A recent decision from the Northern District of California, Magic Leap, Inc. v. Bradski et. al., shows that employers must meet a high standard when filing a California Code of Civil Procedure Section 2019.210 disclosure statement under the California Uniform Trade Secrets Act (“CUTSA”). See California Civil Code § 3426 et seq. The disclosure statement, which does not have a counterpart in the federal Defend Trade Secrets Act, requires a plaintiff to “identify the trade secret with reasonable particularity” before it can conduct discovery of the defendants’ evidence. See California Code of Civil Procedure § 2019.210. The sufficiency of these disclosure statements is often hotly contested in litigations under CUTSA.
While there is no bright-line rule governing how much specificity should be in a Section 2019.210 disclosure statement, courts have explained that the trade secret must be described with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons who are skilled in the trade, and to permit the defendant and the court to ascertain the boundaries within which the secret lies. See Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226 Cal.App.4th 26, 43-44. The Northern District’s Magic Leap decision reinforces the importance of emphasizing a trade secret’s novelty in a Section 2019.210 disclosure statement under the CUTSA.
As described in its pleading, Magic Leap is a start-up that is developing a “head-mounted virtual retinal display, which superimposes 3D computer-generated imagery over real world objects.” It brought suit against two former high-level employees and their venture, alleging misappropriation of its trade secrets, among other claims. When Magic Leap submitted its latest Section 2019.210 disclosure, defendants Adrian Kaehler and Robotics Actual, Inc. moved to strike, contending that Magic Leap provided only vague, conceptual descriptions of its technology, and merely described well-known, well-studied, and obvious issues in highly technical fields. Magic Leap argued that, among other things, the defendants confused Section 2019.210’s disclosure requirement with litigating the ultimate merits of the case. It also argued that the defendants confused trade secrets with patents, which must be novel and inventive.
On June 9, 2017, a California federal magistrate judge granted the defendants’ motion to strike, ruling that Magic Leap’s disclosures “in totality fail to disclose the asserted trade secrets with ‘reasonable particularity.’” The judge allowed Magic Leap to amend its disclosures in order to identify its asserted trade secrets with greater specificity.
Although at this time the magistrate judge’s reasoning in Magic Leap is not public record, the ruling is another example of a court requiring a more exacting level of particularity from plaintiffs bringing a CUTSA claim. The ruling also emphasizes that, even if extensive measures are taken to protect information, the novelty of the underlying trade secret may affect a court’s analysis of the viability of a CUTSA claim. Tips for employers to prevent and protect against trade secret misappropriation in California were recently discussed in EBG’s Take 5 Newsletter.