21 Jul 2017 Trade Secrets: How Unifying Acts May Preempt Unfair Competition Laws in California
A federal court in California recently handed down a decision and opinion illustrating when and how the California Uniform Trade Secrets Act (CUTSA) may preempt unfair competition laws in California. The case is between Uber, a modern tech giant, and Waymo, a subsidiary company of Google in the self-driving industry. Though the ruling closes the case on this preemption issue, it will continue for other unresolved issues.
The main issues of this case revolve around Anthony Levandowski, a former employee of Waymo, and the technology he allegedly took with him to start a new company. The case began in 2015 when Levandowski used his position in Waymo to download over nine gigabytes of data from his company computer. Levandowski later left Waymo to begin his own self-driving company named Otto. Otto was quickly purchased by Uber for, reportedly, over $600 million.
The lawsuit came about after Waymo accused Uber of using its protected technology and intellectual property acquired through Levandowski’s Otto. Waymo framed their claims under CUTSA and under Section 17200 of California’s Business and Professions Code. Section 17200 makes all “unfair competition,” including “any unlawful, unfair or fraudulent business act or practice” illegal.
Uber responded to the Waymo claim by asserting that CUTSA preempts any misappropriation of trade secrets claim made under Section 17200. Because Waymo framed both the Section 17200 claim and the CUTSA claim around the misappropriation of their trade secrets, Uber argued that their entire claim should have fallen under the exclusive remedy provided by CUTSA, and not Section 17200. The federal court agreed with Uber’s preemption claim.
The court opinion states that anytime a complaint is based on a nucleus of facts alleging misappropriation of trade secrets, it must be pleaded under CUTSA. This is exactly what happened in this case—No matter how Waymo tried to restructure their argument around a Section 17200 claim, it was a trade secrets case at its core. As a result, the Section 17200 claim was preempted by CUTSA, and the Section 17200 claim was dismissed.
Defending and Protecting Trade Secrets and Intellectual Property
A big part of corporate success in 2017 is protecting trade secrets and intellectual property. To do so, a company must be proactive about protecting these. This approach needs to involve practical protections of data and company processes, and it needs to take certain legal requirements into consideration, as well.
If someone has misappropriated your company trade secrets or intellectual property, what can you do? Well, you have options. The most direct line to success begins with contacting a qualified legal team to help you understand what steps you need to take to protect what is rightfully yours. At Royse Law Firm, our team of intellectual and corporate practice attorneys can help you at whatever stage of protection you are in. Contact us today.