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Quote of the Day - Business? It's quite simple. It's other people's money. - Alexander Dumas
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California Discovery Allows A Little 'Play In The Joints'

While Katrina cleanup continues, Ophelia threatens, and Roberts tap-dances the Senate Judiciary Committee, the rest of us continue to practice law and the Courts roll out decisions like clockwork. 

Every once in awhile, you even might find one of those rulings helpful.  Take, for example, the dispute between Sputtered Films, Incorporated (Tegal is the successor corporation) and Advanced Modular Sputtering, Inc.  No, it has nothing to do with Hollywood, but everything to do with applying a thin film to silicon wafers used in fabricating printed circuits.  Yes, I know, boring, compared to films.  The decision, though, gives much-needed insight to discovery rules and trade secret issues.

This ruling represents the first time California courts have buckled down and addressed the issue of conducting discovery of another company's trade secrets.  Discovery statute California Code of Civil Procedure section 2019(d) (scroll down) requires that you first identify your trade secret with reasonable particularity before you can start to conduct discovery of how the other party might have violated your trade secret.  Before today, we had no guidance on this point.  There has been some concern recently expressed about what disclosure that really meant. 

Think about it.  As a company, you sue a former employee who's out there stealing your customers and applying what she learned at your company to take your business away, and you have to reveal your trade secrets in order to find out what your former employee is doing?  Did the legislature get that backwards when they drafted that statute?  Nope, that's the way it's written, and the way the courts have to interpret it.  Here, our battling parties were in just that situation.  Sputtered Films alleged that two of its former employees used trade secrets they learned while employed to steal customers, and start their own company. 

Sputtered Films tried several times to describe its eight trade secrets to the trial court in order to begin the discovery process to learn what their former employees were up to.  They couldn't convince the trial court that they had a trade secret, and took the denial to higher courts. 

The Appellate Court was none too pleased with the actions taken by the parties in the discovery squabble.  Indeed, they first declined the writ (not surprising because practically all discovery writs are summarily denied).  The parties, however, would not let the dispute rest, and took their case to the Supreme Court, who ordered the Appellate Court to give a listen.  Listen they did, and they were none too happy with what they heard about what the parties had been squabbling about so far.

Leave it to dueling experts - and lawyers - to get the court up in arms:  "As a result, the parties have created a voluminous record, expended thousands of dollars on attorneys fees and expert witnesses, and consumed considerable judicial resources without ever even beginning to conduct discovery," the Court said in its opinion.  There's another way to read that statement, but I'm sure you can figure it out. 

Even so, the Court's guidance is not particularly detailed:  "it remains true, that at this very preliminary stage of the litigation, the proponent of the alleged trade secret is not required, on pain of dismissal, to describe it with the greatest degree of particularity possible, or to reach such an exacting level of specificity that even its opponents are forced to agree that the designation is adequate.  We question whether any degree of specificity would satisfy that lofty standard.  What is required is not absolute precision, but 'reasonable particularity.' "

You know that standard, like hand grenades and horseshoes:  "close enough counts." 

P.S.  Today's headline is from Locke v. Davey, an opinion written by former Chief Justice William Rehnquist, and cited in the Sputtered Films case.

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Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Tuesday, September 13, 2005 at 23:10 Comments Closed (0) |
 
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