CACI 4421 Affirmative Defense—Statute of Limitations—Three-Year Limit (Civ. Code, § 3426.6)
California Civil Jury Instructions CACI
4421 Affirmative Defense—Statute of Limitations—Three-Year Limit (Civ. Code, § 3426.6)
[Name of defendant] claims that [name of plaintiff]’s lawsuit was not filed within the time set by law. To succeed on this defense, [name of defendant] must prove that the claimed misappropriation of [name of plaintiff]’s trade secrets occurred before [insert date three years before date of filing].
However, the lawsuit was still filed on time if [name of plaintiff] proves that before [insert date three years before date of filing], [he/she/nonbinary pronoun/it] did not discover, nor with reasonable diligence should have discovered, facts that would have caused a reasonable person to suspect that [name of defendant] had misappropriated [name of plaintiff]’s [select short term to describe, e.g., information].
Directions for Use
Give this instruction if the California Unif orm Trade Secrets Act statute of limitations is at issue. (See Civ. Code, § 3426.6.) In an action in which the defendant is or was a customer of the initial misappropriator, modifications may be required. (See Cypress Semiconductor Corp. v. Superior Court (2008) 163 Cal.App.4th 575 [77 Cal.Rptr.3d 685].)
It is not necessary that the plaintiff know the identity of the defendant in order to trigger the duty to discover. (Cypress Semiconductor Corp., supra, 163 Cal.App.4th at p. 587.) Therefore, “[name of defendant]” in the last sentence will need to be modified if inquiry notice may have been triggered against an actual, but unidentified, misappropriator. (See Cypress Semiconductor Corp., supra, 163 Cal.App.4th at p. 585.)
This instruction places the burden on the plaintiff to prove that it did not know nor have any reason to suspect the misappropriation earlier than three years before filing. (See Civ. Code, § 3426.6.) This is the rule for the burden of proof under the nonstatutory delayed-discovery rule. (See Glue-Fold, Inc. v. Slautterback Corp. (2000) 82 Cal.App.4th 1018, 1030 [98 Cal.Rptr.2d 661]; CACI No. 455, Statute of Limitations—Delayed Discovery.) Certain statutes that have their own delayed discovery language (as does Civil Code section 3426.6) have been construed to place the burden on the defendant to prove that the plaintiff knew or should have suspected the facts giving rise to the cause of action earlier than the limitation date. (See, e.g., Samuels v. Mix (1999) 22 Cal.4th 1, 8–10 [91 Cal.Rptr.2d 273, 989 P.2d 701] [construing Code Civ. Proc., § 340.6 on legal malpractice]; CACI No. 610, Affirmative Defense—Statute of Limitations—Attorney Malpractice—One-Year Limit.) No court has construed Civil Code section 3426.6 to transfer the burden of proof on delayed discovery to the defendant, so presumably the burden of proof remains with the plaintiff under the nonstatutory rule.
Sources and Authority
•Statute of Limitations. Civil Code section 3426.6.
•“The unanimous conclusion of courts considering the issue—i.e., from federal courts construing section 3426.6—is that it is the first discovered (or discoverable) misappropriation of a trade secret which commences the limitation period.” (Glue-Fold, Inc., supra, 82 Cal.App.4th at p. 1026.)
•“The statute is triggered when the plaintiff knows or has reason to know the third party has knowingly acquired, used, or disclosed its trade secrets.” (Cypress Semiconductor Corp., supra, 163 Cal.App.4th 585.)
•“[T]he misappropriation that triggers the running of the statute is that which the plaintiff suspects, not that which may or may not actually exist.” (Cypress Semiconductor Corp., supra, 163 Cal.App.4th at p. 587.)
•“[A] plaintiff may have more than one claim for misappropriation, each with its own statute of limitations, when more than one defendant is involved. This is different from saying that each misappropriation gives rise to a separate claim, which is what section 3426.6 precludes.” (Cypress Semiconductor Corp., supra, 163 Cal.App.4th at p. 583, original italics.)
•“A misappropriation within the meaning of the UTSA occurs not only at the time of the initial acquisition of the trade secret by wrongful means, but also with each misuse or wrongful disclosure of the secret. But a claim for misappropriation of a trade secret arises for a given plaintiff against a given defendant only once, at the time of the initial misappropriation, subject to the discovery rule provided in section 3426.6. Each new misuse or wrongful disclosure is viewed as augmenting a single claim of continuing misappropriation rather than as giving rise to a separate claim.” (Cadence Design Systems, Inc. v. Avant! Corp. (2002) 29 Cal.4th 215, 223 [127 Cal.Rptr.2d 169, 57 P.3d 647], original italics.)
•“It [is appropriate] to construe section 3426.6 as meaning that a cause of action for misappropriation against a third party defendant accrues with the plaintiff’s discovery of that defendant’s misappropriation. Any continuing misappropriation by that defendant constitutes a single claim.” (Cypress Semiconductor Corp., supra, 163 Cal.App.4th at p. 583.)
•“If someone steals a trade secret and then sells it to a third party, when does the statute of limitations begin to run on any misappropriation claim the trade secret owner might have against the third party? … We conclude that with respect to the element of knowledge, the statute of limitations on a cause of action for misappropriation begins to run when the plaintiff has any reason to suspect that the third party knows or reasonably should know that the information is a trade secret. The third party’s actual state of mind does not affect the running of the statute.” (Cypress Semiconductor Corp., supra, 163 Cal.App.4th at p. 579, original italics.)
•“We conclude that the trial court erred in ruling, under the stipulated facts, that the statute of limitations did not begin to run until August 2003, when [defendant] actually learned that the DynaSpice program contained [plaintiff]’s trade secrets. Rather, the question is: When did [plaintiff] first have any reason to suspect that a … customer [of the initial misappropriator] had obtained or used DynaSpice knowing, or with reason to know, that the software contained [plaintiff]’s trade secrets?” (Cypress Semiconductor Corp., supra, 163 Cal.App.4th at p. 588, original italics.)
•“[I]t is not necessary that the plaintiff be able to identify the person or persons causing the harm. Since the identity of the defendant is not an element of a cause of action, the failure to discover the identity of the defendant does not postpone accrual of the cause of action. ‘ “Although never fully articulated, the rationale for distinguishing between ignorance” of the defendant and “ignorance” of the cause of action itself “appears to be premised on the commonsense assumption that once the plaintiff is aware of” the latter, he “normally” has “sufficient opportunity,” within the “applicable limitations period,” “to discover the identity” of the former.’ In this case, therefore, the statute began to run when [plaintiff] had any reason to suspect that the CSI customers knew or should have known that they had acquired [plaintiff]’s trade secrets.” (Cypress Semiconductor Corp., supra, 163 Cal.App.4th at p. 587, internal citations omitted.)