CACI 4400 Misappropriation of Trade Secrets—Introduction

New December 2007; Revised December 2010

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This instruction is designed to introduce the jury to the issues involved in a case involving the misappropriation of trade secrets under the California Uniform Trade Secrets Act. (See Civ. Code, § 3426.1 et seq.) It should be read before the instructions on the substantive law.

In the first sentence, provide only a general description of the alleged trade secrets. Then in the second sentence, select a short term to identify the items, such as “information,” “customer lists,” or “computer code.” The items that are alleged to be trade secrets will be described with more specificity in CACI No. 4401, Misappropriation of Trade Secrets—Essential Factual Elements.

Select the appropriate term, “owner” or “licensee,” to indicate the plaintiff’s interest in the alleged trade secrets. No reported California state court decision has addressed whether a licensee has a sufficient interest to assert a claim of trade secret misappropriation. These instructions take no position on this issue. The court should make a determination whether the plaintiff has the right as a matter of substantive law to maintain a cause of action for misappropriation of trade secrets if that issue is disputed.

Civil Code section 3426.1(b)(1) defines “misappropriation” as improper “[a]cquisition” of a trade secret, and subsection (b)(2) defines it as improper “[d]isclosure or use” of a trade secret. In some cases, the mere acquisition of a trade secret, as distinguished from a related disclosure or use, will not result in damages and will only be relevant to injunctive relief. Because generally the jury should be instructed only on matters relevant to damage claims, do not select “acquiring” in the second paragraph unless there is evidence that the acquisition resulted in damages, other than damages from related disclosure or use.

To avoid confusion, instruct the jury only on the particular theory of misappropriation applicable under the facts of the case. For example, the jury should not be instructed on misappropriation through “use” if the plaintiff does not assert that the defendant improperly used the trade secrets. Nor should the jury be instructed on a particular type of “use” if that type of “use” is not asserted and supported by the evidence.

In the third paragraph, select the nature of the recovery sought, either damages for harm to the plaintiff or for the defendant’s unjust enrichment, or both.

Include the last paragraph if the defendant asserts any affirmative defenses.

•Uniform Trade Secrets Act: Definitions. Civil Code section 3426.1.

•“[W]e agree with the federal cases applying California law, which hold that section 3426.7, subdivision (b), preempts common law claims that are ‘based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.’ Depending on the particular facts pleaded, the statute can operate to preempt the specific common claims asserted here: breach of confidence, interference with contract, and unfair competition.” (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 958–959 [90 Cal.Rptr.3d 247], internal citation omitted.)

•“ ‘ “Trade secret law promotes the sharing of knowledge, and the efficient operation of industry; it permits the individual inventor to reap the rewards of his labor by contracting with a company large enough to develop and exploit it.” [Citation.]’ ‘Trade secret law also helps maintain “standards of commercial ethics … .” [Citation.] … By sanctioning the acquisition, use, and disclosure of another’s valuable, proprietary information by improper means, trade secret law minimizes “the inevitable cost to the basic decency of society when one … steals from another.” [Citation.] In doing so, it recognizes that “ ‘good faith and honest, fair dealing, is the very life and spirit of the commercial world.’ ” ’ ” (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 42 [171 Cal.Rptr.3d 714], internal citations omitted.)

•“[W]e find no support for [a current-ownership] rule in the text of the CUTSA, cases applying it, or legislative history. Nor do we find any evidence of such a rule in patent or copyright law, which defendants have cited by analogy. Defendants have offered no persuasive argument from policy for our adoption of such a rule.” (Jasmine Networks, Inc. v. Superior Court (2009) 180 Cal.App.4th 980, 986 [103 Cal.Rptr.3d 426].)

•“[T]he only California authority [defendant] cited for the asserted requirement [that a trade-secrets plaintiff must own the trade secret when the action is filed] was the official California pattern jury instructions—whose ‘first element,’ [defendant] asserted, ‘requires the plaintiff to be either the owner or the licensee of the trade secret. See CACI Nos. 4400, 4401.’ [Defendant] did not quote the cited instructions—for good reason. The most that can be said in favor of its reading is that the broader and less specific of the two instructions uses the present tense to refer to the requirement of ownership. That instruction, whose avowed purpose is ‘to introduce the jury to the issues involved’ in a trade secrets case (Directions for Use for CACI No. 4400), describes the plaintiff as claiming that he ‘is’ the owner/licensee of the trade secrets underlying the suit. (CACI No. 4400.) The second instruction, which enumerates the actual elements of the plaintiff’s cause of action, dispels whatever weak whiff of relevance this use of the present tense might have. It requires the plaintiff to prove that he ‘owned’ or ‘was a licensee of’ the trade secrets at issue. (CACI No. 4401, italics added.) Given only these instructions to go on, one would suppose that past ownership—i.e., ownership at the time of the alleged misappropriation—is sufficient to establish this element.” (Jasmine Networks, Inc., supra, 180 Cal.App.4th at p. 997, original italics.)