*Co-authored with Kathryn T. McGuigan.

The recent case of Perlan Therapeutics v. Superior Court (California Ct App 11/04/2009) serves as a reminder that when litigating, the definition of the trade secrets at issue is important.

Perlan Therapeutics brought an action against two former employees claiming the employees had misappropriated its trade secrets. California discovery statutes require that a plaintiff bringing an action for misappropriation of trade secrets file a trade secret statement before commencing discovery related to the trade secrets. The statement must identify with "reasonable particularity" the purported trade secrets which allegedly have been misappropriated.” The trial court found that Perlan’s statement lacked the necessary particularity, and granted the defendant employees an order precluding discovery until Perlan provided sufficient identification of its claimed trade secrets. The Court of Appeal affirmed.

The appellate court pointed out that Perlan’s trade secret statement lacked clarity, did not segregate its alleged trade secrets, did not clearly explain how its secrets differed from publicly available knowledge, included a large amount of "surplusage," such as legal objections, factual allegations, and reservations of rights, and referenced hundreds of pages of extra documents. While the court noted that some trial courts have requested too much particularity, it emphasized that trial courts have broad discretion under the California discovery statutes. In this case, the court did not abuse its discretion in requiring Perlan to produce a clear, non-evasive trade secret statement.

You will certainly want to protect your trade secret information when in litigation. This can be accomplished with a protective order, which was in place in Perlan. As the Perlan court noted, there has been much protracted litigation regarding the initial trade secrets statement. Consider drafting this all important statement prior to filing your complaint.