Cadence Design Sys. v. Avant! Corp., 29 Cal. 4th 215 (2002)

In this case, the California Supreme Court answered the following question of law certified to it from the United States Court of Appeals for the Ninth Circuit: Under the California Uniform Trade Secrets Act (UTSA), when does a claim for trade secret infringement arise: only once, when the initial misappropriation occurs, or with each subsequent misuse of the trade secret? In 1994, the parties negotiated a release of Cadence’s trade secret misappropriation claims (including any unknown claims) that arose against Avant! when a Cadence vice president joined Avant! In 1995, one of Cadence’s engineers discovered a “bug” in Avant!’s software that was similar to one that he had inadvertently created several years before while writing source code for Cadence. In December 1995, Cadence sued Avant! for theft of its copyrighted and trade secret source code, arguing that the 1994 release agreement did not bar any claims for misappropriation that occurred after the date of the release. Avant! argued that the release barred all such claims, including those based on continuing or future misuse of trade secrets that were stolen prior to the date of the release. The Supreme Court narrowly answered the question and held that “the UTSA views a continuing misappropriation of a trade secret of one party by another as a single claim, . . . and each subsequent use or disclosure of the secret augments the initial claim rather than arises as a separate claim.”