Is your confidential information “property” if it does not qualify as a trade secret?
The answer likely is “no” according to a recent decision from a federal court in San Francisco. The plaintiff in that case, a data storage company, alleged that a competitor misappropriated its trade secrets by illegally accessing its proprietary databases. The plaintiff also alleged several alternative claims on the grounds that, even if the stolen information did not qualify as a trade secret, it was nonetheless a valuable asset, and its theft was therefore a wrongful act. The court dismissed those alternative claims, reasoning that, “in order for the taking of information to constitute wrongdoing, the information must be ‘property’ as defined by some source of positive law.” The court rejected the plaintiff’s theory that the confidential information was “property” by virtue of California Labor Code Section 2860, which provides (in part) that “everything which an employee acquires by virtue of his employment, except the compensation which is due to him from his employer, belongs to the employer.” This code section, the court held, does not grant an employer a positive property right in its employees’ non-trade secret work product. The case, which also addresses interesting questions of trade secret preemption and the Computer Fraud and Abuse Act, is NetApp, Inc. v. Nimble Storage, Inc., 2015 U.S. Dist. LEXIS 11406 (N.D. Cal. January 29, 2015).