Stokes O'Brien

California Trade Secret Law Preempts Other Claims

As Bloomberg BNA’s reporting on the Oculus Rift lawsuit notes, California law limits the types of claims plaintiffs may bring in trade secret lawsuits.  Unlike in other lawsuits, where plaintiffs are basically allowed to throw the kitchen sink at a defendant, with regard to trade secret theft allegations, California plaintiffs are forced to narrow their lawsuits.  This basically means they are only permitted to bring a lawsuit for trade secret misappropriation and breach of contract.  California trade secret law preempts other claims.

Oculus Rift is a virtual reality headset for video games.  The company that initially began its development is suing the contractor it hired to the design the product.   The company alleges the contractor took the intellectual property, and then founded his own company to sell the same product.  In the Oculus Rift lawsuit, the court recently ruled that California trade secret law prevents the plaintiffs from bringing somewhat related claims, such as conversion (theft) of the information, constructive fraud (misrepresentation during a fiduciary relationship), and unfair competition.

This preemption is the result of California case law interpreting California’s uniform trade secret act.  The courts have said that, based on the statutory language, the act provides the exclusive civil remedy for conduct falling within its terms, so as to supersede other civil remedies “based upon misappropriation of a trade secret.”  The question then often becomes: what parts of the lawsuit are based on trade secret misappropriation?   Plaintiff need to be crafty (and expansive) when detailing the defendant’s alleged conduct.  And, anyone defending a trade secret lawsuit should try to dismiss all preempted claims immediately — this narrows the lawsuit, discovery, and should make the litigation a bit more manageable.

For more information on prosecuting or defending a San Diego trade secret case, call a trade secret lawyer in San Diego at 619.535.5151 or use the contact form here.