Under California law, you must bring an action for trade secret misappropriation within three years after the misappropriation has been discovered or should have been discovered. (Cal. Civ. Code §3426.6.) This means that you must act when you first suspect you are the victim of trade secret misappropriation rather than waiting until you can confirm it as a matter of fact.
The case of Gabriel Technologies Corporation v. Qualcomm Incorporated (2012 U.S. Dist. LEXIS 33421) reinforces this point. There, a U.S. District Court threw out plaintiff’s claims for trade secret misappropriation because they were filed more than three years after the plaintiff first suspected misappropriation.
In the late 1990s, two technology companies, Locate (whose assets were acquired by Gabriel) and SnapTrack (later acquired by Qualcomm), entered into a licensing agreement to jointly develop GPS technology. Gabriel later discovered that SnapTrack filed numerous patents using the technology the parties jointly developed. Gabriel sued Qualcomm in 2008 asserting claims for trade secret misappropriation (among others) and sought more than $1 billion in damages.
Qualcomm moved for summary judgment claiming that the undisputed evidence showed that plaintiff suspected the alleged trade secret misappropriation more than three years before filing the lawsuit and that its trade secret claims were therefore barred by the statute of limitations. Qualcomm pointed to two pieces of evidence in support of its contention. First, Locate’s cofounder and chief technology officer sent a January 2003 email in which he stated that SnapTrack’s product was “a direct rip off” of plaintiff’s technology. The CTO admitted in deposition that he suspected that their trade secrets had been “ripped off” at the time he sent the email.
Defendant also offered evidence that in June 2004, as the parties were renegotiating the licensing agreement, the plaintiff’s CFO grew suspicious because Qualcomm wanted to strike certain language regarding “proprietary rights” that had appeared in an earlier licensing agreement. The CFO admitted in deposition that he grew suspicious at that time that Qualcomm or SnapTrack had engaged in some type of misconduct concerning Locate’s intellectual property.
In granting summary judgment for Qualcomm as to the trade secret misappropriation claim, the Court noted that “[u]nder California’s discovery rule, suspicion of wrongdoing will trigger the statute of limitations.” The Court continued by recognizing the well-established California law that “[w]hen there is reason to suspect that a trade secret has been misappropriated, and a reasonable investigation would produce facts sufficient to confirm this suspicion (and justify bringing suit), the limitations period begins, even though the plaintiff has not conducted such an investigation.” The court concluded: “So long as a suspicion exists, it is clear that the plaintiff must go find the facts; she cannot wait for the facts to find her.”
The Court’s holding in Gabriel Technologies makes clear that if you suspect your trade secret information has been taken, you should immediately conduct an investigation and consult with an attorney concerning the matter. Waiting to confirm actual misappropriation years after your suspicion first arose may result in your claims for trade secret misappropriation becoming time barred. Companies are well advised that if they have a suspicion of misappropriation; they must act immediately to protect their rights.