Trade secret misappropriation claims in California

Glenn W. Peterson

In a general sense, trade secret misappropriation is the improper use or disclosure of information that a company has dedicated a significant amount of time and resources into developing and protecting. California is one of 47 states to have adopted the Uniform Trade Secrets Act, but even so, the way in which California courts approach misappropriation claims differs than how other states which have adopted the same laws would.

Under California’s codified version of the UTSA, § 3426.1, the summary of which can be found on FindLaw, “misappropriation” occurs when a person acquires the trade secret of another by a person who knows or has reason to believe that improper means were used to acquire the trade secret. Misappropriation also occurs when a person discloses or uses the trade secret of another without consent, either implied or express, when a person uses improper means to acquire the trade secret of another, or when a person uses or accepts a trade secret that he or she knows has been acquired via improper means. Improper means can mean misrepresentation, bribery, theft, inducement of a breach of duty to maintain secrecy, breach of duty to maintain confidentiality or espionage.

Though California’s trade secret laws are similar to that of other states, the way in which the state deals with the misappropriation claims is unique. Per Ca. Civ. Proc. Code § 2019.210, and in an attempt to prevent parties from claiming misappropriation of a secret that is not rightfully theirs, the party alleging misappropriation must first identify the trade secret, providing precise detail, before the court will commence with the discovery phase.