Lower Bar for Trade Secret Claims in Orange County

Code Civ. Proc. § 2019.210, provides that, before commencing discovery in a trade secret misappropriation case, Plaintiff “shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code.” The trade secret must be described “with sufficient particularity to separate it from matters of general knowledge in the trade … and to permit the defendant to ascertain at least the boundaries within which the secret lies.” (Brescia v. Angelin (2009) 172 Cal.App.4th 133, 144.) Any reasonable doubt regarding adequacy of the description is resolved in favor of allowing discovery to proceed. (Id. at 145.)

In practice, Section 2019.210 is often a substantial barrier to trade secret cases. For instance, if you know a company likely stole your design for a new machine because they were in a joint venture with you and then two months later came out with a product that competes with your machine that took years to develop, you still can't sue in California because you can't say with particularity what parts of your design were both a) used by the defendant and b) trade secret. Because of this, I have often recommended suing in other states if possible. For instance, in Washington State, you can use discovery to find out both a) and b) above after you file your suit.

But it looks like, at least in Orange County, the requirements are not so strict after all. Yesterday, May 24, in┬áBend-Tek, Inc. Vs. Precision Aeroform, Inc., the OC Superior Court found the plaintiff's complaint sufficiently detailed to satisfy Section 2019.210 when it alleged that the defendants misappropriated trade secrets consisting of "a) customer lists and information concerning customers, b) Plaintiff’s product purchasing, pricing practices and strategies, c) information concerning customer creditworthiness, payment histories, and credit terms, and d) information concerning the identities, skills, work experience, performance and compensation of Plaintiff’s employees." The Court said this language "describes the trade secrets with sufficient particularity to separate them from matters of general knowledge in the trade."

The problem (or advantage, depending on your perspective) with this ruling is that although the alleged trade secrets are detailed enough to show they are not matters of general knowledge, there is no allegation sufficient to show they are actually secrets. Certainly, credit history is accessible by any company seeking to extend credit. Employee work histories, skills and education can probably be found on Indeed.com, the identities of employees is shared with the IRS and other public agencies. "Information concerning customers" is just so vague it cannot possibly meet the requirements of the statute. A trade secret has to be information that a company keeps secret. It's hard to see how the allegations in this case meet that mark except possibly for customer lists, which numerous courts have held can be trade secrets but only if the plaintiff meets a high bar to show they are unique to that company and kept secret. But maybe that bar is a tad bid lower in Orange County :)

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