Case Name: ASML US, Inc. v. XTAL, Inc.
Case No.: 16CV295051

I. Background

This action arises from a trade secret dispute between plaintiff ASML US, Inc. (“ASML”) and its competitor, defendant XTAL, Inc. (“Xtal”). As alleged in the Second Amended Complaint (“SAC”), ASML is one of the world’s leading designers and manufacturers of semiconductor chip processing equipment. (SAC, ¶ 2.) In 2007, ASML expanded its involvement in the semiconductor industry by acquiring Brion Technologies, Inc. (“Brion”) and all of its contracts with its employees. (Id. at ¶¶ 3-4.) Brion is the global leader in computational lithography and operates as a division of ASML. (Id. at ¶ 3.) Brion developed unique and proprietary techniques to perform computational lithography from which ASML derives hundreds of millions of dollars in revenue each year. (Ibid.)

In 2014, Xtal was founded by two former Brion employees. (Id. at ¶ 5.) Though ASML originally believed Xtal was not involved in computational lithography, Xtal’s current business includes computational lithography and unlawfully capitalizes on Brion’s innovations in the field. (Ibid.) Approximately one year after Xtal was formed, two high-level ASML employees – Hua-yu Liu (“Liu”) and Song Lan (“Lan”) (collectively the “Employees”) – left ASML’s Brion division to work for Xtal. (Id. at ¶ 6.) However, before they left employment with ASML and without its knowledge or consent, Xtal intentionally directed and encouraged the Employees to secretly work for it. (Id. at ¶ 7.) Among other things, Lan performed unauthorized technical work for Xtal, including conducting simulations, reviewing a website and providing comments on Xtal’s work with a particular tool. (Id. at 25.) As for Liu, she provided Xtal with unauthorized technical advice and used ASML’s confidential and proprietary technical and pricing information to develop a budget and pricing strategy for Xtal. (Ibid.) She did this to assist Xtal in its efforts to solicit and divert the business of ASML’s customers to itself. (Ibid.) In performing this unauthorized work for Xtal, the Employees violated their agreements to work exclusively for Brion and refrain from engaging in activities conflicting with their professional and fiduciary duties to it. (Ibid.)

As high-level employees of ASML, the Employees also had access to Brion’s secret, confidential information and made fiduciary and contractual commitments to maintain that information in strictest confidence. (Id. at ¶ 7.) Despite this fact, Xtal encouraged and induced the Employees to misappropriate valuable trade secrets from ASML by improperly acquiring, copying and taking such secrets with them after they left ASML to work for Xtal; disclosing the secrets; and using them on its behalf. (Id. at ¶ 8.) Among other things, shortly before they began employment with Xtal, the Employees copied data including trade secret information from their Brion computers to external storage devices. (Id. at ¶¶ 41-49.) They did not return this information to ASML as required by their employment agreements and have used it in the course of performing work for Xtal. (Id. at ¶¶ 34, 45, 50-51.)

As a result of Xtal and the Employees’ actions, Xtal has been unjustly enriched and ASML has suffered financial detriment. (Id. at ¶¶ 26, 54.)

The SAC asserts seven causes of action against Xtal for: (1) aiding and abetting breach of duty of undivided loyalty; (2) inducing breach of contract; (3) intentional interference with prospective economic relations; (4) violation of Penal Code section 502; (5) aiding and abetting violation of Penal Code section 502; (6) civil conspiracy; and (7) violation of the Uniform Trade Secrets Act.

Currently before the Court is Xtal’s demurrer to each cause of action, which ASML opposes.

II. Demurrer

Xtal demurs to each cause of action on the ground of failure to state facts sufficient to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).) With respect to the first through sixth causes of action, it argues they are preempted by the California Uniform Trade Secrets Act (“CUTSA”). It also asserts additional arguments relative to each individual cause of action. The Court will address the issue of preemption first and then discuss the contentions specific to each cause of action.

A. Preemption – First through Sixth Causes of Action

The CUTSA is codified in Civil Code section 3426 et seq. and provides for the civil recovery of actual loss or other injury caused by the misappropriation of trade secrets. The statutory scheme has been characterized as having a “comprehensive structure and breadth” that “suggests a legislative intent to preempt the common law.” (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 954, quoting AccuImage Diagnostics Corp. v. Terarecon, Inc. (N.D. Cal. 2003) 260 F.Supp.2d 941, 953.) As such, the Sixth District Court of Appeal has held that the CUTSA “preempts common law claims that are based on the same nucleus of facts as the misappropriation of trade secrets claim for relief.” (Id. at 958, internal citations and quotation marks omitted.) It does not, however, preempt claims that are “based on facts distinct from the facts that support the misappropriation claim.” (Angelica Textile Servs., Inc. v. Park (2013) 220 Cal.App.4th 495, 506; Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 236 (“Silvaco”).)

Here, the first through sixth causes of action are not preempted in full by the CUTSA because each of these claims is predicated, at least in part, on facts other than the misappropriation of trade secrets.

Under the CUTSA, “misappropriation” is defined as the improper acquisition and/or non-consensual disclosure or use of another’s trade secret. (Civ. Code, § 3426.1, subd. (b).)

Here, the first through third and sixth causes of action, while based in part on conduct apparently constituting the misappropriation of trade secrets, is also predicated on separate and distinct conduct. Specifically, in addition to alleging Xtal encouraged the Employees to use and disclose confidential information, the first and second causes of action also allege it encouraged and caused the Employees to breach their contracts or duties of loyalty by performing unauthorized work for it as an ASML competitor during their employment with ASML. (SAC, ¶¶ 57, 68.) The facts in support of this allegation relate to work the Employees did for Xtal while still employed with ASML, including the running of simulations and provision of technical or business advice. (See Id. at ¶ 26.) These facts are independent from those constituting the basis of the trade secret misappropriation claim, which comprise Xtal’s acquisition of ASML trade secrets through the Employees’ copying and transfer of ASML trade secret information and Xtal’s subsequent disclosure and use of such information. (See Id. at ¶¶ 41-53.) Similarly, the third and sixth causes of action are predicated on conduct beyond the misappropriation of trade secret information. In particular, the conduct forming the basis of ASML’s claims Xtal interfered and conspired to interfere with its economic relations with the Employees includes both facts relating to the trade secret misappropriation and facts related to the unauthorized work the Employees performed for Xtal in breach of their agreements with ASML. (See Id. at ¶¶ 74-75; 95-96.) The latter facts are separate and distinct from the nucleus of facts forming the basis of the misappropriation claim.

As for the fourth and fifth causes of action, predicated on a violation of Penal Code section 502, the conduct complained of is not limited to trade secret misappropriation. Though it is true ASML alleges facts relating to the trade secret misappropriation claim, i.e. the copying and use of its data, it also avers that Xtal “added, altered, damaged, and/or deleted data that resided or existed internal or external to an ASML computer, computer system, or computer network.” (Id. at ¶ 82.) This allegation does not rest squarely on the misappropriation of information but goes beyond it to the addition, alteration, damage or destruction of the misappropriated information. Furthermore, these causes of action are predicated on statutory violations and Xtal entirely fails to discuss whether the CUTSA preempts statutory claims such as one for violation of Penal Code section 502. It only argues that the CUTSA “preempts common law claims.” (Dem. at p. 2:26-28, emphasis added.) As such, its preemption argument relative to the statutory claims is unsubstantiated.

Thus, even assuming portions of each of these claims are preempted by the CUTSA, other portions would not be and the law is well-settled that a demurrer does not lie to a portion of a cause of action. (See PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682.) Accordingly, the demurrer to the first through sixth causes of action is not sustainable on the basis they are preempted by the CUTSA.

B. First Cause of Action

The first cause of action is for aiding and abetting the breach of undivided loyalty. ASML alleges Xtal encouraged the Employees to perform work for Xtal while still employed with it and to misuse and disclose its confidential information.

An essential element of aiding and abetting liability is that the defendant “knows the other’s conduct constitutes a breach of duty.” (Casey v. U.S. Bank Nat’l Ass’n (2005) 127 Cal.App.4th 1138, 1144 (“Casey”).)

Here, Xtal argues this claim fails because ASML does not allege an actual breach of the duty of undivided loyalty. It contends no breach has been stated because the work the Employees did for it while employed with ASML was “de minimus” and did not result in actual harm to ASML. (Dem. at p. 4:4-9.) In support, it cites Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400 for the proposition that de minimis work cannot constitute a transfer of loyalty to a competitor. Its reliance on this case is misplaced.

In Huong, the court analyzed the issue of whether a duty of loyalty could be imposed on a defendant who contractually agreed to act as an agent for a plaintiff. (Id. at 414.) It stated in dicta that “an employee, while employed, owes undivided loyalty to his employer…[and cannot] transfer his loyalty to a competitor.” (Id. at 414.) The court did not address the issue of what conduct could constitute a transfer of loyalty much less discuss whether de minimus work could qualify as such conduct. As such, Huong does not support Xtal’s position. Moreover, the Court otherwise notes the Huong court stated that “[t]he duty of loyalty is breached, and the breach may give rise to a cause of action in the employer, when the employee takes action which is inimical to the best interests of the employer.” (Ibid., internal citations and quotation marks omitted.) This statement would tend to suggest that an allegation an employee simultaneously performed work for an employer and a competitor would adequately state a breach of the duty of loyalty as such action is arguably “inimical to the best interests of the employer.” (See Ibid.)

Next, Xtal contends no cause of action has been stated because ASML provides no factual allegations in support of its claim it sustained damages as a result of Xtal’s actions. This argument is well-taken.

To sufficiently allege a claim based on aiding and abetting liability, a plaintiff must plead damages resulting from a defendant’s conduct. (Nasrawi v. Buck Consultants LLC (2014) 231 Cal.App.4th 328, 343.) “Allegations of damages without allegations of fact to support them are but conclusions of law, which are not admitted by demurrer.” (Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1509 (“Shopoff”); Zumbrun v. Univ. of S. California (1972) 25 Cal.App.3d 1, 12; Baldwin v. Marina City Properties, Inc. (1978) 79 Cal. App. 3d 393, 409.)

Here, ASML generally asserts Xtal’s conduct caused it to “suffer damages in an amount in excess of $25,000” but does not otherwise allege facts demonstrating how the unauthorized work performed by the Employees resulted in these damages. (SAC, ¶ 60.)

As such, the demurrer to the first cause of action on the ground of failure to state sufficient facts is SUSTAINED with 10 days’ leave to amend.

C. Second Cause of Action

The second cause of action is for inducing breach of contract. ASML alleges Xtal induced the Employees, who had entered into binding contracts with it, to breach the agreements by performing work for a competitor and refusing to return company property after their termination.

Xtal argues no claim has been stated because ASML provides no factual allegations in support of its averment it sustained damages as a result.

In opposition, ASML contends it is not required to plead damages but only harm, citing CACI No. 2200, which lists the elements of a claim for inducing breach of contract. ASML points out that CACI No. 2200 states that harm must be alleged and further asserts that “[h]arm and damages are distinct legal concepts.” (Opp. at p. 11:10.) It provides no legal authority in support of this proposition. As such, its argument is unsubstantiated. (See, e.g., Kyne v. Eustice (1963) 215 Cal.App.2d 627, 635 [bald assertions of law made without citation to supporting legal authority will be disregarded].) Moreover, even if ASML was correct that only harm needs to be alleged, the paragraphs it points to as averments of harm do not address the issue of harm. It references paragraphs 64, 65, 68 and 69 of the SAC but these paragraphs merely consist of allegations that the consideration for the Employees’ agreements were adequate, the terms of the agreement were reasonable, ASML performed all of its obligations under the agreement, Xtal’s misconduct caused the Employees to breach their agreements and duties of loyalty, and ASML suffered damages. Aside from paragraph 69 relating to its allegation of damages, no facts regarding harm are alleged in the cited paragraphs.

Moreover, with respect to paragraph 69, it is nearly identical to and therefore suffers from the same deficiency as the damages allegation relative to the first cause of action. Specifically, paragraph 69 states: “As a direct and proximate result of Xtal’s misconduct, ASML has suffered and will suffer damages in an amount in excess of $25,000 that cannot yet be ascertained fully.” (SAC, ¶ 69.) However, it provides no facts in support of its claim Xtal’s conduct in inducing the Employees to perform work for a competitor resulted in damages to it. As such, its averment of damages is conclusory and insufficient. (See Shopoff, supra, 167 Cal.App.4th at 1509.)

The demurrer to the second cause of action on the ground of failure to state sufficient facts is therefore SUSTAINED with 10 days’ leave to amend.

D. Third Cause of Action

The third cause of action is for intentional interference with prospective economic relations. ASML alleges it was in economic relationships with the Employees, Xtal knew of these relationships and yet disrupted them by aiding and abetting the Employees in breaching their duties of loyalty and employment agreements.

Xtal first contends no claim has been stated because ASML fails to allege an expected economic benefit from its relations with the Employees. ASML does not respond to this argument.

An essential element of a claim for intentional interference with prospective economic advantage is an “economic relationship…that carries a probability of future economic benefit to the plaintiff.” (Stevenson Real Estate Servs., Inc. v. CB Richard Ellis Real Estate Servs., Inc. (2006) 138 Cal.App.4th 1215, 1220 (“Stevenson”); Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153–1154, 1164–1165 (“Korea”).) The probability of future economic benefit is a threshold requirement and, in determining if such benefit has been alleged, “the cases generally agree that it must be reasonably probable the prospective economic advantage would have been realized but for defendant’s interference.” (Youst v. Longo (1987) 43 Cal. 3d 64, 71.)

Here, Xtal is correct that ASML insufficiently pleads it expected to receive a prospective economic benefit from the Employees. Though ASML generally alleges its relationship with the Employees “would have or substantially likely would have resulted in economic benefit to [it],” the pleading does not demonstrate some anticipated economic benefit that would have been realized but for Xtal’s interference. (See SAC, ¶ 72.) In fact, as pointed out by Xtal, ASML alleges facts that contradict this averment. Among other things, it clearly states that at the time of Xtal’s interference, the Employees had already accepted employment with Xtal. (See SAC, ¶¶ 7, 25, 41-49.) As such, it is unclear what prospective benefit ASML was reasonably expecting to gain from its relations with the Employees. Its pleading of this element is therefore deficient. (See Wilson v. Loew’s Inc. (1956) 142 Cal.App.2d 183, 190, emphasis added [“The general rule is that before recovery can be had for interference with and loss of a future or prospective contract or business relationship, it must appear that such contract or relationship would otherwise have been entered into.”]; Campbell v. Rayburn (1954) 129 Cal.App.2d 232, 234 [same].)

Next, Xtal argues the cause of action fails because ASML does not allege any conduct by Xtal that was independently wrongful. In opposition, ASML contends it sufficiently alleges independently wrongful conduct in the form of Xtal’s aiding and abetting the Employees’ breach of their duties of loyalty and its inducement of their breaches of contract. This argument is not well-taken.

In addition to pleading the elements of a claim for intentional interference with prospective economic relations, a plaintiff must allege that “the defendant’s conduct was wrongful by some measure beyond the fact of the interference itself.” (Ibid., citing Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 392–393, internal citations and quotation marks omitted.) “An act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Korea, supra, 29 Cal.4th at 1159.) Examples of acts that have been held to be independently wrongful include violating established rules of professional conduct, inducing a party to enter into a contract with no intent of performing, and conditioning employment on an employee’s release of non-waivable statutory claims. (See, e.g., Stevenson, supra, 138 Cal.App.4th at 1224-25; Buxbom v. Smith (1944) 23 Cal.2d 535, 547-548; Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 950.)

Here, ASML insists Xtal’s encouragement of the Employees’ breaches of contract and duties of loyalty were independently wrongful. However, it cites no legal authority in support of this proposition. As such, ASML’s position is unsubstantiated. (See Cal. Rules of Court, rule 3.1113(b) [supporting memorandum must include a discussion of legal authority in support of the position advanced].)

As such, the demurrer to the third cause of action on the ground of failure to state sufficient facts is SUSTAINED with 10 days’ leave to amend.

E. Fourth Cause of Action

The fourth cause of action is for violations of Penal Code section 502 (“Section 502”). Section 502 prohibits unauthorized access to computers, computer systems and computer data. Among other things, Section 502 proscribes the unauthorized copying of data from computer systems; use of computers and computer systems to wrongfully obtain property or data; and altering, damaging or destroying of data on a computer. (Pen. Code, § 502, subd. (c).)

ASML alleges Xtal violated this statute when the Employees, acting as Xtal’s agents, used its data, software and computer systems to wrongfully obtain its property or data; made copies of data and documents stored on ASML’s computer; added, altered, damaged or deleted data that existed internally or externally to an ASML computer; and provided Xtal with access to its computer systems. The damages it allegedly suffered include the costs of conducting an investigation into Xtal’s conduct, conducting a damages assessment and taking corrective action to redress Xtal’s actions.

Xtal asserts no cause of action has been stated because ASML fails to assert damages that would give rise to standing to bring suit under Section 502. It asserts that damages in the nature of costs to conduct a damages assessment or take corrective action are insufficient but neither cites legal authority supporting this contention nor otherwise discusses the standing requirements under Section 502. Xtal’s argument is unsubstantiated. (See Cal. Rules of Court, rule 3.1113(b) [supporting memorandum must include a discussion of legal authority in support of the position advanced]; see also People v. Dougherty (1982) 138 Cal.App.3d 278, 282 [a point asserted without citation to authority requires no response from the court].)

Next, Xtal contends the allegation the Employees acted as Xtal’s agents is insufficient because it is a legal conclusion and ASML does not otherwise aver facts regarding Xtal’s dominion or control over the Employees. This argument is not well-taken.

Courts have held “[a]n allegation of agency is an allegation of ultimate fact and is, of itself, sufficient to avoid a demurrer.” (Garton v. Title Ins. & Tr. Co. (1980) 106 Cal.App.3d 365, 376; Skopp v. Weaver (1976) 16 Cal. 3d 432, 437.) Here, ASML repeatedly alleges the Employees “act[ed] as Xtal’s agents” in the various actions they took that were violative of Section 502. (See SAC, ¶¶ 79-84.) This averment of agency is not a legal conclusion but an allegation of ultimate fact. Xtal does not cite any authority in support of a contrary position and also does not legally substantiate its contention facts of dominion or control must be alleged to survive a pleading challenge. As such, the demurrer is not sustainable on the basis ASML insufficiently alleges agency.

Therefore, its demurrer to the fourth cause of action on the ground of failure to state sufficient facts is OVERRULED.

F. Fifth Cause of Action

The fifth cause of action is for aiding and abetting violations of Section 502. ASML alleges Xtal gave substantial assistance and encouragement to the Employees in their violations of the statute with the specific intent to facilitate their infractions.

Xtal first asserts ASML fails to plead facts sufficient to establish aiding and abetting liability because it does not aver it had any knowledge of improper interactions between the Employees and ASML’s computer networks or systems, citing Casey, supra, 127 Cal.App.4th 1138 in support. This argument is not well-taken.

In Casey, the court evaluated the sufficiency of a cause of action for aiding and abetting a breach of fiduciary duty and held the plaintiff was required to allege the defendant had “actual knowledge of the primary wrongdoing” constituting a breach of that duty. (Casey, supra, 127 Cal.App.4th at 1152.) In that case, the primary wrongdoing at issue was the misappropriation of funds. (Ibid.) As such, the court stated the plaintiff was required to aver the defendant bank knew the misappropriation was occurring to adequately allege aiding and abetting liability. (Ibid.) The plaintiff’s general allegations the defendant had knowledge of “wrongful or illegal conduct” were held to be insufficient. (Id. at 1152.)

Here, the primary wrongdoing at issue is the Employees’ unauthorized use of ASML’s systems to obtain its data, copying of its data and documents, and alteration and destruction of data on its computer systems, all in violation of Section 502. ASML alleges Xtal not only had knowledge of this conduct but encouraged it. For example, ASML avers that Lan accessed ASML’s computer network and software “with the knowledge of, and at the encouragement, of Xtal.” (SAC, ¶ 25.) It also alleges the Employees took data from ASML’s computer network and systems “with the inducement, knowledge of and encouragement of each other and Xtal.” (Id. at ¶ 51.) Under the principle discussed in Casey, these allegations are not deficient.

Next, Xtal contends ASML fails to allege facts sufficient to establish standing to bring a Section 502 claim. In support, it advances the same contention it set forth relative to the fourth cause of action. For the reason previously stated, its position is unsubstantiated.

Therefore, the demurrer to the fifth cause of action on the ground of failure to state sufficient facts is OVERRULED.

G. Sixth Cause of Action

The sixth cause of action is for civil conspiracy. ASML alleges that Liu interfered with its economic relations with Lan, Lan interfered with its economic relations with Liu, Xtal was aware Liu and Lan planned to interfere with each other’s economic relations with ASML, and Xtal conspired with them to do so.

Xtal contends no cause of action has been stated because civil conspiracy is not a recognized cause of action. This argument has merit.

“Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-11; Kidron v. Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1581.) “Standing alone, a conspiracy does no harm and engenders no tort liability. It must be activated by the commission of an actual tort.” (Ibid.)

In opposition, ASML contends that “[c]omplaints asserting civil conspiracy causes of action…routinely withstand attacks at the pleading stage.” (Opp. at p. 14:3-4.) However, the cases it cites in support do not stand for the proposition that civil conspiracy is an independent cause action. Rather, they confirm that the conspiracy liability is not actionable in the absence of an underlying tort. (See, e.g., Sprewell v. Golden State Warriors (9th Cir. 2001) 266 F.3d 979, 992.)

Next, Xtal asserts that, even assuming a claim for civil conspiracy can be alleged, no cause of action for conspiracy has been stated because the averments forming the basis of this claim are conclusory. This argument is well-taken.

A claim for conspiracy must be properly pleaded and conclusory allegations of conspiracy will not withstand demurrer. (See Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1173.) To allege a conspiracy, a plaintiff must plead “(1) the formation and operation of the conspiracy; (2) the wrongful act or acts done pursuant thereto; and (3) the damage resulting.” (Mosier v. Southern California Physicians Insurance Exchange (1998) 63 Cal.App.4th 1022, 1048.) A plaintiff must also aver a defendant had “actual knowledge that a tort [wa]s planned and concur[red] in the tortious scheme with knowledge of its unlawful purpose.” (Kidron v. Movie Acquisition Corp. (1995) 40 Cal. App. 4th 1571, 1582.)

Here, as observed by Xtal, ASML alleges for the first time in this claim that Lan and Liu interfered with each other’s economic relationship with ASML and Xtal participated in such interference. It provides no factual allegations regarding the nature of the interference and the SAC is otherwise silent regarding the issue of the Employees’ disruption of each other’s employment relationships. Such allegations are insufficient for purposes of stating a civil conspiracy claim. (See, e.g., Daniels, supra, 246 Cal.App.4th at 1173.)

In opposition, ASML does not address the issue of whether its allegations were conclusory but merely asserts its conspiracy claim is adequately pled because it otherwise alleges the underlying torts of aiding and abetting the Employees’ breaches of their duties of loyalty and interference with their economic relationships with ASML (i.e. its first and third causes of action). This argument is misplaced because it fails to respond to the issue raised on demurrer.

Accordingly, the demurrer to the sixth cause of action on the ground of failure to state sufficient facts is SUSTAINED with 10 days’ leave to amend.

H. Seventh Cause of Action

The seventh cause of action is for violations of the CUTSA. As stated earlier, the CUTSA prohibits the misappropriation (i.e. the improper acquisition and/or non-consensual disclosure or use) of another’s trade secret. (Civ. Code, § 3426.1, subd. (b).) ASML alleges Xtal contravened the CUTSA by misappropriating its trade secrets.

Xtal’s sole argument on demurrer is that the misappropriation allegations are conclusory and not factually substantiated. It lists each allegation relating to the trade secret misappropriation claim and asserts the averments are deficient because they lack specific details regarding a whole host of issues. It contends ASML is required to allege, among other things, facts relating to the “particular piece of information that it knew…was an ASML trade secret,” its knowledge it was using an ASML trade secret, how it encouraged or induced the Employees to misappropriate the trade secrets, and “how or why [it] knew of Liu’s misuse [of trade secret information].” (Id. at p. 14:25-15:15:17.) In essence, Xtal appears to suggest the existence of a heightened pleading requirement for stating a CUTSA claim. Because the mentioned facts are not alleged, it concludes ASML fails to demonstrate it engaged in “pointed conduct intended to secure dominion over the trade secrets.” (Dem. at p. 15:13-15, citing Silvaco, supra, 184 Cal.App.4th at 236.) Xtal’s contention is not well-taken.

First, it is unclear why Xtal cites Silvaco in support of its argument. In Silvaco, the issue presented was whether the plaintiff raised triable issues of fact regarding the defendant’s acquisition, disclosure or use of a trade secret. (184 Cal.App.4th at 236.) In this context, the court stated that, for purposes of a CUTSA claim, acquisition “implies pointed conduct intended to secure dominion over the thing.” (Ibid.) It did not address what facts must be pled to state a claim under the CUTSA. Xtal’s contention is devoid of reference to any legal authority discussing what facts must be pled to state a claim under the CUTSA much less authority stating such a claim must be pled with a heightened level of specificity. As such, its argument is unsubstantiated.

The demurrer to the seventh cause of action on the ground of failure to state sufficient facts is therefore OVERRULED.