To prevail on a claim for misappropriation of a trade secret and to recover damages, Plaintiff must prove:

1. the existence of a trade secret;
2. that the plaintiff made reasonable efforts to protect the secrecy of the trade secret;
3. defendant’s misappropriation of the trade secret;
4. the date on which the misappropriation began or that it began within the period of the statute of limitations;
5. damages proximately resulting from the misappropriation;
6. if justified by the facts, plaintiff’s entitlement to exemplary damages and to attorney’s fees; and
7. facts justifying the request for injunctive relief.

Diodes v. Franzen (1968) 260 Cal.App.2d 244, 250.

“‘A trade secret may consist of any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.’” Diodes, supra, 260 Cal.App.2d at 251 (citation omitted).

Misappropriation of Trade Secrets under Civil Code § 3426 and the Uniform Trade Secret Act

“It is critical to any (UTSA) cause of action—and any defense—that the information claimed to have been misappropriated be clearly identified. Accordingly, a California trade secrets plaintiff must, prior to commencing discovery, ‘identify the trade secret with reasonable particularity.’” Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 221, disapproved on another ground. “[U]ntil the content and nature of the claimed secret is ascertained, it will likely be impossible to intelligibly analyze the remaining” elements that constitute the cause of action. Id. at 220.

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 to ascertain at least the boundaries within which the secret lies.” Diodes, supra, 260 Cal.App.2d at 253; accord Brescia v. Angelin, 172 Cal.App.4th 133, 144 (noting that Code Civ. Proc., Sec. 2019.210 was intended to codify Diodes); Advanced Modular Sputtering, Inc. v. Super. Ct. (2005) 132 Cal.App.4th 826, 835; Altavion, Inc. v. Konica Minolta Sys. Lab. Inc. (2014) 226 Cal.App.4th 26, 43-44.

Preemption Under California Uniform Trade Secrets Act (CUTSA)

CUTSA preempts common law claims that are “based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.” K.C. Multimedia, Inc. v. Bank of America Tech. & Oper., Inc. (2009) 171 Cal.App.4th 939, 958-959. Common law claims for conversion, interference with contract, unjust enrichment, negligence and “unfair competition” under Business and Professions Code section 17200 have thus been held preempted where based on the same nucleus of facts as the misappropriation of trade secrets claim. Id. (finding claim that defendants “engaged in intentional acts designed to induce a breach or disruption of plaintiff’s contractual relationship” by “helping” and “encouraging” him to misappropriate trade secrets and then luring him to become an employee was premised upon trade secrets claim and derived from “the same nucleus of facts” as the trade secrets claim, and was thus preempted); Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 236 (disapproved on other grounds in Kwikset Corp. v. Super. Ct. (2011) 51 Cal.4th 310, 337).

However, the CUTSA does not preempt contract claims even if based on misappropriation of a trade secret. Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 506; Civ. Code Sec. 3426.7(b)(1). Nor does it preempt non-contract claims that, although related to a trade secret misappropriation, are independent and based on facts distinct from those that support the misappropriation claim. Angelica Textile Services, Inc. v. Park, supra, 220 Cal.App.4th at 506.

Plaintiff’s Relief

The prevailing plaintiff in an action for the misappropriation of trade secrets may recover for the “actual loss caused by misappropriation,” and may also recover “for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss.” Cal. Civ. Code Sec. 3426.3(a). “A defendant’s unjust enrichment is typically measured by the defendant’s profits flowing from the misappropriation,” not from those profits a defendant would have otherwise earned. Ajaxo Inc. v. E*Trade Fin. Corp. (2010) 187 Cal. App. 4th 1295, 1305; see also Restatement (Third) of Unfair Competition Sec. 45 cmt. f (1995) (“The traditional form of restitutionary relief in an action for the appropriation of a trade secret is an accounting of the defendant’s profits on sales attributable to the use of the trade secret”). Consequently, “[w]here the plaintiff’s loss does not correlate directly with the misappropriator’s benefit,” the calculation of unjust enrichment damages “becomes more complex,” and “[t]here is no standard formula to measure it.” Ajaxo Inc., 187 Cal. App. 4th at 1305. “The royalty that the plaintiff and defendant would have agreed to for the use of the trade secret made by the defendant may be one measure of the approximate portion of the defendant’s profits attributable to the use.” Restatement (Third) of Unfair Competition Sec. 45 cmt. f (1995).

As a matter of proof, “[t]he plaintiff has the burden of establishing the defendant’s sales,” whereas “the defendant has the burden of establishing any portion of the sales not attributable to the trade secret and any expenses to be deducted in determining net profits.” Id.