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Uniform Trade Secret Act – California Civil Code CC 3426

Posted by Raoul Severo | Nov 01, 2020 | 0 Comments

Trade secrets are confidential ideas, practices, processes, or products that a company tends to keep secret. A product of intensive research and development and countless trials and errors, trade secrets are kept hidden because it is usually what gives the company an advantage over its competitors.

In the United States, companies put a considerable amount of effort in concealing these intellectual properties from the public, i.e., KFC's eleven (11) herbs and spices and Coca Cola's secret formula. To protect these companies' rightful claim to their intellectual properties, the state of California adopted the national UTSA (Uniform Trade Secrets Act).

California Civil Code CC 3426

Civil code 3426, otherwise known as California's Uniform Trade Secrets Act (UTSA), is the statute that protects confidential corporate ideas commonly known as trade secrets. The code contains the following conditions:3

California Civil Code CC 3426 (1)

Acquiring trade secrets through "Improper means" and "Misappropriation."

Improper means include:

  • Includes theft, bribery, misrepresentation,
  • Breach or inducement of a breach of a duty to maintain secrecy, or
  • espionage through electronic or other means.
  • Reverse engineering or independent derivation alone shall not be considered improper means.
  • Misappropriation means the:
  • Improper acquisition,
  • Unconsented disclosure.

This section also defines what constitutes a "person" and "trade secrets."

Person means a natural person, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision or agency, or any other legal or commercial entity.

Trade secret means information, including a formula, pattern, compilation, program, device, method, technique, or process, that (1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

California Civil Code CC 3426 (2)

Actual or threatened misappropriation may be enjoined. Upon application to the court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation

California Civil Code CC 3426 (3)

A complainant may recover damages for the actual loss caused by misappropriation. A complainant also may recover for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss

California Civil Code CC 3426 (4)

If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney's fees and costs to the prevailing party. 

California Civil Code CC 3426 (5)

In an action under this title, a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings, holding in-camera hearings, sealing the records of the action, and ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval.

California Civil Code CC 3426 (6)

Except as otherwise expressly provided, this title does not supersede any statute relating to misappropriation of a trade secret, or any statute otherwise regulating trade secrets.

California Civil Code CC 3426 (7)

This title shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this title among states enacting it.

California Civil Code CC 3426 (8)

This title shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this title among states enacting it.

California Civil Code CC 3426 (9)

If any provision of this title or its application to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of the title which can be given effect without the invalid provision or application, and to this end the provisions of this title are severable.

California Civil Code CC 3426 (10)

This title does not apply to misappropriation occurring prior to January 1, 1985. If a continuing misappropriation otherwise covered by this title began before January 1, 1985, this title does not apply to the part of the misappropriation occurring before that date. This title does apply to the part of the misappropriation occurring on or after that date unless the appropriation was not a misappropriation under the law in effect before the operative date of this title.

Legal Support

Trade secrets are considered to be one of, if not the most important confidential pieces of information that a company can have. To know more about them and how to protect one's rightful intellectual property, it would be best to hire legal assistance from our top-notch California lawyers.

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