CACI 4412 Independent Economic Value Explained

California Civil Jury Instructions CACI

4412 “Independent Economic Value” Explained

[Select short term to describe, e.g., Information] has independent economic value if it gives the owner an actual or potential business advantage over others who do not know the [e.g., information] and who could obtain economic value from its disclosure or use.

In determining whether [e.g., information] had actual or potential independent economic value because it was secret, you may consider the following:

(a)The extent to which [name of plaintiff] obtained or could obtain economic value from the [e.g., information] in keeping [it/them] secret;

(b)The extent to which others could obtain economic value from the [e.g., information] if [it were/they were] not secret;

(c)The amount of time, money, or labor that [name of plaintiff] expended in developing the [e.g.information];

(d)The amount of time, money, or labor that [would be/was] saved by a competitor who used the [e.g.information];

[(e)[Insert other applicable factors].]

The presence or absence of any one or more of these factors is not necessarily determinative.

Directions for Use

Give this instruction to further explain element 2 of CACI No. 4402, “Trade Secret” Defined. Inapplicable factors may be omitted.

Sources and Authority

“Trade Secret” Defined. Civil Code section 3426.1(d).

“[I]t is not true that evidence of ‘some’ helpfulness or usefulness, if credited, would compel a finding of independent economic value. The Restatement defines trade secret as business or technical information ‘that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.’ (Rest.3d, Unfair Competition, § 39.) The advantage ‘need not be great,’ but must be ‘more than trivial.’ (Rest.3d, Unfair Competition, § 39, com. e, p. 430.) Merely stating that information was helpful or useful to another person in carrying out a specific activity, or that information of that type may save someone time, does not compel a factfinder to conclude that the particular information at issue was ‘sufficiently valuable … to afford an … economic advantage over others.’ (Rest.3d, Unfair Competition, § 39.) The factfinder is entitled to expect evidence from which it can form some solid sense of how useful the information is, e.g., how much time, money, or labor it would save, or at least that these savings would be ‘more than trivial.’ (Rest.3d., Unfair Competition, § 39, com. e.)” (Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 564–565 [66 Cal.Rptr.3d 1], original italics.)

“[T]he focus of the inquiry regarding the independent economic value element is ‘on whether the information is generally known to or readily ascertainable by business competitors or others to whom the information would have some economic value. [Citations.] Information that is readily ascertainable by a business competitor derives no independent value from not being generally known. [Citation.]’ ” (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 62 [171 Cal.Rptr.3d 714].)

“Moreover, it seems inherent in the requirement of value, as codified, that it is relevant to ask to whom the information may be valuable. The statute does not speak of value in the abstract, but of the value that is ‘[d]eriv[ed] … from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use … .’ In other words, the core inquiry is the value to the owner in keeping the information secret from persons who could exploit it to the relative disadvantage of the original owner.” (Yield Dynamics, Inc., supra, 154 Cal.App.4th at p. 568, original italics, internal citation omitted.)

“ ‘[C]ourts are reluctant to protect customer lists to the extent they embody information which is “readily ascertainable” through public sources, such as business directories. … . On the other hand, where the employer has expended time and effort identifying customers with particular needs or characteristics, courts will prohibit former employees from using this information to capture a share of the market. Such lists are to be distinguished from mere identities and locations of customers where anyone could easily identify the entities as potential customers. … . As a general principle, the more difficult information is to obtain, and the more time and resources expended by an employer in gathering it, the more likely a court will find such information constitutes a trade secret.’ ” (San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1539–1540 [67 Cal.Rptr.3d 54], internal citation omitted.)

“The requirement that a customer list must have economic value to qualify as a trade secret has been interpreted to mean that the secrecy of this information provides a business with a ‘substantial business advantage.’ In this respect, a customer list can be found to have economic value because its disclosure would allow a competitor to direct its sales efforts to those customers who have already shown a willingness to use a unique type of service or product as opposed to a list of people who only might be interested.” (Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1522 [66 Cal.Rptr. 2d 731], internal citations omitted.)

“ ‘The value of information claimed as a trade secret may be established by direct or circumstantial evidence. Direct evidence relating to the content of the secret and its impact on business operations is clearly relevant. Circumstantial evidence of value is also relevant, including the amount of resources invested by the plaintiff in the production of the information, the precautions taken by the plaintiff to protect the secrecy of the information … , and the willingness of others to pay for access to the information.’ ” (Altavion, Inc., supra, 226 Cal.App.4th at p. 62.)

Secondary Sources

1 Milgrim on Trade Secrets, Ch. 1, Definitional Aspects, § 1.01 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition, §§ 565.103–565.105 (Matthew Bender)
Edelson & Kay, eds., Trade Secret Litigation and Protection in California (State Bar of California 2009) Ch. 1