Procedural Posture

Plaintiff software company sued defendant, a developer and manufacturer of integrated circuits, alleging that defendant had misappropriated certain trade secrets used by plaintiff in its software products in violation of the California Uniform Trade Secrets Act (CUTSA), Civ. Code, § 3426 et seq. The Santa Clara County Superior Court, California, granted defendant's motion for summary judgment. Plaintiff appealed.

Overview: corporate lawsuit

Plaintiff claimed that defendant had used software acquired from plaintiff's competitor with knowledge that plaintiff had accused the competitor of incorporating source code, stolen from plaintiff, in its products. The court held that one did not, by executing machine-readable software, "use" the underlying source code, nor did one acquire the requisite knowledge of any trade secrets embodied in that code. Liability under CUTSA was not dependent on the defendant's comprehension of the trade secret but did require knowledge of it. So far as the record showed, defendant did not know, and had no way to get, the information constituting the trade secret. Its only conduct in the matter was to run the software it acquired from the competitor - software which, according to plaintiff, incorporated or contained its trade secrets. That did not constitute a "use" of plaintiff's source code under CUTSA. Plaintiff's non-CUTSA claims were all superseded by CUTSA, and none of them stated a cause of action independent of that act. Plaintiff lacked standing under the unfair competition law, as it offered no basis to suppose that it had alleged or could allege facts entitling it to restitution.

Outcome

The court affirmed the judgment.