California Civil Jury Instructions (CACI) (2017)

4402. “Trade Secret” Defined

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4402.“Trade Secret” Defined
To prove that the [select short term to describe, e.g., information] [was/
were] [a] trade secret[s], [name of plaintiff] must prove all of the
1. That the [e.g., information] [was/were] secret;
2. That the [e.g., information] had actual or potential independent
economic value because [it was/they were] secret; and
3. That [name of plaintiff] made reasonable efforts to keep the [e.g.,
information] secret.
New December 2007; Revised April 2008
Directions for Use
Give also CACI No. 4403, Secrecy Requirement, if more explanation of element 1
is needed. Give CACI No. 4412, “Independent Economic Value” Explained, if
more explanation of element 2 is needed. Give CACI No. 4404, Reasonable Efforts
to Protect Secrecy, if more explanation of element 3 is needed.
Sources and Authority
• “Trade Secret” Defined. Civil Code section 3426.1(d).
“ ‘Trade secrets are a peculiar kind of property. Their only value consists in
their being kept private.’ Thus, ‘the right to exclude others is central to the very
definition of the property interest. Once the data that constitute a trade secret
are disclosed to others, or others are allowed to use those data, the holder of the
trade secret has lost his property interest in the data.’ ” (DVD Copy Control
Assn., Inc. v. Bunner (2003) 31 Cal.4th 864, 881 [4 Cal.Rptr.3d 69, 75 P.3d 1],
internal citations omitted.)
• “[T]he test for a trade secret is whether the matter sought to be protected is
information (1) that is valuable because it is unknown to others and (2) that the
owner has attempted to keep secret. . . . [I]n order to qualify as a trade secret,
the information ‘must be secret, and must not be of public knowledge or of a
general knowledge in the trade or business.’ ” (DVD Copy Control Assn., Inc. v.
Bunner (2004) 116 Cal.App.4th 241, 251 [10 Cal.Rptr.3d 185], internal citations
• “[A]ny information (such as price concessions, trade discounts and rebate
incentives) disclosed to [cross-complainant’s] customers cannot be considered
trade secret or confidential.” (Whyte v. Schlage Lock Co. (2002) 101
Cal.App.4th 1443, 1455 [125 Cal.Rptr.2d 277].)
• “ ‘[A] trade secret . . . has an intrinsic value which is based upon, or at least
preserved by, being safeguarded from disclosure.’ Public disclosure, that is the
absence of secrecy, is fatal to the existence of a trade secret. ‘If an individual
discloses his trade secret to others who are under no obligation to protect the
confidentiality of the information, or otherwise publicly discloses the secret, his
property right is extinguished.’ A person or entity claiming a trade secret is also
required to make ‘efforts that are reasonable under the circumstances to
maintain its secrecy.’ ” (In re Providian Credit Card Cases (2002) 96
Cal.App.4th 292, 304 [116 Cal.Rptr.2d 833], internal citations 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
• “The sine qua non of a trade secret, then, is the plaintiff’s possession of
information of a type that can, at the possessor’s option, be made known to
others, or withheld from them, i.e., kept secret. This is the fundamental
difference between a trade secret and a patent. A patent protects an idea, i.e., an
invention, against appropriation by others. Trade secret law does not protect
ideas as such. Indeed a trade secret may consist of something we would not
ordinarily consider an idea (a conceptual datum) at all, but more a fact (an
empirical datum), such as a customer’s preferences, or the location of a mineral
deposit. In either case, the trade secret is not the idea or fact itself, but
information tending to communicate (disclose) the idea or fact to another. Trade
secret law, in short, protects only the right to control the dissemination of
information.” (Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210,
220–221 [109 Cal.Rptr.3d 27], original italics.)
• “[I]f a patentable idea is kept secret, the idea itself can constitute information
protectable by trade secret law. In that situation, trade secret law protects the
inventor’s ‘right to control the dissemination of information’—the information
being the idea itself—rather than the subsequent use of the novel technology,
which is protected by patent law. In other words, trade secret law may be used
to sanction the misappropriation of an idea the plaintiff kept secret.” (Altavion,
Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26,
55−56 [171 Cal.Rptr.3d 714], original italics, internal citations omitted.)
• “[T]he doctrine has been established that a trade secret can include a system
where the elements are in the public domain, but there has been accomplished
an effective, successful and valuable integration of the public domain elements
and the trade secret gave the claimant a competitive advantage which is
protected from misappropriation.” (Altavion, Inc.,supra, 226 Cal.App.4th at p.
Secondary Sources
13 Witkin, Summary of California Law (10th ed. 2005) Equity, § 87(4)
Trade Secrets Practice in California (Cont.Ed.Bar 2d ed.) §§ 4.8–4.10
1 Milgrim 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,
§ 40.52 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.103 (Matthew Bender)
Edelson & Kay, eds., Trade Secret Litigation and Protection in California (State
Bar of California 2009) Ch. 1