California Civil Jury Instructions (CACI) (2017)

4401. Misappropriation of Trade Secrets—Essential Factual Elements

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4401.Misappropriation of Trade Secrets—Essential Factual
Elements
[Name of plaintiff] claims that [name of defendant] has misappropriated a
trade secret. To succeed on this claim, [name of plaintiff] must prove all
of the following:
1. That [name of plaintiff] [owned/was a licensee of] [the
following:][describe each item claimed to be a trade secret that is
subject to the misappropriation claim];
2. That [this/these] [select short term to describe, e.g., information]
[was/were] [a] trade secret[s] at the time of the
misappropriation;
3. That [name of defendant] improperly [acquired/used/ [or]
disclosed] the trade secret[s];
4. That [[name of plaintiff] was harmed/ [or] [name of defendant] was
unjustly enriched]; and
5. That [name of defendant]’s [acquisition/use/ [or] disclosure] was a
substantial factor in causing [[name of plaintiff]’s harm/ [or]
[name of defendant] to be unjustly enriched].
New December 2007; Revised December 2010, December 2014
Directions for Use
In element 1, specifically describe all items that are alleged to be the trade secrets
that were misappropriated. (See Altavion, Inc. v. Konica Minolta Systems
Laboratory, Inc. (2014) 226 Cal.App.4th 26, 43 [171 Cal.Rptr.3d 714].) If more
than one item is alleged, include “the following” and present the items as a list.
Then in element 2, select a short term to identify the items, such as “information,”
“customer lists,” or “computer code.”
In element 1, select the appropriate term, “owned” or “was a licensee of,” 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.
Read also CACI No. 4402, “Trade Secret” Defined, to give the jury guidance on
element 2.
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
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“[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
“acquired” in element 3 or “acquisition” in element 5 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.
Give also CACI No. 4409, Remedies for Misappropriation of Trade Secret.
Sources and Authority
• Uniform Trade Secrets Act: Definitions. Civil Code section 3426.1.
Trade Secrets Must Be Identified With Reasonable Particularity. Code of Civil
Procedure section 2019.210.
• “A trade secret is misappropriated if a person (1) acquires a trade secret
knowing or having reason to know that the trade secret has been acquired by
‘improper means,’ (2) discloses or uses a trade secret the person has acquired
by ‘improper means’ or in violation of a nondisclosure obligation, (3) discloses
or uses a trade secret the person knew or should have known was derived from
another who had acquired it by improper means or who had a nondisclosure
obligation or (4) discloses or uses a trade secret after learning that it is a trade
secret but before a material change of position.” (Ajaxo Inc. v. E*Trade Group
Inc. (2005) 135 Cal.App.4th 21, 66 [37 Cal.Rptr.3d 221].)
• “A cause of action for monetary relief under CUTSA may be said to consist of
the following elements: (1) possession by the plaintiff of a trade secret; (2) the
defendant’s misappropriation of the trade secret, meaning its wrongful
acquisition, disclosure, or use; and (3) resulting or threatened injury to the
plaintiff. The first of these elements is typically the most important, in the sense
that until the content and nature of the claimed secret is ascertained, it will
likely be impossible to intelligibly analyze the remaining issues.” (Silvaco Data
Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 220 [109 Cal.Rptr.3d 27],
internal citations omitted.)
• “It is critical to any [UTSA] cause of action—and any defense—that the
information claimed to have been misappropriated be clearly identified.
Accordingly, a California trade secrets plaintiff must, prior to commencing
discovery, ‘identify the trade secret with reasonable particularity.’ ” (Altavion,
Inc.,supra, 226 Cal.App.4th at p. 43.)
• “We find the trade secret situation more analogous to employment
CACI No. 4401 TRADE SECRETS
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discrimination cases. In those cases, as we have seen, information of the
employer’s intent is in the hands of the employer, but discovery affords the
employee the means to present sufficient evidence to raise an inference of
discriminatory intent. The burden of proof remains with the plaintiff, but the
defendant must then bear the burden of producing evidence once a prima facie
case for the plaintiff is made. [¶] We conclude that the trial court correctly
refused the proposed instruction that would have shifted the burden of proof.”
(Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1674 [3
Cal.Rptr.3d 279], internal citation 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
1 Milgrim on Trade Secrets, Ch. 1, Definitional Aspects, § 1.01 (Matthew Bender)
Zamore, Business Torts, Ch. 17, Trade Secrets, § 17.05 et seq. (Matthew Bender)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.51 (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) Chs. 1, 2, 6, 10, 11, 12
TRADE SECRETS CACI No. 4401
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