software.
       After SoCal rested its case-in-chief, the trial court granted
Robyn’s motion for nonsuit, finding that no evidence suggested

                                10
she participated in or had reason to know about any
misappropriation of SoCal’s algorithm. Because she had no
understanding of computer programming, she could not know
that the algorithm was misappropriated as opposed to reverse
engineered. The court found it “inherently improbable that
[Robyn] committed any act directly or indirectly[,] implied or
tacit[,] that would subject her to personal liability . . . .” The
court further found that SoCal’s maintenance of the action
against Robyn was in bad faith, and granted her motion for fees
and costs, awarding $198,485.24.
       The court denied Ira’s and Extrasensory’s motion for
nonsuit.
       Ira testified he has never known the content of SoCal’s
algorithm, even during trial. He merely [REDACTED]. He
testified that Simonov did not copy SoCal’s algorithm.
       Defendants presented evidence that Josh Chavez, a
programmer from Arizona, independently reverse engineered the
EFI software lock using an AutoCal, without using SoCal’s
algorithm, as did Dan Smith, an electrical engineer. Smith and
Josh Chavez both testified that defendants’ algorithm was not
similar to SoCal’s, but instead functioned like the EFI algorithm
operating on a Control Module, in that it could [REDACTED].
(Smith testified that he reverse engineered SoCal’s algorithm
using only a pre-tuned AutoCal (and Control Module
[REDACTED]), and never encountered the EULA.)
       Smith testified that Extrasensory’s and SoCal’s algorithms
were “not the same” because they performed different steps.
Smith acknowledged that both algorithms would produce the
same result if given the same input, but testified that SoCal’s
algorithm could accept only one input value, while Extrasensory’s

                                11
could accept approximately 65,000 values. Although it was
undisputed that Extrasensory’s algorithm (1) used SoCal’s user
ID Code (even though it did not have to); (2) [REDACTED],
Smith nevertheless testified that the algorithms were different
because “the whole idea of the algorithm being the same would be
for the same inputs they should result in the same outputs, and
for some input the outputs would be different comparing the
EFILive description versus the [Extrasensory] tuning C code.” In
sum, whereas SoCal’s algorithm would work with only one user
ID Code, Extrasensory’s algorithm would work with any user ID
Code, using math steps not found in the other algorithm.
       Chavez testified that the SoCal and Extrasensory
algorithms “are a different algorithm because they perform
different operations that are not described in the trade secret or
are not used in the SoCal Diesel switch code.”
       SoCal attempted to rely upon the EULA throughout trial
but the trial court repeatedly sustained defendants’ objections to
its consideration because, the court found, the EULA could not
“trump” or “govern over” California law. The court ultimately
issued jury instructions to that effect.
       On March 23, 2018, the jury returned a special verdict
finding that Ira and Extrasensory misappropriated SoCal’s trade
secret, and awarded disgorgement of profits in the amount of
$482,000.
       Ira and Extrasensory moved for judgment notwithstanding
the verdict (JNOV) and a new trial.
       On June 14, 2018, the court denied defendants’ motion for
JNOV but granted the motion for new trial. It found “the jury
was wrong—‘clearly’ so, in finding that plaintiff’s algorithm was
the same as defendants’ and that plaintiff misappropriated the

                                12
trade secret.” The court found that no substantial evidence
suggested SoCal’s switching algorithm “was the same as”
defendants’ algorithm. [REDACTED]. As a result,
“[defendants’] switching algorithm would function with different
[manufacturer IDs], something that [plaintiff’s] switching
algorithm would be unable to do. Put another way, plaintiff’s
switching algorithm is a [REDACTED]. . . . The switching
algorithms were not simply different sets of instructions that
would produce the same outputs for a given input. The
algorithms were different in substance.”
       The court further found that “[o]ther than innuendo, no
substantial evidence was presented that [defendants]
‘misappropriated’ or wrongfully obtained plaintiff’s designated
Trade Secret (the combined algorithm and manufacturer I.D.).”
(Internal quotations omitted.) Instead, the evidence showed that
Ira reverse engineered a “separate and distinct” algorithm, which
is permissible. “Had Ira Emus simply misappropriated the
relevant information given to him under the confidentiality
agreement, there would have been no need to even attempt
reverse engineering and, more importantly, the switching
algorithms would have simply been the same.”
       SoCal appealed separately from the orders granting Robyn
nonsuit and granting Ira’s and Extrasensory’s motion for new
trial. We consolidated the appeals.
       We issued an opinion in this matter on May 3, 2021, but
subsequently granted rehearing, vacated the opinion, and sought
supplemental briefing. We asked four questions, two of which
are pertinent for our discussion:
       1.    Where does the record reflect that after terminating
his relationship with EFI in 2012, Ira Emus or his agent

                               13
downloaded, used or transferred CSP5 software (except for
purposes of this litigation) that was subject specifically to the
2007 EULA?
      2.     Where does the record reflect that Ira Emus knew
about the 2007 EULA after 2012?
      The parties’ answers and our own reexamination of the
record indicate that nothing in the record shows Ira downloaded,
used, or transferred CSP5 software subject specifically to the
2007 EULA. The testimony showed that he transferred
unidentified computer files to Pavel Simonov that may have been
subject to some end user license agreement, but did not show
what these files were or that they were subject specifically to the
2007 EULA. It is not clear what fragments of code Simonov used.
                           DISCUSSION
A.    New Trial
      SoCal contends the trial court abused its discretion in
granting defendants’ motion for new trial. We disagree.
      1.     Applicable Law
      A new trial may be granted only on grounds specified in
Code of Civil Procedure section 657, one of them being
“Insufficiency of the evidence to justify the verdict.”
      “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.”
(Civ. Code, § 3426.1, subd. (d).)

                                14
       Algorithms and computer code can be trade secrets.
(Altavion, Inc. v. Konica Minolta Sys. Lab., Inc. (2014) 226
Cal.App.4th 26, 59.) Software in a product remains a trade secret
when it is not necessarily revealed during the product’s use.
(Ibid.)
        “Misappropriation” of a trade secret means “Acquisition of
a trade secret of another by a person who knows or has reason to
know that the trade secret was acquired by improper means.”
(Civ. Code, § 3426.1, subd. (b), italics added.)
       “Improper Means” includes theft, “inducement of a breach
of a duty to maintain secrecy, or espionage through electronic or
other means.” (Civ. Code, § 3426.1, subd. (a).)
       However, “[r]everse engineering or independent derivation
alone shall not be considered improper means.” (Civ. Code,
§ 3426.1, subd. (a).)
       We review an order granting a new trial for abuse of
discretion. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th
826, 860.) “[O]n appeal from an order granting a new trial upon
the ground of the insufficiency of the evidence to justify the
verdict . . . , such order shall be reversed as to such ground only if
there is no substantial basis in the record” supporting it. (Code
Civ. Proc., § 657.)
       2.      Application
       Here, the trial court made two findings: that SoCal failed
to establish either that defendants (1) copied SoCal’s algorithm or
that they (2) misappropriated as opposed to permissibly reverse
engineered it. (SoCal argues the court made only the first
finding, not the second. We discuss that argument below.) If
supported by the evidence, these findings would undermine the
essential assertions forming the basis of the jury’s verdict—that

                                 15
defendants obtained SoCal’s trade secret by improper means—
and therefore ostensibly provide a sufficient basis for ordering a
new trial. We conclude that the record supports both findings.
       3.    Dissimilarity Between SoCal’s and Defendants’
Algorithms
       The first question is whether evidence supported the trial
court’s finding that Extrasensory’s algorithm was different from
SoCal’s. In our prior opinion we held that the evidence
supporting the difference, the testimony of Smith and Chavez,
lacked sufficient foundation. Upon further reflection, however,
we conclude the court was entitled to credit the testimony not
only of Smith and Chavez but also Ira Emus, all of whom opined
that the algorithms were different.
       Smith and Josh Chavez both testified that defendants’
algorithm functioned like the EFI algorithm operating on a
Control Module, but was not the same as that algorithm because
it could produce an acceptable key value from any user ID input.
They described the algorithms as functionally identical, but only
when SoCal’s user ID Code was used: [REDACTED]
       Both experts distinguished the manner in which
Extrasensory’s and SoCal’s algorithms [REDACTED]. Although
it was undisputed (1) that Extrasensory’s algorithm would not
work without [REDACTED]; (2) that the initial values, end
value, and all constants were the same; and (3) that both
algorithms “functioned substantially the same way and
accomplished substantially the same result” (Sinclair v. Aquarius
Electronics, Inc. (1974) 42 Cal.App.3d 216, 222), the specific
operations employed to reach interim values were different.
       Smith and Chavez concluded that Extrasensory’s algorithm
constituted an independent reverse engineering of a prior

                                16
solution to find a new solution reached by different means.
Because in reviewing an order granting a new trial we must defer
to the trial court’s view of the evidence, we now conclude we must
accept its view of Smith’s and Chavez’ testimony. Even though
the evidence was susceptible to opposing interpretations, a
reasonable finder of fact sitting much closer to the evidence than
we, watching and hearing as the evidence unfolds, could have
credited Smith and Chavez.
      We reiterate from our prior opinion that parties “cannot
escape responsibility by showing that they have improved upon
or modified plaintiff’s process. Even though they may have
modified or improved the plaintiff’s process they are still
wrongfully using its property.” (By-Buk Co. v. Printed
Cellophane Tape Co. (1958) 163 Cal.App.2d 157, 169; see also
American Can Co. v. Mansukhani (7th Cir. 1984) 742 F.2d 314,
328-329 [“a party may not use another’s trade secret, even with
independent improvements or modifications, so long as the
product or process is substantially derived from the trade
secret”].) “One who seeks to pirate an invention, like one who
seeks to pirate a copyrighted book or play, may be expected to
introduce minor variations to conceal and shelter the piracy.
Outright and forthright duplication is a dull and very rare type of
infringement. To prohibit no other would place the inventor at
the mercy of verbalism and would be subordinating substance to
form.” (Graver Tank & Mfg. Co. v. Linde Air Products Co. (1950)
339 U.S. 605, 607.) “If the law were not flexible enough to reach
such modifications, trade secret protection would be quite
hollow.” (American Can Co., at p. 329.)
      However, Smith, Chavez, and Ira Emus all testified that
Extrasensory’s algorithm constituted the independent

                                17
engineering of a solution to EFI’s security identification
algorithm derived from raw data openly conveyed from the
Control Module to a scanning tool, not simply a copy of EFI’s or
SoCal’s process. The court was entitled to credit this testimony
and order a new trial based on it.
      4.    Appropriation by Inappropriate Means, i.e.,
Violation of the EULA
      We next consider whether evidence supported the court’s
finding that Ira did not appropriate the trade secret by improper
means.
      5.    Procedure
      SoCal preliminarily argues that the trial court granted a
new trial only on the ground of insufficient evidence, and
reasoned the evidence was insufficient only because SoCal and
Extrasensory algorithms were different. Under the rule of
Mercer v. Perez (1968) 68 Cal.2d 104 (Mercer), SoCal argues, we
may review only whether the algorithms were different, not
whether the evidence was insufficient for any other reason.
      Given our holding on that question, ante, we need not
examine the improper means issue. However, we disagree with
SoCal’s characterization of the court’s order, and in any event
wish to provide the trial court with some guidance on the issue
should there be another trial.
      A trial court must specify the reasons why the evidence
supports a moving party’s grounds for seeking a new trial. (See
Scala v. Jerry Witt & Sons, Inc. (1970) 3 Cal.3d 359, 363 (Scala).)
A statement of reasons suffices where the court “furnishes a
concise but clear statement of the reasons why” one or more
“grounds” in Code of Civil Procedure section 657 applies.
(Mercer, supra, 68 Cal.2d at p. 115.) “[T]he judge must briefly

                                18
recite the respects in which he [or she] finds the evidence to be
legally inadequate” (id. at p. 116) and “identify the deficiencies”
in “ ‘the proof.’ ” (Scala, at p. 367.) A brief summation regarding
the key evidence suffices. (Id. at p. 370.) The key question is
whether the court’s explanation is adequate to facilitate
“ ‘meaningful appellate review.’ ” (Oakland Raiders v. National
Football League (2007) 41 Cal.4th 624, 637.)
        Here, the court found first that “the jury was wrong—
‘clearly’ so, in finding that plaintiff’s algorithm was the same as
defendants’ and that [defendants] misappropriated the trade
secret.”
        However, the court went on to find that “[o]ther than
innuendo, no substantial evidence was presented that
[defendants] ‘misappropriated’ or wrongfully obtained plaintiff’s
designated Trade Secret (the combined algorithm and
manufacturer I.D.).” Instead, the evidence showed that Ira
reverse engineered a “separate and distinct” algorithm, which is
permissible. “Had Ira Emus simply misappropriated the relevant
information given to him under the confidentiality agreement,
there would have been no need to even attempt reverse
engineering and, more importantly, the switching algorithms
would have simply been the same.”
        Both findings discussed the difference between
Extrasensory’s and SoCal’s algorithms, but the second used the
word “misappropriated” twice (putting it in quotes the first time)
and “wrongfully” once, from which we conclude the court found
Ira’s reverse engineering of the algorithm constituted a proper
means of obtaining it.
        We conclude the record supported the court’s finding that
no evidence indicated Ira reverse engineered SoCal’s algorithm

                                19
by improper means. But it is not clear that the court fully
considered EFI’s EULA in making that finding.
       It was undisputed that installing CSP5 software on any
computer, which was necessary to configure every AutoCal and
install CSP5 software onto a Control Module, was subject to the
EULA, which prohibited decompiling or reverse engineering the
software.
       Civil Code section 3426.1 states that “Reverse engineering
or independent derivation alone shall not be considered improper
means.” (Civ. Code, § 3426.1, subd. (a), italics added.) Use of the
word “alone” indicates that reverse engineering attended by some
delict is improper. If Ira Emus agreed to the EULA—which
specifically prohibited reverse engineering—with the intention of
breaching it, that would constitute an improper means of
obtaining EFI’s trade secret. (See Lazar v. Superior Court (1996)
12 Cal.4th 631, 638 [entering a contract with the intention of
breaching it constitutes fraud].)
       “ ‘The basic logic of the common law of trade secrets
recognizes that private parties invest extensive sums of money in
certain information that loses its value when published to the
world at large.’ [Citation.] Based on this logic, trade secret law
creates a property right ‘defined by the extent to which the owner
of the secret protects his interest from disclosure to others.’ ”
(DVD Copy Control Assn., Inc. v. Bunner (2003) 31 Cal.4th 864,
880.) “By sanctioning the acquisition, use, and disclosure of
another’s valuable, proprietary information by improper means,
trade secret law” “recognizes that ‘ “good faith and honest, fair
dealing, is the very life and spirit of the commercial world.” ’ ”
(Id. at p. 881.)

                                20
       Fraudulent violation of EFI’s EULA, which expressly
prohibited the very measures employed here and was designed to
avoid the very result obtained, defeated EFI’s (and by assignment
SoCal’s) efforts to protect its interest, and cannot be considered
good faith and honest, fair dealing. We conclude that a deliberate
violation of the EULA would constitute an improper means by
which to reverse engineer SoCal’s algorithm. (See Viken
Detection Corp. v. Videray Techs., Inc. (D.Mass. Jan. 7, 2020,
Civil A. No. 19-10614-NMG) 2020 U.S.Dist. Lexis 2138, at pp.
*10-11.)
       Defendants argue the EULA is irrelevant because reverse
engineering can never be an improper means of obtaining a trade
secret. Untrue. As stated above, Civil Code section 3426.1,
subdivision (a) provides that “Reverse engineering or
independent derivation alone shall not be considered improper
means.” (Italics added.) Reverse engineering accomplished by
fraud is not reverse engineering alone. Entering into a EULA
with the intention of violating its terms is fraud.
       Defendants argue that reverse engineering is proper where
a rightful user is “examining or testing a product to determine
whether it works.” Perhaps so, but nothing suggests that was
defendants’ purpose here. On the contrary, defendants
admittedly reversed engineered SoCal’s algorithm in order to
create their own competing product.
       However, we have been directed to no evidence, and our
own reexamination revealed none, indicating that Ira violated
the EULA, deliberately or otherwise.
       We asked the parties for supplemental briefing about what
evidence suggests that Ira, after terminating his relationship
with EFI in 2012, or his agent, used or transferred CSP5

                               21
software (except for purposes of this litigation) that was subject
specifically to the 2007 EULA.
       SoCal gave several nonresponsive and/or
misrepresentational answers. First, it argued that Ira admitted
in his testimony that he continued to download, use and transfer
CSP5 software files after 2012. The testimony cited for this
proposition pertained to Ira’s email conversations with Simonov
and the transfers by Ira of unidentifiable files and code
fragments and by Simonov of computer code representing the
fruits of his reverse engineering efforts. However, nothing in
these exchanges indicated that the two exchanged anything that
was subject to the EULA.
       SoCal argued that software Ira used could not be
“downloaded” without agreeing to the EULA, but the testimony of
EFI’s CEO indicated that EFI’s software could be downloaded
without agreeing to the EULA, it simply could not be installed. It
is not clear whether this is a substantive difference, but that
uncertainty just means that even if the files exchanged between
Ira and Simonov were described in the EULA, it is not clear they
were obtained after installing (as opposed to simply downloading)
EFI software.
       (Smith testified that he reverse engineered SoCal’s
algorithm using only a pre-tuned AutoCal and CAN analyzer,
and never encountered the EULA.)
       SoCal represented that Ira testified that in 2013 he sent
Simonov “a CSP5 file” after converting it with EFILive software,
but the testimony was actually about a CSP file, CSP5’s
precursor.
       SoCal argued that Ira admitted using the new EFI CSP5
software in his testing and troubleshooting of Simonov’s algorithm,
but again, the testimony was about only CSP software (and
sometimes “EFI software”), not specifically about CSP5.

                                22
      In any event, that Ira downloaded, used or transferred
CSP5 software “files” does not mean he knew about the EULA,
which popped up on a computer screen only when a user installed
a CSP5 package. We have found nothing in the record indicating
Ira ever installed one, and nothing indicating he needed to have
done so in order to transact with Simonov.
      If there is a second trial, we think the trial court would be
well advised to ascertain exactly which EULA—the one from
2005 or from 2013—Ira encountered after 2013 and under what
circumstances, and whether the law governing that EULA would
enforce its prohibition against reverse engineering the software
within the pertinent timeframe.
      6.     Other Grounds for New Trial
      Defendants argue that SoCal’s counsel characterized them
as “cheaters” during opening argument, which inflamed the jury’s
passions, and in closing argument asserted that defendants
violated the EULA, which misrepresented the law. Defendants
argue a new trial is warranted because of counsel’s misconduct.
We disagree. Characterizing defendants as cheaters was no more
inflammatory than SoCal’s theory that defendants deliberately
schemed to misappropriate its trade secret. An attorney “ ‘may
vigorously argue his case and is not limited to “Chesterfieldian
politeness.” ’ ” (People v. Fields (1983) 35 Cal.3d 329, 363.) And
as discussed above, counsel’s characterization of the law was
correct.
      Defendants argue a new trial is warranted on the issue of
damages because Chavez’s independent reverse engineering of
the SoCal algorithm vitiated some of SoCal’s damages by
reducing the period during which the algorithm was entitled to
protection. We are in no position to reweigh the evidence on
damages, and thus cannot from our vantage point affirm a new

                                23
trial based on them. In any event, these matters may be
revisited at any second trial.
B.     Grounds for Nonsuit
       SoCal contends nonsuit as to Robyn was improper. We
agree.
       A motion for nonsuit tests the legal sufficiency of a
plaintiff’s evidence, operating, in effect, as a demurrer to the
evidence. The motion lies when the plaintiff’s evidence, taken as
true and construed most strongly in favor of the plaintiff, entitles
the plaintiff to no relief under any theory. (Castaneda v. Olsher
(2007) 41 Cal.4th 1205, 1214-1215.) In a proper case the court
has the duty to forestall the cost and delay of a meritless lawsuit
by granting nonsuit. (O’Keefe v. South End Rowing Club (1966)
64 Cal.2d 729, 746.)
       A nonsuit motion may be made “[o]nly after, and not before,
the plaintiff has completed his or her opening statement, or after
the presentation of his or her evidence in a trial by jury.” (Code
Civ. Proc., § 581c, subd. (a).) The motion may be granted as to
“some but not all of the issues involved in the action.” (Code Civ.
Proc., § 581c, subd. (b).)
       Because a nonsuit deprives the plaintiff of the right to have
a claim determined by a jury, California courts take a restrictive
view of the circumstances under which it may be granted.
(Carson v. Facilities Development Co. (1984) 36 Cal.3d 830, 838.)
       In reviewing a judgment of nonsuit, we are “guided by the
same rule requiring evaluation of the evidence in the light most
favorable to the plaintiff. ‘The judgment of the trial court cannot
be sustained unless interpreting the [proposed] evidence most
favorably to plaintiff’s case and most strongly against the
defendant and resolving all presumptions, inferences and doubts

                                24
in favor of the plaintiff a judgment for the defendant is required
as a matter of law.’ ” (Carson v. Facilities Development Co.,
supra, 36 Cal.3d at p. 839.)
      An officer or director of a corporation may not use her
position as an agent of the corporation to escape liability for
“personally direct[ing] or participat[ing] in . . . tortious conduct”
(Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490,
504), but is liable to a third party “[w]hen [her] acts are wrongful
in their nature” (Civ. Code, § 2343). Thus, “a corporate officer or
director may be liable for an intentional tort” committed by the
corporation at the officer or director’s behest. (PMC, Inc. v.
Kadisha (2000) 78 Cal.App.4th 1368, 1372.)
      Here, Robyn testified that defendants’ switch needed EFI’s
code, and consequently SoCal’s algorithm, to operate, and that
EFI’s altering its software in 2013 caused their prototype switch
to cease working. She testified, “They had changed the protocol,
in my opinion, when they realized that we knew how to do it. So
they changed it and then Ira figured it out again.” Evidence thus
suggested that Robyn: planned with Ira to acquire and use
SoCal’s trade secret; knew about the EULA through her tenure
as an EFI distributorship; knew that it at least facially prohibited
reverse engineering of EFI’s software; and knew defendants’
switch could not be created without such reverse engineering. A
reasonable jury could thus find that Robyn controlled
Extrasensory’s actions and directly participated in any
misappropriation of SoCal’s trade secret, and thus can be held
personally liable.
      The court found, and defendants argue, that Robyn was not
a computer programmer, and did not know what decompiling
hardwired code entailed.

                                 25
       The point is irrelevant because if Robyn knew that the
EULA prohibited decompiling EFI’s hardwired code, no matter
how it was accomplished, she need not be a programmer to
facilitate Ira’s breach of the EULA.
       Defendants argue that Robyn, at worst, believed the trade
secret was acquired through reverse engineering, but “reverse
engineering is expressly excluded from the definition of improper
means.” This argument has been discussed and rejected above.
                            DISPOSITION
       The order granting nonsuit is reversed. The order granting
a new trial is affirmed, and the matter is remanded for further
proceedings consistent with this opinion. The parties are to bear
their own costs on appeal.
       NOT TO BE PUBLISHED

                                                 CHANEY, J.
We concur:

             BENDIX, Acting P. J.

                            †
             CRANDALL, J.

      †
       Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.

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