CACI No. 4406. Misappropriation by Disclosure

Judicial Council of California Civil Jury Instructions (2023 edition)

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4406.Misappropriation by Disclosure
[Name of defendant] misappropriated [name of plaintiff]’s trade secret[s]
by disclosure if [name of defendant]
1. disclosed [it/them] without [name of plaintiff]’s consent; and
2. [did any of the following:]
2. [insert one or more of the following:]
2. [acquired knowledge of the trade secret[s] by improper means][./;
or]
2. [at the time of disclosure, knew or had reason to know that [his/
her/nonbinary pronoun/its] knowledge of [name of plaintiff]’s trade
secret[s] came from or through [name of third party], and that
[name of third party] had previously acquired the trade secret[s]
by improper means][./; or]
2. [at the time of disclosure, knew or had reason to know that [his/
her/nonbinary pronoun/its] knowledge of [name of plaintiff]’s trade
secret[s] was acquired [insert circumstances giving rise to duty to
maintain secrecy], which created a duty to keep the [select short
term to describe, e.g., information] secret][./; or]
2. [at the time of disclosure, knew or had reason to know that [his/
her/nonbinary pronoun/its] knowledge of [name of plaintiff]’s trade
secret[s] came from or through [name of third party], and that
[name of third party] had a duty to [name of plaintiff] to keep the
[e.g., information] secret][./; or]
2. [before a material change of [his/her/nonbinary pronoun/its]
position, knew or had reason to know that [it was/they were] [a]
trade secret[s] and that knowledge of [it/them] had been acquired
by accident or mistake.]
New December 2007; Revised December 2010
Directions for Use
Read this instruction with CACI No. 4401, Misappropriation of Trade
Secrets - Essential Factual Elements, if the plaintiff claims that the defendant’s
disclosure of the information alleged to be a trade secret is a misappropriation.
If consent is at issue, CACI No. 1302, Consent Explained, and CACI No. 1303,
Invalid Consent, may also be given.
In element 2, select the applicable statutory act(s) alleged to constitute
misappropriation by disclosure. (See Civ. Code, § 3624.1(b)(2).) If only one act is
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selected, omit the words “did any of the following.”
If either of the first two acts constituting misappropriation by disclosure is alleged,
give also CACI No. 4408, Improper Means of Acquiring Trade Secret.
Sources and Authority
• “Misappropriation” Defined. Civil Code section 3426.1(b)(2).
• Constructive Notice. Civil Code section 19.
• “The fact that [defendant]’s postings were not of the ‘entire secret,’ and included
only portions of courses, does not mean that [defendant]’s disclosures are not
misappropriations. While previous partial disclosures arguably made public only
those parts disclosed, [defendant]’s partial disclosures of non-public portions of
the secrets may themselves be actionable because they constitute ‘disclosure . . .
without . . . consent by a person who . . . knew or had reason to know that his
. . . knowledge of the trade secret was . . . [either] derived from or through a
person who had utilized improper means to acquire it [or] acquired under
circumstances giving rise to a duty to maintain its secrecy or limit its use.’ ”
(Religious Tech. Ctr. v. Netcom On-Line Commun. Servs. (N.D. Cal. 1995) 923
F.Supp. 1231, 1257, fn. 31.)
• “Under the UTSA, simple disclosure or use may suffice to create liability. It is
no longer necessary, if it ever was, to prove that the purpose to which the
acquired information is put is outweighed by the interests of the trade secret
holder or that use of a trade secret cannot be prohibited if it is infeasible to do
so.” (Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1527 [66 Cal.Rptr.2d
731].)
• “[N]othing in the UTSA requires that the defendant gain any advantage from the
disclosure; it is sufficient to show ‘use’ by disclosure of a trade secret with
actual or constructive knowledge that the secret was acquired under
circumstances giving rise to a duty to maintain its secrecy.” (Religious Tech. Ctr.,
supra, 923 F.Supp. at p. 1257, fn. 31.)
• “Liability under CUTSA is not dependent on the defendant’s ‘comprehension’ of
the trade secret but does require ‘knowledge’ of it.” (Silvaco Data Systems v.
Intel Corp. (2010) 184 Cal.App.4th 210, 229 [109 Cal.Rptr.3d 27].)
• “ ‘Knowledge,’ of course, is ‘[t]he fact or condition of knowing,’ . . . and in this
context, ‘[t]he fact of knowing a thing, state, etc. . . .’ (8 Oxford English Dict.,
supra, p. 517.) To ‘know’ a thing is to have information of that thing at one’s
command, in one’s possession, subject to study, disclosure, and exploitation. To
say that one ‘knows’ a fact is also to say that one possesses information of that
fact. Thus, although the Restatement Third of Unfair Competition does not
identify knowledge of the trade secret as an element of a trade secrets cause of
action, the accompanying comments make it clear that liability presupposes the
defendant’s ‘possession’ of misappropriated information.” (Silvaco,supra, 184
Cal.App.4th at pp. 225-226, original italics.)
• “The record contains no evidence that [defendant] ever possessed or had
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knowledge of any source code connected with either [software product]. So far
as the record shows, [defendant] never had access to that code, could not
disclose any part of it to anyone else, and had no way of using it to write or
improve code of its own. [Defendant] appears to have been in substantially the
same position as the customer in the pie shop who is accused of stealing the
secret recipe because he bought a pie with knowledge that a rival baker had
accused the seller of using the rival’s stolen recipe. The customer does not, by
buying or eating the pie, gain knowledge of the recipe used to make it.”
(Silvaco,supra, 184 Cal.App.4th at p. 226.)
• “When a competitor hires a former employee of plaintiff who is likely to
disclose trade secrets, ‘[i]t is a question of fact whether the competitor had
constructive notice of the plaintiff’s right in the secret.’ ” (Ralph Andrews
Productions, Inc. v. Paramount Pictures Corp. (1990) 222 Cal.App.3d 676,
682-683 [271 Cal.Rptr. 797], internal citation omitted.)
Secondary Sources
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.53[1][b] (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.103[4][c] (Matthew Bender)
Edelson & Kay, eds., Trade Secret Litigation and Protection in California (State Bar
of California 2009) Chs. 2, 6, 12
Gaab & Reese, California Practice Guide: Civil Procedure Before Trial - Claims &
Defenses, Ch. 10(II)-A 10:250 (The Rutter Group)
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