Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. CV031949
RUSHING, P.J.
Silvaco Data Systems (Silvaco) brought this action seeking damages from Agilent Technologies, Inc. (Agilent) on the theory, among others, that by using software purchased from a third party but allegedly created from trade secrets belonging to Silvaco, Agilent had itself misappropriated Silvaco’s trade secrets. The trial court granted Agilent’s motion for summary judgment on this theory, reasoning that because Agilent never possessed or had knowledge of the source code constituting the trade secrets, it could not have misappropriated them. The court granted judgment on the pleadings on Silvaco’s other theories of recovery, holding that they were superseded by the governing trade secrets statute. Silvaco contends that the court erred in both respects. We conclude otherwise, and affirm the judgment.
BACKGROUND
The facts in this case largely parallel those in Silvaco Data Systems v. Intel Corp. (April 29, 2010, H032895) ___ Cal.App.4th ___. Silvaco contends that Agilent engaged in actionable conduct by using a program called DynaSpice, which competed with Silvaco’s own product, SmartSpice. Both programs are examples of circuit simulators, which is a type of electronic design automation (EDA) software. Silvaco contended that DynaSpice had been created by its seller, Circuit Semantics, Inc. (CSI), using the source code for SmartSpice, a trade secret, which had been made available to CSI by defecting Silvaco employees. In 2000 Silvaco sued CSI for misappropriation of trade secrets, yielding a judgment in 2003 under which CSI was required to refrain from providing or further supporting any products derived from Silvaco source code. Silvaco alleged, and it has not been denied, that these events were well known within the EDA industry, and specifically to DynaSpice purchasers, including Agilent.
Silvaco brought this action on December 8, 2004, alleging that Agilent had “obtained, used, licensed and/or relicensed the CSI Software, including renewals and extensions of such licenses, after it knew, or had reason to know, that the CSI Software contained the property [sic] and SILVACO Trade Secrets and of the claims being made by Silvaco in the CSI Action.” In the first of five counts, Silvaco alleged that the “trade secret and proprietary information embodied and used in the CSI Software” constituted a trade secret, which Agilent had misappropriated and was continuing to misappropriate by “using the CSI Software that contains the SILVACO Trade Secrets.” At the time of the use, Silvaco alleged, Agilent “knew or had reason to know that the trade secrets were derived from or through [people] who had utilized improper means to get them, ... [or] through persons who owed SILVACO a duty to maintain their secrecy and/or were acquired under circumstances giving rise to a duty to maintain their secrecy.” Silvaco had been damaged, the complaint continued, and Agilent had been unjustly enriched, by this conduct. Silvaco’s second through fifth causes of action asserted claims, respectively, for conversion, unlawful business practices, “civil conspiracy, ” and “common count.” The prayer asserted pleas for compensatory damages, statutory penalties, punitive damages, disgorgement of wrongful profits, restitution, imposition of a constructive trust, and an injunction against using or disclosing “any Silvaco Trade Secrets, including but not limited to, any CSI Software containing any Silvaco Trade Secrets.”
Silvaco later declared that it was withdrawing the fourth cause of action (conspiracy) on the ground that it was “redundant of the First” (trade secret misappropriation).
Agilent answered the complaint, but moved for judgment on the pleadings as to all causes of action save the first, principally on the ground that they were preempted by the California Uniform Trade Secrets Act (CUTSA), Civil Code sections 3426.1 et sequitur. It argued in essence that CUTSA superseded all common-law causes of action “based upon misappropriation of a trade secret, ” and that since all of Silvaco’s causes of action fell within this description, they were preempted. In its opposition, Silvaco did not meet the argument on its terms, but asserted that it was incompatible with Agilent’s anticipated contention that Silvaco had not stated a trade secrets claim. It contended that if it did not have a viable CUTSA claim, CUTSA could not supersede its other claims, and that it was entitled to plead these possibilities in the alternative. It anticipated asserting, at the appropriate time, a further claim that Agilent was judicially estopped from challenging the sufficiency of the CUTSA claim if it successfully contended that the non-CUTSA claims were superseded.
All further statutory references are to the Civil Code.
The court granted the motion for judgment on the pleadings. Agilent then moved for summary judgment on the lone remaining cause of action, which asserted misappropriation of trade secrets under CUTSA. Agilent contended that the claim was fatally defective because “as a matter of law, Agilent never acquired nor gained knowledge of the alleged trade secrets.” The gist of the argument was that the only trade secrets identified by Silvaco were embodied in source code allegedly purloined by CSI, which Agilent had never possessed or seen, and thus could not have used. Agilent pointed out that the court had already granted a similar motion in another similar case brought by Silvaco, this one against Cirrus Logic, Inc.
The resulting appeal in that case has resulted in an affirmance of the judgment by a decision we also file today. (Silvaco Data Systems v. Cirrus Logic, Inc., (Apr. 29, 2010, H032802.) [nonpub. opn.].)
Silvaco’s opposition rested on several assertions. One was that Agilent did not have to “comprehend” the trade secrets in order to expose itself to liability for misappropriating them. Another was that the underlying trade secrets consisted not only of the source code CSI had purloined but also the “ ‘methods, techniques and algorithms’ ” embodied in that code and, according to Silvaco, in the object code included in the products CSI sold to Agilent. Silvaco further contended, in fulfillment of its own earlier prediction, that Agilent’s successful invocation of preemption against the non-CUTSA claims worked a judicial estoppel to contest the sufficiency of the trade secrets claim.
The trial court rejected these arguments and concluded that there was no factual basis for the necessary finding that Agilent ever possessed, or acquired knowledge of, Silvaco’s trade secrets. Without such acquisition or knowledge, the court wrote, “Silvaco cannot prove misappropriation of those trade secrets under [CUTSA].” “By acquiring the CSI software that ‘embodies’ Silvaco’s source code, Agilent did not acquire, or gain knowledge of, the information that constitutes Silvaco’s alleged trade secrets. Instead, Agilent acquired a product that was created using the trade secret. It is not the functionality of the CSI software that constitutes Silvaco’s alleged trade secret, but Silvaco’s means of creating that functionality through the source code.” The court thereupon granted the motion for summary judgment, followed by entry of judgment. Silvaco filed this timely appeal.
Discussion
I. Misappropriation of Trade Secrets
In Silvaco v. Intel, supra, ___ Cal.App.4th ___ [p. 10], we noted that CUTSA identifies three forms of conduct that may constitute misappropriation of a trade secret: acquisition, disclosure, and use. We held that Silvaco had identified no basis in that case for a finding that the defendant had engaged in the acquisition or disclosure of a Silvaco trade secret. (Id. ___ [pp. 10-11].) This left only the possibility that the defendant had made “use” of Silvaco’s trade secrets. With one arguable and immaterial exception, a finding of “use” would require that the defendant have acquired “knowledge of the trade secret, ” which generally means possession of the information constituting the trade secret. We found no evidentiary basis to attribute the requisite knowledge to the defendant. The trade secrets identified by Silvaco were the source code that went into Silvaco’s circuit emulator SmartSpice, and that were allegedly used to generate CSI’s competing product, DynaSpice. There was no evidence that the defendant had ever possessed or had access to that source code. The closest the defendant came was by running the executable code that constituted the commercial DynaSpice product. It was undisputed that this code did not disclose the underlying source code and would not enable its possessor to incorporate the underlying design features in his own software. Accordingly, there was no basis to find the requisite “knowledge of the trade secret, ” even if it was possible-which we doubted-that the mere execution of compiled code might otherwise be viewed as a “use” of the underlying source code. We likened the difference to that between a pie and the recipe used to bake it. The recipe might well constitute a trade secret, but that would not make one liable for a “use” of the recipe merely because he ate the pie, even if he was told that the pie had been made using a purloined recipe. We see no reason to reach a different conclusion here. Silvaco points to no distinguishing feature that would permit the imposition of liability on any basis other than those we rejected in Silvaco v. Intel, supra, ___ Cal.App.4th ___. Similarly, for the reasons stated there, we find its attempt to raise the bar of “judicial estoppel” unpersuasive. We can therefore find no error in the trial court’s granting of Agilent’s motion for summary judgment.
II. Non-CUTSA Claims
Nor do we see any reason to reach a different result here on the non-CUTSA claims, which the court dismissed on motion for judgment on the pleadings. As we held in Silvaco v. Intel, supra, ___ Cal.App.4th ___ [p. 29], CUTSA supersedes other non-contractual civil remedies for claims “based upon misappropriation of a trade secret.” (Civ. Code, § 3426.7, subd. (b).) Each of Silvaco’s non-CUTSA counts incorporated all preceding allegations by reference, meaning that each of them fully incorporated the CUTSA count’s allegations of a misappropriation of trade secrets. Each count then expressly relied on these allegations to state a further cause of action. Thus the second count alleged that, “[a]s a proximate result of the conversion and use of SILVACO’s property as described herein, SILVACO has been damaged and AGILENT unjustly enriched....” (Italics added.) The third count likewise asserted that “[i]n the course of the wrongful conduct alleged herein, ” Agilent committed unfair business practices. (Italics added.) The fourth count alleged that Agilent “knowingly and willfully joined in a conspiracy by its actions including its use of the SILVACO trade secrets.” (Italics added.) The fifth count alleged that Agilent “obtained certain property of SILVACO as alleged herein....” (Italics added.)
Of course the term “including” is wholly ineffectual to assert actionable conduct other than that specified. The only conduct effectively alleged in this sentence is Agilent’s “use of the Silvaco trade secrets.”
It thus appears that all counts are explicitly based upon the misappropriation of trade secrets alleged in the introductory paragraphs and the first cause of action. Although the terms “misappropriation” and “trade secrets” do not separately appear in each count, they are incorporated in each count by reference. Moreover, each count is expressly predicated on the actionable acquisition of “property” belonging to Silvaco, except the third, which asserts “wrongful conduct.” The complaint is devoid of any basis to find a cognizable “property” right, or actionable conduct, except as such characterizations might be derived from the law of trade secrets. Each of these counts is therefore ineffective to state a cause of action other than or apart from the claim for misappropriation of trade secrets. If that cause of action is fatally defective, as we have held it is, there could be no error in the trial court’s granting judgment on the pleadings or its entry of judgment in favor of Agilent.
Disposition
The judgment is affirmed.
WE CONCUR: PREMO, J. ELIA, J.