CACI 4401 Misappropriation of Trade Secrets—Essential Factual Elements

California Civil Jury Instructions CACI

4401 Misappropriation of Trade Secrets—Essential Factual Elements

[Name of plaintiff] claims that [name of defendant] has misappropriated a trade secret. To succeed on this claim, [name of plaintiff] must prove all of the following:

1.That [name of plaintiff] [owned/was a licensee of] [the following:][describe each item claimed to be a trade secret that is subject to the misappropriation claim];

2.That [this/these] [select short term to describe, e.g., information] [was/were] [a] trade secret[s] at the time of the misappropriation;

3.That [name of defendant] improperly [acquired/used/ [or] disclosed] the trade secret[s];

4.That [[name of plaintiff] was harmed/ [or] [name of defendant] was unjustly enriched]; and

5.That [name of defendant]’s [acquisition/use/ [or] disclosure] was a substantial factor in causing [[name of plaintiff]’s harm/ [or] [name of defendant] to be unjustly enriched].

Directions for Use

In element 1, specifically describe all items that are alleged to be the trade secrets that were misappropriated. (See Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 43 [171 Cal.Rptr.3d 714].) If more than one item is alleged, include “the following” and present the items as a list. Then in element 2, select a short term to identify the items, such as “information,” “customer lists,” or “computer code.”

In element 1, select the appropriate term, “owned” or “was a licensee of,” 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.

Read also CACI No. 4402, “Trade Secret” Defined, to give the jury guidance on element 2.

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 “acquired” in element 3 or “acquisition” in element 5 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.

Give also CACI No. 4409, Remedies for Misappropriation of Trade Secret.

Sources and Authority

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

Trade Secrets Must Be Identified With Reasonable Particularity. Code of Civil Procedure section 2019.210.

“A trade secret is misappropriated if a person (1) acquires a trade secret knowing or having reason to know that the trade secret has been acquired by ‘improper means,’ (2) discloses or uses a trade secret the person has acquired by ‘improper means’ or in violation of a nondisclosure obligation, (3) discloses or uses a trade secret the person knew or should have known was derived from another who had acquired it by improper means or who had a nondisclosure obligation or (4) discloses or uses a trade secret after learning that it is a trade secret but before a material change of position.” (Ajaxo Inc. v. E*Trade Group Inc. (2005) 135 Cal.App.4th 21, 66 [37 Cal.Rptr.3d 221].)

“A cause of action for monetary relief under CUTSA may be said to consist of the following elements: (1) possession by the plaintiff of a trade secret; (2) the defendant’s misappropriation of the trade secret, meaning its wrongful acquisition, disclosure, or use; and (3) resulting or threatened injury to the plaintiff. The first of these elements is typically the most important, in the sense that until the content and nature of the claimed secret is ascertained, it will likely be impossible to intelligibly analyze the remaining issues.” (Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 220 [109 Cal.Rptr.3d 27], internal citations omitted.)

“A cause of action for misappropriation of trade secrets requires a plaintiff to show the plaintiff owned the trade secret; at the time of misappropriation, the information was a trade secret; the defendant improperly acquired, used, or disclosed the trade secret; the plaintiff was harmed; and the defendant’s acquisition, use, or disclosure of the trade secret was a substantial factor in causing the plaintiff harm.” (AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923, 942 [239 Cal.Rptr.3d 577] [citing CACI].)

“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.’ ” (Altavion, Inc.supra, 226 Cal.App.4th at p. 43.)

“We find the trade secret situation more analogous to employment discrimination cases. In those cases, as we have seen, information of the employer’s intent is in the hands of the employer, but discovery affords the employee the means to present sufficient evidence to raise an inference of discriminatory intent. The burden of proof remains with the plaintiff, but the defendant must then bear the burden of producing evidence once a prima facie case for the plaintiff is made. [¶] We conclude that the trial court correctly refused the proposed instruction that would have shifted the burden of proof.” (Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1674 [3 Cal.Rptr.3d 279], internal citation 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.)

Secondary Sources

Gaab and Reese, California Practice Guide: Civil Procedure Before Trial—Claims & Defenses, Ch. 10(II)-A ¶ 10:250 (The Rutter Group)
1 Milgrim on Trade Secrets, Ch. 1, Definitional Aspects, § 1.01 (Matthew Bender)
Zamore, Business Torts, Ch. 17, Trade Secrets, § 17.05 et seq. (Matthew Bender)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, § 40.51 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition, § 565.103[4] (Matthew Bender)
Edelson & Kay, eds., Trade Secret Litigation and Protection in California (State Bar of California 2009) Chs. 1, 2, 6, 10, 11, 12