Tuesday, December 29, 2009

Jasmine Networks v. Superior Court (Cal. Ct. App. - Dec. 29, 2009)

I like it when the Court of Appeal spells out crystal clearly at the outset of the opinion what we're talking about. Justice Rushing does a fantastic job of that in this opinion. Here are the first two paragraphs, which pretty much say it all. With 34 pages of subsequent elaboration, of course:

"Plaintiff Jasmine Networks, Inc. (Jasmine) brought this action charging Marvell Semiconductor, Inc. (Marvell) and others with violating the California Uniform Trade Secrets Act (Civ. Code, § 3426, et seq.) (CUTSA) by misappropriating certain trade secrets belonging to Jasmine. Not long after filing the action Jasmine went through bankruptcy proceedings, in the course of which it sold its rights in the alleged trade secrets, while reserving its rights of action for misappropriation commencing before the date of the transfer. As this lawsuit reached the verge of trial, Marvell moved to dismiss Jasmine’s complaint on the ground that by selling the alleged secrets, Jasmine had forfeited its “standing” to maintain an action for misappropriation. Marvell asserted the existence of a “current ownership rule,” under which a plaintiff can recover for misappropriation of a trade secret only if he owns the trade secret at the time of suit. The trial court found this argument persuasive, and dismissed Jasmine’s complaint.

Jasmine petitioned this court for a writ of mandate directing the trial court to set aside its order of dismissal and permit the matter to proceed to trial. We issued an order to show cause why the petition should not be granted. We will now grant the requested relief. Despite the impressive efforts by Marvell’s counsel to conjure up a “current ownership rule,” we find no support for such a rule in the text of the CUTSA, cases applying it, or legislative history. Nor do we find any evidence of such a rule in patent or copyright law, which defendants have cited by analogy. Defendants have offered no persuasive argument from policy for our adoption of such a rule. There may be situations where a suit by a former owner raises concerns about the rights of absent parties, or a risk of multiple or inconsistent liabilities on the part of parties before the court, but the remedy for such concerns lies in our liberal and highly flexible procedures for the permissive or compulsory joinder of parties. There is in short no substantial basis for the argument put forward by defendants, and the trial court erred by dismissing the complaint."

Beyond style, I also liked the somewhat nice words Justice Rushing said about the attorneys he was voting against. If you're going to lose in the Court of Appeal, I think this is how you want to lose. (Full Disclosure: One of the lawyers on the losing side, Jeffrey Kobrick, was an instructor of mine two decades ago at Harvard Law School, and I both very much liked his class and remember him well.)