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California Code of Civil Procedure Section 2019.210, formerly Section 2019(d), provides that discovery relating to a trade secret case may not commence in civil litigation until the plaintiff identifies its trade secrets with "reasonable particularity." As a result, defendants in trade secret cases typically challenge the adequacy of a plaintiff's Section 2019.210 identification. However, to date, there has been very little case law discussing what constitutes a sufficient showing of "reasonable particularity" or the applicability of the Section 2019.210 stay of discovery to other causes of action raised in a complaint.
The California Court of Appeal has now clarified this issue. In a unanimous opinion handed down on September 13, 2005, the Court of Appeal for the Second District (Santa Barbara) in Advanced Modular Sputtering, Inc. v. Superior Court, (2005) __Cal.App.4th __, 05 C.D.O.S. 8294 declared that the Section 2019.210 stay of discovery was not limited in its application to a cause of action brought under the Uniform Trade Secrets Act ("UTSA")(Civ. Code ยงยง 3426-3426.11) for the misappropriation of trade secrets, but extends to any cause of action which relates to the trade secrets put in issue by the plaintiff. In the present case, the Court of Appeal ruled that the trial court should have stayed discovery on all ten causes of action, which included unfair business practices, declaratory relief, breach of contract, conversion, and interference with prospective economic advantage, because each cause of action incorporated and depended on the foundational allegation that the defendants misappropriated the plaintiff's trade secrets.
The Court further elaborated on what the "reasonable particularity" requirement mandated by Section 2019.210 means. The Court held that it does not mean that the party alleging misappropriation has to define every minute detail of its claimed trade secret at the outset of the litigation. Rather, the Court ruled that the Section 2019.210 "reasonable particularity" requirement means that the plaintiff must make some showing that is reasonable -- i.e. "fair, proper, just, and rational," -- and that the trade secret has been described with enough detail that will allow the trial court to control the scope of subsequent discovery, protect all parties' proprietary information, and allow them a fair opportunity to prepare and present their best case or defense at trial on the merits. In rendering its opinion, the Court concluded that the "reasonable particularity" requirement is purposefully vague to permit discovery referees and trial courts to achieve just results depending on the facts, law, and equities of the case. The Court concluded that whether a trade secret designation meets the "reasonable particularity" requirement will be determined on a case-by-case basis and depends on the nature of the trade secrets at issue. However, the Court noted that where a qualified expert is capable of understanding the designation, and of distinguishing the alleged trade secrets from information already known to persons in the field, as experts had done in the present case, the designation should, as a general rule, be considered adequate.
It is too early to tell what impact this opinion will have on how parties litigate trade secret misappropriation cases in the future. Although it may appear at first glance that the Court's ruling favors plaintiffs, the Court's holding, however, makes it clear that plaintiffs should take their designation obligations seriously and adequately prepare their cases prior to filing. On the defense side, the Court's interpretation of Section 2019.210 will in all likelihood make it more difficult for defendants to successfully challenge plaintiffs' designations made in good faith and with some level of effort.
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