A user of software containing source code misappropriated by the software developer from a competitor does not thereby acquire the requisite knowledge of the trade secrets embodied in the source code so as to violate the California Uniform Trade Secrets Act, a California appeals court ruled. The court held that the execution of software object code did not impart knowledge to the user of the trade secrets and therefore the user did not acquire, use or disclose the trade secrets within the meaning of the CUTSA. The court referenced "strong considerations of public policy," commenting that if running executable code was deemed to constitute a "use" of trade secrets embodied in the software, "then every purchaser of software would be exposed to liability if it were later alleged that the software was based in part upon purloined source code. This risk could be expected to inhibit software sales and discourage innovation to an extent far beyond the intentions and purpose of CUTSA."
Silvaco Data Systems v. Intel Corp., 2010 Cal. App. LEXIS 771 (Cal. Ct. App. 6th Dist. Apr. 29, 2010, as modified May 27, 2010) Download PDF