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The Ninth Circuit's recent decision in Quintara Biosciences, Inc. v. Ruifeng Biztech, Inc. underscores an important distinction in trade secret law between California's Uniform Trade Secrets Act ("CUTSA") [Cal. Civ. Code, §§ 3426 et seq.] and the federal Defend Trade Secrets Act ("DTSA") [18 U.S.C.A. §§ 1832 et seq.]. Specifically, the Court's reasoning clarifies when and how plaintiffs must identify their alleged trade secrets under each regime.
Quintara Biosciences ("Quintara"), a DNA sequencing analysis company, alleged that Ruifeng Biztech ("Ruifeng") misappropriated nine of Quintara's trade secrets, ranging from databases and marketing plans to specialized protocols and software code. Quintara brought suit in the United States District Court for the Northern District of California.
At the Rule 26(f) discovery planning conference, Ruifeng sought to compel Quintara to identify its trade secrets with "reasonable particularity" before discovery could proceed as required by Section 2019.210 of the CUTSA. See C.C.P. § 2019.210 ("before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity"). The district court agreed and ordered Quintara to do so before discovery could commence. Quintara later amended its trade secret identification to add even more detail but Ruifeng, still dissatisfied, filed a Rule 12(f) motion to strike.
While the district court acknowledged that "state procedure does not govern here," it nonetheless applied the CUTSA reasonable particularity standard. Finding that all but two of Quintara's trade secrets failed to satisfy the CUTSA's threshold, the district court struck those trade secrets. After losing at trial, Quintara appealed.
On appeal, the Ninth Circuit reversed the order striking Quintara's trade secrets. The opinion drew key distinctions between the DTSA and the CUTSA. In particular, while the CUTSA requires plaintiffs to identify their trade secrets with "reasonable particularity" before discovery can proceed, the DTSA only requires identification of a trade secret with "sufficient particularity" in order for that claim to survive summary judgment. The Ninth Circuit held that the district court's reliance "on a California rule that does not control a federal trade-secret claim" to strike Quintara's trade secrets constituted an abuse of discretion.
Quintara makes clear that the DTSA and the CUTSA impose different procedural hurdles for plaintiffs. In federal court under the DTSA, litigants enjoy greater initial flexibility but must ultimately refine and substantiate their claims with "sufficient particularity" to survive a motion for summary judgment. In contrast, plaintiffs pursuing CUTSA claims in California state court must identify their trade secrets with "reasonable particularity" before discovery can even commence.
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