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Presence of EULA Fails to Convert Reverse Engineering Into an “Improper Means” Within Definition of California Trade Secret Law

In EULA, Improper Means, Reverse Engineering on February 21, 2012 at 3:13 pm
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In an unreported case from the Central District of California, Senior District Judge Ronald S.W. Lew held that plaintiff may not maintain a trade secrets claim for reverse engineering of software code, where plaintiff alleged that a trial version of the software was properly downloaded pursuant to an end user license agreement (“EULA”).  Aqua Connect, Inc. v. Code Rebel, LLC, et al., No. CV 11 5764 RSWL (MANx), 2012 WL 469737 (C.D. Cal.  Feb. 13, 2012).

Background

Plaintiff Aqua Connect, Inc. sued Defendants Code Rebel, LLC and others.  Defendants brought a motion to dismiss plaintiff’s claim for misappropriate of trade secrets.  Id.  Plaintiff alleged that defendants downloaded a trial version of Plaintiff’s Aqua Connect Terminal Server software (“ACTS”) and subsequently reverse engineered ACTS in violation of the End User License Agreement (“EULA”), which defendants had to agree to in order to use the trial version of ACTS.  Id. Plaintiff alleged that defendants misappropriated the trade secrets within ACTS and used that information to create and distribute a competing software product.  Id.


Discussion

Publicly Visible “Images” and “Features” of Gaming Applications Not Trade Secret, Even If Source Code Kept Confidential

In Public Availability on February 17, 2012 at 6:20 am
MyFarm

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In a slip opinion, District Judge Yvonne Gonzalez Rogers of the Northern District of California struck portions of trade secret allegations regarding certain gaming applications where those “images” and “features” were visible to the public. SocialApps, LLC v. Zynga, Inc., No. 4:11 CV 04910 YGR, 2012 WL 381216 (N.D. Cal. Feb. 6, 2012) (slip op.).

Background

Plaintiff SocialApps LLC (“SA”) sued Defendant Zynga Inc. (“Zynga”) for violation of the California Uniform Trade Secrets Act (“CUTSA”), copyright, and various other contract-based common law claims.  Id. Zynga moved to dismiss, inter alia, the CUTSA claim.  Id. Plaintiff alleged that it developed the first farming social network game to be accessed through Facebook.  Id.  The game was publicly released on Facebook in November 2008 as “myFarm.”  Id.  In May 2009, Zynga approached SA about acquiring the intellectual property rights and other information about myFarm, and the parties entered into a letter agreement on May 19, 2009.  Id.

Plaintiff alleges that Zynga violated the express terms of the agreement, as well as the implied understandings the parties had reached in connection with the agreement, by making use of the myFarm confidential source code, processes, and other information revealed pursuant to the letter agreement. Id. SA goes on to allege that Zynga thereafter used the confidential source code and other information it acquired from SA to create its own game, “FarmVille,” without SA’s permission and without compensating SA. Id.

Discussion

Northern District of California Holds That CUTSA Supersedes Common Law Claims Where Plaintiff Alleges a Confidentiality Agreement But Failed to Allege Defendant Was Bound by It

In Preemption on February 14, 2012 at 3:52 pm
English: Golden hamster Français: Hamster doré...

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District Judge Jeffrey S. White of the Northern District of California held that the California Uniform Trade Secret Act (“CUTSA”) superseded common law claims for misappropriation, conversion, unjust enrichment, and trespass to chattels.  Heller v. Cepia, L.L.C., No. C1101146JSW, 2012 WL 13572 (N.D. Cal. Jan. 4 2012) (slip op.).  Plaintiff alleged the existence of confidentiality agreements but not that defendants were bound by them.  Id.

Background

Plaintiff Heller was the sole proprietor of Floating Lightbulb Toys. Id. *1. He accused Cepia, A-Tech, The Bean and Ying Leung International Limited (“Ying Leung”) of misappropriating his trade secrets regarding his toy hamster project.  Id.  Cepia moved to dismiss Plaintiff’s claims for failure to state a claim and for sanctions under FRCP 11. Id. Plaintiff filed a counter-motion for sanctions against Cepia. Id. The Bean and A-Tech moved to dismiss based on lack of personal jurisdiction. Id.

Discussion

Cepia argued that Plaintiff’s common law claims were superseded by CUTSA. Id. Citing Silvaco Data Systems v. Intel Corp., 184 Cal.App.4th 210 (April 29, 2010), the court noted that “common law claims premised on the wrongful taking of information that does not qualify as a trade secret are also superseded, unless the plaintiff identifies some law which confers property rights protecting the information.”   Heller, 2012 WL 13572, at *1.

While Plaintiff argued that his confidential information that was not a trade secret is still property because he entered into agreements providing that any non-secret confidential and proprietary business information would remain his property. Id. The court disagreed, dismissing the common law claims:

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