At Jones Day’s San Diego office in La Jolla, over 50 legal professionals from around San Diego gathered to learn about the ins-and-outs of trade secret practice in federal court. Panelists from both the bench and bar included the Honorable Cathy Ann Bencivengo, the Honorable Larry A. Burns, Ret., Qualcomm’s Byron Yafuso, and Jones Day’s Randy Kay. Through an interactive discussion moderated by Jones Day’s Hannah Ohara, FBA VP of Civil Legal Education, the panelists addressed a variety of engaging topics relating to trade secret law.
To frame the discussion, Kay explained that both federal and California state laws define trade secrets. Under both federal and California law, a trade secret is essentially any type of information for which (i) the owner has taken reasonable measure to keep the information secret and (ii) the information derives independent economic value from not being generally known or from not being readily ascertainable. Judge Burns explained that private civil causes of action exist under both CUTSA and DTSA for trade secret misappropriation. Heightening the stakes, Judge Burns also explained that certain statutes such as 18 U.S.C. § 1831 and 18 U.S.C. § 1832 criminalize behavior involved in trade secret misappropriation.
The panelists explained that to benefit from trade secret protections, plaintiffs must show that they took reasonable measures to protect their trade secrets. Yafuso gave some examples of steps companies can take which may be reasonable, such as (i) labeling trade secret material, (ii) limiting access within the company to the trade secret information, (iii) limiting access outside the company to the trade secret information by, for example, locking down USB ports on company computers, and (iv) having exit communications with employees who had access to the trade secret information. The panelists engaged in discussion about ways to define a trade secret before litigation and to get in front of issues before a complaint filing. That said, the panelists also recognized that mistakes happen even when a company works to protect their trade secrets. To address those mistakes, Kay provided examples of reasonable efforts companies can take to limit exposure of leaked trade secrets.
Putting things into perspective, the panelists discussed various contexts where trade secret issues might arise. Judge Bencivengo explained that trade secret issues come to her attention typically through preliminary injunctions or during the Motion to Dismiss stage of a case. Providing a company perspective, Yafuso explained how trade secret issues can arise in the employment context. As a mediator and arbitrator, Judge Burns discussed how trade secret issues often come to him given clauses requiring mediation or arbitration are commonly found in employment agreements. Kay highlighted that trade secret issues might also arise out of third party business relationships such as joint venture partnerships that necessitate sharing of information.
Finally, Judge Bencivengo walked through the plaintiff’s burden under both California and federal laws, focusing on the requirement to serve a “trade secret identification.” Recently, the Federal Judicial Center published a Trade Secret Management Judicial Guide that includes model jury instructions for trade secret cases. Judge Bencivengo suggested that plaintiffs can refer to such model jury instructions when drafting a complaint. The panelists discussed strategies for identifying trade secrets, including drafting trade secret descriptions with sufficient particularity, tapping expert resources if needed, and various written discovery strategies relating to same.