This week the California Court of Appeal ruled against All American Semiconductor, LLC in its theft of trade secrets lawsuit against APX Technology Corp, affirming an award of $200,000 against the plaintiff in attorneys fees for bringing a meritless claim.
The court held (as many courts have rightfully held before it), that ” a plaintiff seeking trade secret protection must be able to identify the trade secret with reasonable particularity.” Notably, the court wrote:
Plaintiff did not identify for the court in sealed filings or otherwise any particular secret manner of designing memory modules [or its other trade secret claims]… plaintiff also omitted specifying in its opposition what constituted the trade secret in any particular module design.
The court then confirmed that the plaintiff was in essence harassing the defendant with unfounded claims, and confirmed an award against plaintiff requiring it to pay defendant’s attorney’s fees of over $200,000.
The take-away here is pretty simple: Regardless of whether your non-disclosure agreements make general recitations of trade secrets, it is extremely risky to sue for breach of such agreements unless you have actual trade secrets (which you can articulate to the court) that need protecting. General business ideas and other vague “things” will not suffice.