CACI No. 4412. “Independent Economic Value” Explained

Judicial Council of California Civil Jury Instructions (2020 edition)

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4412.“Independent Economic Value” Explained
[Select short term to describe, e.g., Information] has independent economic
value if it gives the owner an actual or potential business advantage over
others who do not know the [e.g., information] and who could obtain
economic value from its disclosure or use.
In determining whether [e.g., information] had actual or potential
independent economic value because it was secret, you may consider the
following:
(a) The extent to which [name of plaintiff] obtained or could obtain
economic value from the [e.g., information] in keeping [it/them]
secret;
(b) The extent to which others could obtain economic value from the
[e.g., information] if [it were/they were] not secret;
(c) The amount of time, money, or labor that [name of plaintiff]
expended in developing the [e.g.,information];
(d) The amount of time, money, or labor that [would be/was] saved
by a competitor who used the [e.g.,information];
[(e) [Insert other applicable factors].]
The presence or absence of any one or more of these factors is not
necessarily determinative.
New April 2008
Directions for Use
Give this instruction to further explain element 2 of CACI No. 4402, “Trade
Secret” Defined. Inapplicable factors may be omitted.
Sources and Authority
• “Trade Secret” Defined. Civil Code section 3426.1(d).
• “[I]t is not true that evidence of ‘some’ helpfulness or usefulness, if credited,
would compel a finding of independent economic value. The Restatement defines
trade secret as business or technical information ‘that is sufficiently valuable and
secret to afford an actual or potential economic advantage over others.’ (Rest.3d,
Unfair Competition, § 39.) The advantage ‘need not be great,’ but must be ‘more
than trivial.’ (Rest.3d, Unfair Competition, § 39, com. e, p. 430.) Merely stating
that information was helpful or useful to another person in carrying out a
specific activity, or that information of that type may save someone time, does
not compel a factfinder to conclude that the particular information at issue was
‘sufficiently valuable . . . to afford an . . . economic advantage over others.’
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(Rest.3d, Unfair Competition, § 39.) The factfinder is entitled to expect evidence
from which it can form some solid sense of how useful the information is, e.g.,
how much time, money, or labor it would save, or at least that these savings
would be ‘more than trivial.’ (Rest.3d., Unfair Competition, § 39, com. e.)”
(Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547,
564-565 [66 Cal.Rptr.3d 1], original italics.)
• “[T]he focus of the inquiry regarding the independent economic value element is
‘on whether the information is generally known to or readily ascertainable by
business competitors or others to whom the information would have some
economic value. [Citations.] Information that is readily ascertainable by a
business competitor derives no independent value from not being generally
known. [Citation.]’ ” (Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc.
(2014) 226 Cal.App.4th 26, 62 [171 Cal.Rptr.3d 714].)
• “Moreover, it seems inherent in the requirement of value, as codified, that it is
relevant to ask to whom the information may be valuable. The statute does not
speak of value in the abstract, but of the value that is ‘[d]eriv[ed] . . . from not
being generally known to the public or to other persons who can obtain
economic value from its disclosure or use . . . .’ In other words, the core inquiry
is the value to the owner in keeping the information secret from persons who
could exploit it to the relative disadvantage of the original owner.” (Yield
Dynamics, Inc., supra, 154 Cal.App.4th at p. 568, original italics, internal
citation omitted.)
• “ ‘[C]ourts are reluctant to protect customer lists to the extent they embody
information which is “readily ascertainable” through public sources, such as
business directories. . . . . On the other hand, where the employer has expended
time and effort identifying customers with particular needs or characteristics,
courts will prohibit former employees from using this information to capture a
share of the market. Such lists are to be distinguished from mere identities and
locations of customers where anyone could easily identify the entities as
potential customers. . . . . As a general principle, the more difficult information
is to obtain, and the more time and resources expended by an employer in
gathering it, the more likely a court will find such information constitutes a trade
secret.’ ” (San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th
1528, 1539-1540 [67 Cal.Rptr.3d 54], internal citation 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 omitted.)
• “ ‘The value of information claimed as a trade secret may be established by
direct or circumstantial evidence. Direct evidence relating to the content of the
TRADE SECRETS CACI No. 4412
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secret and its impact on business operations is clearly relevant. Circumstantial
evidence of value is also relevant, including the amount of resources invested by
the plaintiff in the production of the information, the precautions taken by the
plaintiff to protect the secrecy of the information . . . , and the willingness of
others to pay for access to the information.’ ” (Altavion, Inc., supra, 226
Cal.App.4th at p. 62.)
Secondary Sources
1 Milgrim on Trade Secrets, Ch. 1, Definitional Aspects, § 1.01 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§§ 565.103-565.105 (Matthew Bender)
Edelson & Kay, eds., Trade Secret Litigation and Protection in California (State Bar
of California 2009) Ch. 1
4413-4419. Reserved for Future Use
CACI No. 4412 TRADE SECRETS
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