Advanced Modular Sputtering, Inc. v. Superior Court

In Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826, plaintiff Sputtered Films, Inc., sued its former employees and the firm those employees established, Advanced Modular Sputtering, Inc. (AMS). (Advanced Modular, supra, 132 Cal.App.4th at pp. 830-831.) Sputtered Films alleged AMS became its primary competitor in the field of "sputtering" equipment--machines that deposit "a thin and even film of material onto a silicon wafer or other substrate"--by misappropriating Sputtered Films's trade secrets. (Id. at p. 830.) The trial court rejected three separate attempts by Sputtered Films to identify its trade secrets pursuant to section 2019.210, finding each attempt lacked meaningful particularity. (Advanced Modular, at pp. 831-832.) Sputtered Films filed a writ petition challenging the trial court's rejection of its third trade secret identification statement. (Id. at p. 832.) Although the Advanced Modular opinion provided a "purposefully vague" description of the claimed trade secrets to "avoid disclosure of the parties' confidential information," several features of the disclosure can be gleaned. (Advanced Modular, supra, 132 Cal.App.4th at p. 831, fn. 2.) First, there were eight alleged trade secrets advanced by Sputtered Films. (Id. at p. 832.) Second, for six of the eight trade secrets, Sputtered Films relied on a claim that "the combination of ... features" it had identified was "unique and secret." (Ibid.) Third, Sputtered Films did not produce a complete copy of its source code, which comprised one of its alleged trade secrets. (Ibid.) The discovery referee who considered the issue in the first instance "complained that the individual features of the trade secrets were not 'identified with adequate particularity to apply them meaningfully.'" (Ibid.) (2) While acknowledging the discretionary nature of discovery rulings, the appellate court determined the question before it was one of law, i.e., a de novo determination of the meaning of section 2019.210. (Advanced Modular, supra, 132 Cal.App.4th at p. 833.) The Advanced Modular court observed, "the letter and spirit of section 2019.210 require the plaintiff ... to identify or designate the trade secrets at issue with '"sufficient particularity"' to limit the permissible scope of discovery by distinguishing the trade secrets '"from matters of general knowledge in the trade or of special knowledge of those persons ... skilled in the trade."'" (Id. at p. 835.) "The trade secret designation mandated by section 2019.210 is not itself a pleading but it functions like one in a trade secret case because it limits the scope of discovery ... . Generally speaking, pleadings are to be liberally construed in favor of the pleader and doubts about the permissible scope of discovery are to be resolved in favor of disclosure." (Ibid.) Trade secret identification does not require "every minute detail" of the trade secret (Advanced Modular, supra, 132 Cal.App.4th at p. 835) or the "greatest degree of particularity possible" (id. at p. 836). Nor does section 2019.210 envision a "miniature trial on the merits of a misappropriation claim before discovery may commence." (Advanced Modular, at pp. 835-836.) However, where "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." (Id. at p. 836.) Applying its interpretation of the statute to the order before it, the Advanced Modular court concluded: "Here, Sputtered Films has identified eight alleged trade secrets, each with several discrete features that, in combination with one another, form the alleged trade secrets. It has described how it believes the combination of these features distinguish the alleged trade secrets from the prior art, or matters within the general knowledge of persons in the sputtering industry. AMS and its experts contend the alleged trade secrets are well known in the industry and that they have been described in a vague or overbroad manner. Sputtered Films's experts dispute both contentions. We have no doubt the experts will continue to disagree on these crucial questions. For our purposes, at this prediscovery stage of the proceedings, it is appropriate to recognize the existence of this credible dispute, but not necessarily to resolve it. Where credible experts declare that they are capable of understanding the designation and of distinguishing the alleged trade secrets from information already known to persons in the field, the designation should, as a general rule, be considered adequate to permit discovery to commence." (Advanced Modular, supra, 132 Cal.App.4th at p. 836.)