California Civil Jury Instructions (CACI) (2017)

4400. Misappropriation of Trade Secrets—Introduction

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4400.Misappropriation of Trade Secrets—Introduction
[Name of plaintiff] claims that [he/she/it] [is/was] the [owner/licensee] of
[insert general description of alleged trade secret[s]].
[Name of plaintiff] claims that [this/these] [select short term to describe,
e.g., information] [is/are] [a] trade secret[s] and that [name of defendant]
misappropriated [it/them]. “Misappropriation” means the improper
[acquisition/use/ [or] disclosure] of the trade secret[s].
[Name of plaintiff] also claims that [name of defendant]’s
misappropriation caused [[him/her/it] harm/ [or] [name of defendant] to
be unjustly enriched].
[Name of defendant] denies [insert denial of any of the above claims].
[[Name of defendant] also claims [insert affırmative defenses].]
New December 2007; Revised December 2010
Directions for Use
This instruction is designed to introduce the jury to the issues involved in a case
involving the misappropriation of trade secrets under the California Uniform Trade
Secrets Act. (See Civ. Code, § 3426.1 et seq.) It should be read before the
instructions on the substantive law.
In the first sentence, provide only a general description of the alleged trade secrets.
Then in the second sentence, select a short term to identify the items, such as
“information,” “customer lists,” or “computer code.” The items that are alleged to
be trade secrets will be described with more specificity in CACI No. 4401,
Misappropriation of Trade Secrets—Essential Factual Elements.
Select the appropriate term, “owner” or “licensee,” 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.
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
“acquiring” in the second paragraph 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.
In the third paragraph, select the nature of the recovery sought, either damages for
harm to the plaintiff or for the defendant’s unjust enrichment, or both.
Include the last paragraph if the defendant asserts any affirmative defenses.
Sources and Authority
• Uniform Trade Secrets Act: Definitions. Civil Code section 3426.1.
“[W]e agree with the federal cases applying California law, which hold that
section 3426.7, subdivision (b), preempts common law claims that are ‘based on
the same nucleus of facts as the misappropriation of trade secrets claim for
relief.’ Depending on the particular facts pleaded, the statute can operate to
preempt the specific common claims asserted here: breach of confidence,
interference with contract, and unfair competition.” (K.C. Multimedia, Inc. v.
Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939,
958–959 [90 Cal.Rptr.3d 247], internal citation omitted.)
• “ ‘ “Trade secret law promotes the sharing of knowledge, and the efficient
operation of industry; it permits the individual inventor to reap the rewards of
his labor by contracting with a company large enough to develop and exploit
it.” [Citation.]’ ‘Trade secret law also helps maintain “standards of commercial
ethics . . . .” [Citation.] . . . By sanctioning the acquisition, use, and disclosure
of another’s valuable, proprietary information by improper means, trade secret
law minimizes “the inevitable cost to the basic decency of society when one
. . . steals from another.” [Citation.] In doing so, it recognizes that “ ‘good
faith and honest, fair dealing, is the very life and spirit of the commercial
world.’ ” ’ ” (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014)
226 Cal.App.4th 26, 42 [171 Cal.Rptr.3d 714], internal citations 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
13 Witkin, Summary of California Law (10th ed. 2005) Equity, § 81
1Milgrim on Trade Secrets, Ch. 1, Definitional Aspects, § 1.01 (Matthew Bender)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.50 et seq. (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.103 (Matthew Bender)
1 Zamore, Business Torts, Ch. 17, Trade Secrets, § 17.05 et seq. (Matthew Bender)
Edelson & Kay, eds., Trade Secret Litigation and Protection in California (State
Bar of California 2009) Chs. 1, 2, 6, 12