Trade Secrets Practice in California

Courtesy of CEB, we are bringing you selected legal developments in areas of California business law that are covered by CEB’s publications. This month’s feature is a preview of the November 2025 update of Trade Secrets Practice in California. References are to the book’s section numbers. The notable developments since the last update include discussion of a U.S. Copyright Office report affirming that copyright requires human creativity but clarifying that neither the utilization of AI nor the inclusion of AI-generated content would disqualify human-generated works or original expression by human beings from copyright protection.

In January of 2025, the U.S. Copyright Office issued a report affirming that copyright requires human creativity. The report clarifies that neither the utilization of artificial intelligence (AI) nor the inclusion of AI-generated content would disqualify human-generated works or original expression by human beings from copyright protection. It states, “[w]hether human contributions to AI-generated outputs are sufficient to constitute authorship must be analyzed on a case-by-case basis.” See Copyright and Artificial Intelligence, Part 2: Copyrightability (Jan. 2025), available at https://www.copyright.gov/ai/Copyright-and-Artificial-Intelligence-Part-2-Copyrightability-Report.pdf. See §16.24.

Effective December 1, 2025, Fed R Civ P 26(f)(3)(D) was amended to address concerns about the burdens imposed by Rule 26(b)(5)(A), which requires parties to describe withheld materials in a manner that enables other parties to assess privilege claims. In trade secret litigation, in which large volumes of technical and confidential documents are often withheld under claims of privilege or work-product protection, the amendment encourages parties to proactively address privilege log protocols during the Rule 26(f) conference. This change provides an opportunity to negotiate alternatives, such as categorical logs or phased logging, that reduce the cost and complexity of privilege logging in cases involving sensitive proprietary information. See §11.58.

In Jacam Chem. Co. 2013, LLC v Shepard (8th Cir 2024) 101 F4th 954, 965, the court affirmed summary judgment that an energy company’s pricing information did not qualify as protected trade secrets under North Dakota’s trade secret law because the company did not make reasonable efforts to maintain secrecy. Despite having employee confidentiality agreements, the company’s pricing information was not subject to any confidentiality agreement between the company and its customers. See §4.10.

In Insulet Corp. v EOFlow Co. (D Mass 2025) 2025 US Dist Lexis 78091, the court addressed reasonable measures to protect trade secrets. The court upheld the jury’s finding that plaintiff used “reasonable measures” to protect its trade secrets under the DTSA by implementing industry-standard security practices, including NDAs, restricted access, and physical and digital safeguards, despite not limiting employees’ use of personal devices for work-related matters. See §§4.12, 4A.1, 12.3.

Compulife Software, Inc. v Newman (11th Cir 2024) 111 F4th 1147 affirmed trade secret misappropriation under DTSA regarding a competitor’s use of information obtained through unauthorized, automated extraction of large volumes of information from public websites or “data scraping.” See §§4A.8, 11.118.

In Teradata Corp. v SAP SE (9th Cir 2024) 124 F4th 555, the court overturned summary judgment in favor of German software company SAP against data analytics company Teradata. The court held that the parties’ nondisclosure agreement did not require detailed descriptions for preservation of trade secrets and that the adequacy of Teradata’s descriptions was a jury question. See §§4A.9, 11.88.

In Samuelian v Life Generations Healthcare, LLC (2024) 104 CA5th 331, the California court of appeal held that a noncompete against minority members in a member-managed limited liability company was valid under the circumstances when the members sold part of their interests and continued to hold some degree of control over its operations. See §11.90.

Whereas the Delaware Supreme Court in Sunder Energy, LLC v Jackson (Del Sup Ct 2024) 332 A3d 472 affirmed the chancery court’s refusal to enforce restrictive covenants under circumstances that indicated an equality of bargaining power between the parties, such as when the covenants were not negotiated, the minority members received minimal consideration, and the covenants were excessively broad in scope. See §11.90.

In Motorola Solutions, Inc. v Hytera Commumications Corp. (7th Cir 2024) 108 F4th 458, cert denied (2025) ___ US ___ 145 S Ct 1182, the court affirmed a DTSA damages award based on worldwide profits, rather than domestic profits, when the defendant marketed the misappropriated technology in the United States, holding that such domestic conduct satisfied the DTSA’s extraterritoriality requirement. See §§11.119, 12.20.

In Accretive Specialty Ins. Solutions, LLC v XPT Partners, LLC (CD Cal, Mar. 28, 2024, No. 8:23-CV-01903-JVS (KESx)) 2024 US Dist Lexis 63250, the court held that when a former employee accessed information, even though his prior log-in information was still operative, he had accessed a protected computer without authorization in violation of the Computer Fraud and Abuse Act (CFAA). See §12.1.

Meanwhile, the court in Abu v Dickson (6th Cir 2024) 107 F4th 508 held that the CFAA’s “exceeds authorized access” clause requires, at a minimum, that the insider purposefully access an area of a computer and know that it is forbidden. Therefore, an IT administrator did not intentionally exceed his authorized access when he lacked notice that his accesses to a protected system was unauthorized. See §12.1.

The court in Pegasystems Inc. v Appian Corp. (2024) 904 SE2d 247, 268, held that the burden to prove the amount of appropriate deductions for unjust profits attributed to misappropriation should be placed on the complainant under Virginia law. See §12.20.

In Bartel v Chicago Title Ins. Co. (2025) 111 CA5th 655, the California court of appeal held that an insurer’s duty to defend a claim against an insured party is triggered if there is any possibility of a covered claim, meaning the duty arises unless there is no conceivable theory of coverage based on the known facts, and any ambiguity due to complex facts should also activate this duty. See §§14.3, 14.15.

In Softketeers, Inc. v Regal W. Corp. (9th Cir, Feb. 27, 2025, Nos. 24-150, 24-451) 2025 US App Lexis 4796 (unpublished opinion), an independent contractor developed software for 2 decades without a signed agreement clarifying software ownership, and after the parties’ relationship terminated, the contractor’s client had no right to own or license to use the software without the developer’s consent. See §16.29.