CACI 4403 Secrecy Requirement

California Civil Jury Instructions CACI

4403 Secrecy Requirement

The secrecy required to prove that something is a trade secret does not have to be absolute in the sense that no one else in the world possesses the information. It may be disclosed to employees involved in [name of plaintiff]’s use of the trade secret as long as they are instructed to keep the information secret. It may also be disclosed to nonemployees if they are obligated to keep the information secret. However, it must not have been generally known to the public or to people who could obtain value from knowing it.

Directions for Use

Read this instruction with CACI No. 4402, “Trade Secret” Defined, to give the jury additional guidance on the secrecy requirement of element 1 of that instruction.

Sources and Authority

“ ‘Trade secrets are a peculiar kind of property. Their only value consists in their being kept private.’ Thus, ‘the right to exclude others is central to the very definition of the property interest. Once the data that constitute a trade secret are disclosed to others, or others are allowed to use those data, the holder of the trade secret has lost his property interest in the data.’ ” (DVD Copy Control Assn., Inc. v. Bunner (2003) 31 Cal.4th 864, 881 [4 Cal.Rptr.3d 69, 75 P.3d 1], internal citations omitted.)

“[T]he test for a trade secret is whether the matter sought to be protected is information (1) that is valuable because it is unknown to others and (2) that the owner has attempted to keep secret. … [I]n order to qualify as a trade secret, the information ‘must be secret, and must not be of public knowledge or of a general knowledge in the trade or business.’ ” (DVD Copy Control Assn., Inc. v. Bunner (2004) 116 Cal.App.4th 241, 251 [10 Cal.Rptr.3d 185], internal citations omitted.)

“The secrecy requirement is generally treated as a relative concept and requires a fact-intensive analysis. Widespread, anonymous publication of the information over the Internet may destroy its status as a trade secret. The concern is whether the information has retained its value to the creator in spite of the publication.” (DVD Copy Control Assn., Inc., supra, 116 Cal.App.4th at p. 251, internal citations omitted.)

“[A]ny information (such as price concessions, trade discounts and rebate incentives) disclosed to [cross-complainant’s] customers cannot be considered trade secret or confidential.” (Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1455 [125 Cal.Rptr.2d 277].)

“ ‘[A] trade secret … has an intrinsic value which is based upon, or at least preserved by, being safeguarded from disclosure.’ Public disclosure, that is the absence of secrecy, is fatal to the existence of a trade secret. ‘If an individual discloses his trade secret to others who are under no obligation to protect the confidentiality of the information, or otherwise publicly discloses the secret, his property right is extinguished.’ A person or entity claiming a trade secret is also required to make ‘efforts that are reasonable under the circumstances to maintain its secrecy.’ ” (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 304 [116 Cal.Rptr.2d 833], internal citations omitted.)

“ ‘[R]easonable efforts to maintain secrecy have been held to include advising employees of the existence of a trade secret, limiting access to a trade secret on ‘need to know basis,’ and controlling plant access.’ ” (Courtesy Temporary Service, Inc. v. Camacho (1990) 222 Cal.App.3d 1278, 1288 [272 Cal.Rptr. 352].)

Secondary Sources

13 Witkin, Summary of California Law (11th ed. 2017) Equity, §§ 89, 90
Gaab & Reese, California Practice Guide: Civil Procedure Before Trial—Claims & Defenses, Ch. 10(II)-A ¶ 10:250 (The Rutter Group)
Trade Secrets Practice in California (Cont.Ed.Bar 2d ed.) §§ 4.2–4.10
1 Milgrim on Trade Secrets, Ch. 1, Definitional Aspects, § 1.03 (Matthew Bender)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, § 40.52 (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) § 1.03(3), (4)