California Federal Court Finds CUTSA Preemption on Unfair Competition Claim in Uber Row

by Seyfarth Shaw LLP
Contact

[co-author:

Uber’s ongoing battle with Waymo in the Northern District of California federal court over technology used in self-driving cars provided another significant decision concerning the broad scope of trade secret preemption under California state law.

Waymo accused Levandowski (a former employee) of taking more than 14,000 company files before leaving Waymo and starting his own self-driving truck company (which Uber bought for $680 million). Waymo asserted several claims against Uber for misappropriation of trade secrets under the federal Defend Trade Secrets Act (“DTSA”) and the California Uniform Trade Secrets Act (“CUTSA”). In addition to the trade secret claims, Waymo asserted four claims for patent infringement and one claim for violation of section 17200 of California’s Business and Professions Code.

Waymo’s section 17200 claim, or Unfair Competition Law (“UCL”) claim was based on alleged theft of “confidential information,” which the court found to be vague and not sufficiently distinct or independent from Waymo’s trade secrets claim. Thus, Waymo v. Uber presents us with another California federal court decision in the mix where the court refused to permit a plaintiff to proceed on a UCL claim based on theft of “confidential information.”

In the Order granting Uber’s Motion to Dismiss the UCL claim, the court noted that “Under California law, CUTSA provides the exclusive civil remedy for conduct falling within its terms and supersedes other civil remedies based upon misappropriation of a trade secret… It therefore supersedes claims—including Section 17200 claims—based on the same nucleus of facts as trade secret misappropriation.” Order Granting Motion to Dismiss Unfair Competition Law Claim at 3, Waymo LLC v. Uber Techs., Inc., No. C 17-00939 WHA (N.D. Cal. Jun. 8, 2017) (citations omitted).

While the court ultimately dismissed Waymo’s UCL claim, the court was confronted with the “preemptive sweep” of Silvaco Data Sys. v. Intel Corp., 184 Cal.App.4th 210 (2010), disapproved on other grounds by Kwikset Corp. v. Super. Ct., 51 Cal.4th 310 (2011). In Silvaco, the court established that CUTSA not only supersedes claims based on trade secret information, but also supersedes claims based on alleged misappropriation of non-trade secret information, unless some other provision of positive law grants a property right in that information.

Waymo attempted to avoid Silvaco and escape CUTSA supersession by arguing for a definition of “property right” used in another case, but the court observed that Silvaco expressly rejected that argument because it was irrelevant to CUTSA. The court then clarified the scope for exemption of non-trade secret information claims to CUTSA supersession following Silvaco as applying in two circumstances: if the claims “(1) allege facts showing that the plaintiff’s property right in the information at issue stems from some provision of positive law on grounds qualitatively different from grounds upon which trade secrets are considered property, or (2) allege wrongdoing materially distinct from the wrongdoing alleged in a CUTSA claim.” Order at 5, Waymo LLC v. Uber Techs., Inc., No. C 17-00939 WHA (N.D. Cal. Jun. 8, 2017) (citations omitted).

Following Silvaco was easier for the court here because Waymo’s UCL claim did not fall into one of the above circumstances and according to the court, instead was a “transparent attempt to evade the strictures of CUTSA,” which is barred by Silvaco. The court also pointed out that “neither the amended complaint nor Waymo’s opposition brief attempts to distinguish its trade secrets from non-trade secret ‘confidential information’… Rather, the court reasoned that Waymo accused defendants of blanket “misappropriation” of “confidential information,” apparently intending to use its Section 17200 claim as a fallback for any information that ultimately fails to qualify for trade secret protection as this litigation progresses. Order at 6, Waymo LLC v. Uber Techs., Inc., No. C 17–00939 WHA (N.D. Cal. Jun. 8, 2017).

For more information about CUTSA preemption, see our post on Seyfarth’s California Peculiarities Employment Blog.

Written by:

Seyfarth Shaw LLP
Contact
more
less

Seyfarth Shaw LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.