Case Name: OptumSoft, Inc. v. Arista Networks, Inc.

Case No.: 1-14-CV-263257

Defendant and cross-complainant Arista Networks, Inc. (“Arista”) moves to compel further identification of trade secrets.

Code of Civil Procedure section 2019.210 provides that before commencing discovery relating to a trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity. Legislative history reveals that Code of Civil Procedure section 2019, subdivision (d) (now Code of Civil Procedure section 2019.210) was intended to codify the ruling in Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244. (See Computer Economics, Inc. v. Gartner Group, Inc. (1999) 50 F.Supp.2d 980, 984.)

The court in Diodes stated:

Before a defendant is compelled to respond to a complaint upon claimed misappropriation or misuse of a trade secret and to embark on discovery which may be both prolonged and expensive, the complainant should describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons who are skilled in the trade, and to permit the defendant to ascertain at least the boundaries within which the secret lies.

If the subject matter of the claimed trade secret is a manufacturing process, the plaintiff must not only identify the end product manufactured, but also supply sufficient data concerning the process, without revealing the details of it, to give both the court and the defendant reasonable notice of the issues which must be met at the time of trial and to provide reasonable guidance in ascertaining the scope of appropriate discovery.

(Diodes, Inc. v. Franzen, supra, 260 Cal.App.2d at p. 253.)

More recently, in Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826, 835-836, the court held that the “reasonable particularity” required by Code of Civil Procedure section 2019.210 does not mean the party alleging misappropriation has to define every minute detail of its claimed trade secret at the outset of the litigation and does not require a trial court to conduct a miniature trial on the merits of a misappropriation claim before discovery may commence. The court stated further:

Rather, it means that the plaintiff must make some showing that is reasonable, i.e., fair, proper, just and rational, under all of the circumstances to identify its alleged trade secret in a manner that will allow the trial court to control the scope of subsequent discovery, protect all parties’ proprietary information, and allow them a fair opportunity to prepare and present their best case or defense at a trial on the merits.

The degree of “particularity” that is “reasonable” will differ, depending on the alleged trade secrets at issue in each case. Where, as here, the alleged trade secrets consist of incremental variations on, or advances in the state of the art in a highly specialized technical field, a more exacting level of particularity may be required to distinguish the alleged trade secrets from matters already known to persons skilled in that field. Nothing in section 2019.210 precludes the trial court from considering relevant evidence, including expert witness declarations, on the adequacy of a designation to describe the alleged trade secrets and distinguish them from prior art. But 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 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.”

(Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th at p. 836, citations omitted.)

In the instant matter, plaintiff and cross-defendant OptumSoft, Inc. (“OptumSoft”) has identified two categories of trade secrets at issue: (1) source code for OptumSoft’s proprietary supporting run-time framework software and associated documentation for TACC, a software platform used for large-scale cloud computing; and (2) detailed information and descriptions regarding OptumSoft’s proprietary Application Programmer Interfaces (“API”) for TACC, which provide the functionality of the TACC software to other programming languages.

Arista argues that OptumSoft’s trade secret identification is insufficient as to the first category of trade secrets because: (1) OptumSoft includes “broad, ‘catch-all’ language” in connection with the disclosure as a tactic to preserve an unrestricted, unilateral right to subsequently amend its trade secret statement; (2) although OptumSoft states its belief that Arista improperly disclosed at least 13 specific source code files, OptumSoft does not specify which components of those files it is claiming as trade secrets; (3) OptumSoft includes no information in its disclosure describing how any of the purportedly misappropriated source code files are “novel” and “distinguishable from matters already known to persons skilled in that field”; and (4) OptumSoft’s disclosure lacks the required clarity. Arista argues that OptumSoft’s trade secret identification is insufficient as to the second category of trade secrets because: (1) OptumSoft includes “broad, ‘catch-all’ language” in connection with the disclosure as a tactic to preserve an unrestricted, unilateral right to subsequently amend its trade secret statement; (2) although OptumSoft states its belief that Arista improperly allowed users to access at least 26 specific APIs, OptumSoft does not specify which components of those APIs it is claiming as trade secrets; (3) OptumSoft includes no information in its disclosure describing how any of the purportedly misappropriated APIs files are “novel” and “distinguishable from matters already known to persons skilled in that field”; and (4) OptumSoft’s disclosure lacks the required clarity.

In opposing the motion, OptumSoft asserts that Arista has possessed OptumSoft’s trade secrets for over ten years and continues to possess them today. OptumSoft appears to make this point to show that less specificity is required in the trade secret identification because Arista has the trade secrets and therefore will understand OptumSoft’s trade secret identification with less explanation. OptumSoft states that identifying specific files, which consist of “only” approximately 8,000 lines of code will permit Arista to ascertain the boundaries of the claimed trade secrets. One problem with this contention, even if it were true, is that the trade secret identification is not meant only to identify the claimed trade secrets for the opposing party, but also for the court. (See Diodes, Inc. v. Franzen, supra, 260 Cal.App.2d at p. 253.) Consequently, simply identifying certain files is not necessarily sufficient.

With regard to Arista’s argument that OptumSoft includes “broad, ‘catch-all’ language” in connection with the disclosure, Arista takes issue with the fact that OptumSoft states in the disclosure that Arista improperly disclosed “at least” certain source code files and APIs and that OptumSoft “reserves the right to identify additional trade secrets that Arista has misappropriated.” Arista relies on the case of Perlan Therapeutics, Inc. v. Superior Court (2009) 178 Cal. App. 4th 1333 in making its argument. OptumSoft argues that Arista’s reliance on Perlan is misplaced because the plaintiff’s trade secret statement in Perlan contained pages of surplusage and referenced hundreds of pages of documents. While this is true, the Perlan court stated that a party is “not entitled to include broad, “catch-all” language as a tactic to preserve an unrestricted, unilateral right to subsequently amend its trade secret statement.” (Id. at p. 1350.) In other words, Arista cannot include language in the identification that leaves open the possibility that it may not have identified all of the trade secrets at issue. Of course, if Arista, through discovery, “later uncovers information suggesting defendants misappropriated additional trade secrets, it may have good cause to amend its trade secret statement under appropriate circumstances.” (Ibid.)

Arista’s second argument is that OptumSoft identified certain source code files and APIs, but did not specify which components of those files and APIs are claimed as trade secrets. This argument is well taken. Optumsoft identifies a number of files and APIs, but does not state whether the entirety of these files and APIs are claimed as trade secrets, or only certain portions of them. This must be clarified in the trade secret identification and not left for Arista to inspect on its own “to readily ascertain the boundaries of OptumSoft’s claimed trade secrets.” (Plaintiff and Cross-Defendant OptumSoft, Inc.’s Opposition to Defendant and Cross-Complainant Arista Networks, Inc.’s Motion to Compel Further Identification of Trade Secrets, p. 4:8.)

Arista’s third argument is that OptumSoft includes no information in its disclosure describing how any of the purportedly misappropriated source code files and APIs files are “novel” and “distinguishable from matters already known to persons skilled in that field.” OptumSoft relies on the case of Brescia v. Angelin (2009) 172 Cal. App. 4th 133 for the proposition that there is no requirement in all cases, divorced from the particularity argument itself, of explaining how a trade secret differs from prior art. Indeed, the Brescia court stated that, “absent a showing that the identification of the alleged trade secret alone lacks the particularity necessary to serve the statutory purposes, the trade secret claimant need not specify how the secret or its elements are distinguishable from matters known to skilled persons in the field.” (Brescia v. Angelin, supra, 172 Cal. App. 4th at p. 149.) Nevertheless, it is not sufficient “to simply list the purported trade secrets and label them ‘reasonably particular’ and ‘novel.’” (Perlan Therapeutics, Inc. v. Superior Court, supra, 178 Cal. App. 4th at p. 1351.) When dealing with “a highly specialized technical field” . . . “a more exacting level of particularity may be required to distinguish the alleged trade secrets from matters already known to persons skilled in that field.” (Ibid., quoting Advanced Modular Sputtering, Inc. v. Superior Court, supra, 132 Cal.App.4th at p. 836.) In the instant lawsuit, the claimed trade secrets are source code files and APIs. It is not apparent from the trade secret disclosure how these files are different from “matters already known to persons skilled in [the] field.”

In sum, while OptumSoft is only required to describe the trade secrets with “reasonable particularity,” the current trade secret identification does not reach that level of specificity. Accordingly, Arista’s motion is GRANTED.