CACI 4420 Affirmative Defense—Information Was Readily Ascertainable by Proper Means

California Civil Jury Instructions CACI

4420 Affirmative Defense—Information Was Readily Ascertainable by Proper Means

[Name of defendant] did not misappropriate [name of plaintiff]’s trade secret[s] if [name of defendant] proves that the [select short term to describe, e.g., information] [was/were] readily ascertainable by proper means at the time of the alleged [acquisition/use/ [or] disclosure].

There is no fixed standard for determining what is “readily ascertainable by proper means.” In general, information is readily ascertainable if it can be obtained, discovered, developed, or compiled without significant difficulty, effort, or expense. For example, information is readily ascertainable if it is available in trade journals, reference books, or published materials. On the other hand, the more difficult information is to obtain, and the more time and resources that must be expended in gathering it, the less likely it is that the information is readily ascertainable by proper means.

Directions for Use

Give also CACI No. 4408, Improper Means of Acquiring Trade Secret.

One case has suggested in a footnote that in order for the defense to apply, the defendant must have actually obtained plaintiff’s secrets through readily ascertainable means rather than improperly. (See ABBA Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 21–22, fn. 9 [286 Cal.Rptr. 518].) Such a requirement would not constitute an affirmative defense but rather would be a denial of the improper-means element of the plaintiff’s claim. (See 5 Witkin, California Procedure (4th ed. 1996) Pleadings, § 1081 [affirmative defense admits the truth of the essential allegations of the complaint].) Because the advisory committee believes that this is an affirmative defense, no such requirement has been included in this instruction. (See San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1542–1543 [67 Cal.Rptr.3d 54] [triable issue of fact as to whether information was readily ascertainable, that is, whether defendant could have replicated it within short period of time].)

Sources and Authority

“Trade Secret” Defined. Civil Code section 3426.1(d)(1).

“The Legislative Committee Comment [to Civ. Code, § 3426.1] further explains the original draft defined a trade secret in part as ‘not being readily ascertainable by proper means’ and that ‘the assertion that a matter is readily ascertainable by proper means remains available as a defense to a claim of misappropriation. Information is readily ascertainable if it is available in trade journals, reference books, or published materials.’ ” (DVD Copy Control Assn., Inc. v. Bunner (2003) 31 Cal.4th 864, 899], conc. opn. of Werdegar, J.; see Legis. Comm. Comment (Senate), 1984 Addition.)

“The focus of the first part of the statutory definition 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. Information that is readily ascertainable by a business competitor derives no independent value from not being generally known.” (Syngenta Crop Protection, Inc. v. Helliker (2006) 138 Cal.App.4th 1135, 1172 [42 Cal.Rptr.3d 191], internal citations omitted.)

“With respect to the general availability of customer information, courts 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.” (Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1521–1522 [66 Cal.Rptr.2d 731], internal citations omitted.)

“[Defendant] argues that even if reverse engineering … did not actually occur, the binder contents were not trade secrets because they could have been reverse engineered—that is, they were readily ascertainable. … Considering the length of time that each proposal took to create and finalize and the urgency with which four of the project owners impressed upon the prospective contractors to begin the work, we cannot overlook the possibility that the information was not readily ascertainable in the circumstances presented. … Thus, a triable issue of fact exists as to whether the entire proposal for each project was indeed readily ascertainable—that is, whether [defendant] could have replicated each offer within the short period it claimed to have needed.” (San Jose Construction, Inc., supra, 155 Cal.App.4th at pp. 1542–1543, footnote omitted.)

“While ease of ascertainability is irrelevant to the definition of a trade secret, ‘the assertion that a matter is readily ascertainable by proper means remains available as a defense to a claim of misappropriation.’ Therefore, if the defendants can convince the finder of fact at trial (1) that ‘it is a virtual certainty that anyone who manufactures’ certain types of products uses rubber rollers, (2) that the manufacturers of those products are easily identifiable, and (3) that the defendants’ knowledge of the plaintiff’s customers resulted from that identification process and not from the plaintiff’s records, then the defendants may establish a defense to the misappropriation claim. That defense, however, will be based upon an absence of misappropriation, rather than the absence of a trade secret.” (ABBA Rubber Co., supra, 235 Cal.App.3d at pp. 21–22, fn. 9, internal citations omitted.)

“[T]he evidence established that [plaintiff]’s customer list and related information was the product of a substantial amount of time, expense and effort on the part of [plaintiff]. Moreover, the nature and character of the subject customer information, i.e., billing rates, key contacts, specialized requirements and markup rates, is sophisticated information and irrefutably of commercial value and not readily ascertainable to other competitors. Thus, [plaintiff’s] customer list and related proprietary information satisfy the first prong of the definition of ‘trade secret’ under section 3426.1.” (Courtesy Temporary Serv., Inc. v. Camacho (1990) 222 Cal.App.3d 1278, 1288 [272 Cal.Rptr. 352].)

“In viewing the evidence presented in the light most favorable to the prevailing party, it is difficult to find a protectable trade secret as that term exists under Civil Code section 3426.1, subdivision (d). While the information sought to be protected here, that is lists of customers who operate manufacturing concerns and who need shipping supplies to ship their products to market, may not be generally known to the public, they certainly would be known or readily ascertainable to other persons in the shipping business. The compilation process in this case is neither sophisticated nor difficult nor particularly time consuming. The evidence presented shows that the shipping business is very competitive and that manufacturers will often deal with more than one company at a time. There is no evidence that all of appellant’s competition comes from respondents’ new employer. Obviously, all the competitors have secured the same information that appellant claims and, in all likelihood, did so in the same manner as appellant—a process described herein by respondents.” (American Paper & Packaging Prods., Inc. v. Kirgan (1986) 183 Cal.App.3d 1318, 1326 [228 Cal.Rptr. 713].)

Secondary Sources

1 Milgrim on Trade Secrets, Ch. 1, Definitional Aspects, § 1.07[1] (Matthew Bender)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, §§ 40.52[1], 40.53[1][b] (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition, § 565.103[4][a] (Matthew Bender)