Code of Civil Procedure § 2019.210 requires a plaintiff alleging misappropriation of trade secrets to identify the trade secrets at issue with reasonable particularity. As the Court explains, it is meant to address a problem intrinsic to trade secret litigation.
Like all intellectual property, trade secrets are intangible. But unlike the other common forms of IP—patents, copyrights, trademarks—the nature of a trade secret is almost never defined in any objective way prior to litigation. Which motivates plaintiffs bringing trade secrets claims to define their secrets expansively. As Justice Wiley puts it: “When you define the proposed boundaries of your own property, and when exclusion is valuable, and when litigation is intense, human nature prompts us to ask for more, not less, and to ask for it in a vague and all-encompassing way.”
So to push back on that temptation, § 2019.210 requires a plaintiff to describe its trade secret with enough 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 to ascertain at least the boundaries within which the secret lies.’” This is supposed to happen before discovery. That’s because “[e]xperience has shown that it is easy to allege theft of trade secrets with vagueness, then take discovery into the defendants’ files, and then cleverly specify whatever happens to be there as having been trade secrets stolen from plaintiff.”
In this case, the defendant, a medical practice, allegedly used trade secrets that it gained access to while conducting diligence as part of an unconsummated effort to purchase Plaintiff, also a medical practice. By the time summary judgment came around, the case turned on two alleged trade secrets. One of them dealt with certain codes used for medical billing. The other addressed Plaintiff’s evaluation of its doctors’ productivity using an industry standard scale. The trial court granted SJ on both. The Court of Appeal agrees as to the first, but not the second.
On the codes, Plaintiff’s problem was that it never disclosed them in its § 2019.210 specification. Instead, it referenced them in a single sentence in its summary judgment opposition, where it purported to seek leave to amend its disclosure. That, however, isn’t good enough. First, summary judgment opposition is too late. Were there a reason to amend, it needed to be offered before summary judgment briefing. As the Court puts it, “[w]hat the plaintiff cannot do is to wait until the defense has loosed its arrow at the bullseye, then move the target, and finally claim victory when the defense’s arrow misses the mark.” Second, a one sentence reference in an SJ opposition is not a proper manner to seek amendment. “One may not make an important motion by adding an indefinite sentence to the middle of a summary judgment opposition.” If it wanted to amend, it should have filed an appropriate motion.
One the second secret, however, the Court reverses. It is true that the productivity scale was based on a standardized system. But that doesn’t make each doctor’s productivity score a matter of public knowledge. That information has value in recruiting, and if reasonable means are taken to keep it secret, it could satisfy the definition of a trade secret. That’s particularly the case given that the secret purportedly used was firm-wide productivity data for doctors over two years. Although defendant makes a number of arguments otherwise, the Court makes short shrift in rejecting them.
Affirmed in part.
