Unlocking California’s Trade Secret Identification Requirement Under California Code of Civil Procedure Sec. 2019.210 – Part 1

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California trade secret law (California Code of Civil Procedure § 2019.210) presents a unique framework among state and federal trade secret laws that requires plaintiffs to identify the misappropriated trade secrets before discovery commences.  This requirement curbs meritless trade secret claims, helps define relevant discovery, and provides notice to defendants so they may fashion defenses.  Understanding this requirement is critical for litigants.  This post explains the genesis and purpose of the trade secret identification requirement.  Subsequent posts will explore the boundaries of what is required under California law to get over the hurdle and start discovery, as well as share some practical tips for litigants pursuing trade secret claims.

Q1. Where did California’s trade secret identification requirement originate?

California’s trade secret requirement—now codified in California Code of Civil Procedure § 2019.210—originated from an opinion issued by the Second District of the California Court of Appeals in Diodes v. Franzen (1968) 260 Cal. App. 2d 244, 253.  That case acknowledged an interesting aspect of trade secret cases: no document exists at the outset of a case that defines the alleged misappropriated intellectual property, leaving the scope of the trade secret undefined. As a remedy, the Court of Appeal in Diodes held that before a response is required or discovery commences, the trade secret must be defined:

“Before a defendant is compelled to respond to a complaint based upon claimed misappropriation or misuse of a trade secret and to embark on discovery which may be both prolonged and expensive, the complainant should describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons skilled in the trade, and to permit the defendant to ascertain at least the boundaries within which the secret lies.”  Id.

In 1984, the California legislature codified the requirements from Diodes when it enacted the California Uniform Trade Secrets Act.  The outcome was California Code of Civil Procedure § 2019.210, which requires plaintiffs to identify trade secrets with “reasonable particularity” before discovery commences: “In any action alleging the misappropriation of a trade secret under the Uniform Trade Secrets Act … before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity . . . .”  Thus, at the outset of the case, trade secret plaintiffs must provide to defendants a separate statement, similar to a pleading, that identifies the trade secrets at issue in the litigation.  Such statements are generally provided under protective order, and the sufficiency of the identification is often litigated extensively.  For example, trade secret defendants may serially challenge the sufficiency of the statement, and the parties may engage in an iterative process of challenges and amendments before discovery commences.

Q2. Why does California have a trade secret identification requirement?

California courts have recognized four main policies served by the trade secret identification requirement: “First, it promotes well-investigated claims and dissuades the filing of meritless trade secret complaints.  Second, it prevents plaintiffs from using the discovery process as a means to obtain the defendant’s trade secrets.  Third, the rule assists the court in framing the appropriate scope of discovery and in determining whether plaintiff’s discovery requests fall within that scope.  Fourth, it enables defendants to form complete and well-reasoned defenses, ensuring that they need not wait until the eve of trial to effectively defend against charges of trade secret misappropriation.”  Perlan Therapeutics v. Superior Court (2009) 178 Cal. App. 4th 1333, 1343 (internal citations omitted).  Plaintiffs and defendants may use these principles to argue the sufficiency of an identification.  For example, a defendant may argue that an identification lacks specificity which will preclude the court from properly framing discovery.  In addition, the defendant may argue that it cannot prepare its defenses because it cannot ascertain from the identification what plaintiff alleges was taken.

Because trade secret plaintiffs in California courts will face this obstacle at the outset, it is important that trade secret plaintiffs perform adequate due diligence before filing suit to ensure the case can get off the ground.  Trade secret plaintiffs may begin preparing the trade secret identification before filing suit.

On the other hand, defendants need to understand what was alleged to have been taken, so they need to be diligent and hold the plaintiff’s feet to the fire to force a clear articulation of what was misappropriated.  If discovery commences before the trade secret is clearly defined, plaintiffs will use defendant’s confidential documents to define the trade secret.

In our next post, we will discuss the boundaries of the trade secret identification requirement under California law.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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