Misappropriation of Trade Secrets in California

In today’s competitive business landscape, trade secrets are often a company’s most valuable assets. These confidential pieces of information, ranging from formulas and designs to customer lists and marketing strategies, provide a critical edge in the marketplace. California law recognizes the importance of protecting trade secrets. Additionally, they offer robust legal recourse for businesses that fall victim to misappropriation. At KAASS LAW, we dedicate on safeguarding the intellectual property of businesses and helping them defend their trade secrets from unfair competition. The following will explore the complexities of trade secret misappropriation in California, outlining the legal framework, the elements of a claim, and the available remedies. These types of secrets you want to hold close to your chest!

Understanding the Terms

According to Civil Code Section 3426.1(b)(1) under California law, “misappropriation” refers to the acquisition of a trade secret by а person who knows or has reason to know that the trade secret was acquired by improper means, such as bribery, theft, misrepresentation, breach or inducement of a breach of duty to maintain secrecy.

According to Civil Code Section 3426.1(b)(2), misappropriation also includes the disclosure or use of a trade secret without consent by a person who used improper means to acquire knowledge of the trade secret.

Elements the Plaintiff Must Establish to Prove Misappropriation of Trade Secrets in California

According to CACI 4401, to establish the claim of trade misappropriation, the plaintiff must be able to establish all five elements:

• The plaintiff owned or was a licensee of the trade secret
• The information was a trade secret at the time of the misappropriation
• The defendant improperly acquired, used or disclosed the trade secret
• The plaintiff was harmed, or the defendant was unjustly enriched
• The defendant’s acquisition, use, or disclosure was a substantial factor in causing harm to the defendant or to be unjustly enriched.

What Is Technically A Trade Secret?

According to CACI 4402, each of the following elements must be present in a “trade secret”:

• The trade secret must consist of information. Trade secret law protects different types of information, but the most common examples fall under two categories: business information and technical information.  The information that protects and recognize as a trade secret can include the following:
  • Business plans
  • Corporate agendas and minutes
  • Bid specifications
  • Customer lists
  • Spreadsheets
• The information must derive actual or potential economic value from the fact that it is secret.
• To be a trade secret, the information can’t be generally known to the public, industry competitors, or others who could realize economic value from its use or disclosure.
• The information must be treated as a secret, and the owner must exercise reasonable efforts to maintain its secrecy.

Trade Secret Ownership in California

California Labor Code Section 2860 expressly establish that the employer owns trade secrets created by an employee. Though, an employer wouldn’t own trade secrets created on an employee’s personal time without the use of employer’s materials.

Statute Of Limitations for Misappropriation of Trade Secrets in California

A plaintiff must bring an action for misappropriation within three years after the misappropriation’s discovery. Or, alternatively, by the exercise of reasonable diligence, upon discovery.

Civil Remedies for Misappropriation of Trade Secrets

In case of a successful claim, trade secret owners can:

• Obtain an injunction prohibiting the actual or threatened misappropriation
• Recover compensatory damages for actual loss caused by the misappropriation
• Recover compensatory damages for the defendant’s unfair enrichment to the amount not covered by the calculation of damages for actual loss
• Obtain payment from the defendant of a reasonable royalty if neither the damages nor the unjust enrichment caused by the misappropriation are provable
• Recover punitive damages not exceeding twice the compensatory damages award if the misappropriation was willful and malicious
• Recover attorneys’ fees

KAASS LAW: Your Partner in Trade Secret Protection

At KAASS LAW, we understand the critical role that trade secrets play in business success. Our experienced attorneys can help you:

• Identify and protect your trade secrets: We can help you identify your trade secrets, develop comprehensive protection strategies. Also, we can implement effective confidentiality agreements.
• Investigate misappropriation: If you suspect trade secret misappropriation, we can conduct thorough investigations to gather evidence and identify the responsible parties.
• Enforce your rights: We can pursue legal action to stop misappropriation, recover damages, and protect your intellectual property.

Don’t Let Your Trade Secrets Fall into the Wrong Hands

Trade secret misappropriation can have devastating consequences for businesses, leading to financial losses, reputational damage, and loss of competitive advantage. If you’re concerned about protecting your trade secrets or believe that your trade secrets have been misappropriated, contact KAASS LAW today for a consultation. We’re here to help you safeguard your valuable intellectual property and ensure your business thrives in a competitive marketplace. Additionally, we also help with any partnership and shareholder disputes, so give us a call for any further legal inquiries!