RUSHING, P. J. —
Plaintiff Cypress Semiconductor Corporation (Cypress) brought this action alleging that defendant Maxim Integrated Products, Inc. (Maxim), had misappropriated a trade secret, or was in the process of doing so, by seeking to hire away specialists in touch screen technology, a field in which Cypress and Maxim compete. Maxim responded that it was entitled to solicit prospective employment candidates in Cypress's workforce and that there was no evidence it had acquired, or was seeking to acquire, any trade secret. After failing to secure temporary injunctive relief, and failing to obtain an order placing under seal evidence derived by Maxim from public sources, Cypress dismissed the action. The trial court awarded Maxim its attorney fees pursuant to Civil Code section 3426.4 (section 3426.4), which authorizes such an award to the prevailing party where a claim for misappropriation of
Uncontradicted declarations established that in February 2011 Maxim was seeking to fill several positions, at least some of which required experience with touchscreen technology. Toward that end it engaged, among others, a recruiter named Zion Mushel, who operated out of Israel. On or shortly before February 9, 2011, Mushel sent an e-mail to a Cypress employee whom the parties have identified only as "Employee No. 60**" or "EE No. 60**," and to whom we shall refer as "Employee 60XX." This was at least the third contact between Maxim and Employee 60XX. Mushel had exchanged e-mails with him in June 2010 concerning an opening for a "Business Manager/director Touch Interface Products" at Maxim's headquarters in San Jose. Later, in January 2011 — apparently on his own initiative — Employee 60XX had e-mailed a contact at Maxim about an opening for an "FAE," apparently meaning a field applications engineer, in Austin, Texas. Now, on February 9, 2011, Mushel apparently sent Employee 60XX an e-mail concerning another headquarters opening.
Cypress ultimately presented copies of e-mail exchanges assertedly showing that from February through April 2011, Mushel had "solicited at least nine Cypress employees who specialize in the touchscreen field."
On April 6, 2011, Cypress president T.J. Rodgers wrote to Maxim president Tunç Doluca accusing Maxim of "seeking to obtain Cypress's proprietary information illegally by targeting Cypress employees skilled in touch screen technology." He warned that "[i]f Maxim persists in these actions, Cypress will sue Maxim and enjoin it from creating or distributing any products using any touch screen expertise obtained from Cypress through former employees." This was followed by an exchange of letters and e-mails in which Doluca disclaimed any interest in Cypress's touch screen technology while Rodgers continued to insist that Maxim was engaging in conduct that could lead to litigation. In a letter dated April 18, 2011, Rodgers complained that Employee 60XX, whom he described as "a 14-year Cypress employee with intimate knowledge of all of Cypress's touchscreen trade secrets," had accepted an offer of employment from Maxim. After arguing that hiring Employee 60XX could "contaminate Maxim's own touchscreen intellectual property," Rodgers wrote, "We are currently performing an internal investigation to determine if [Employee 60XX] was contacted by a headhunter hired by Maxim to recruit Cypress touchscreen people. If he was unlawfully recruited, I will follow through on my written promise and immediately file a lawsuit to enjoin Maxim from recruiting and hiring Cypress employees with touchscreen expertise." Doluca replied in e-mail, stating in part that Maxim's offer to Employee 60XX "was generated in March, before I received your first letter. More importantly, he was hired into a field applications engineering position in the US where he will not be working on touch technology at all. I will make sure he does not contaminate our touch technology." On May 12, Rodgers replied stating that Employee 60XX had "chosen to remain at Cypress." He continued to accuse Maxim of wrongful conduct, incorporating in the letter purported facsimiles of the e-mail exchanges between Mushel
On May 13, 2011, Cypress filed an action against Mushel and Eurika Consultants (Eurika), an Israeli corporation on whose behalf he was alleged to have been acting. The complaint asserted causes of action for misappropriation of trade secrets and unlawful competition. Efforts to serve process on Mushel and Eurika were unsuccessful. Eventually, Cypress voluntarily dismissed the complaint against them.
Cypress initiated this action on June 8, 2011, by filing a complaint against Maxim and Doluca. The allegations of the complaint are discussed in part IV.B., post. Two days later Cypress filed an ex parte application for a temporary restraining order prohibiting Maxim and Doluca from soliciting Cypress touch screen employees and requiring them to "immediately return all Cypress trade secret and confidential and proprietary information that became known to Defendants, including specifically any list or roster of Cypress employees working on touchscreen technology." The application was accompanied by the declaration of Rodgers as well as that of Thomas Surrette, a human resources officer at Cypress, who described the steps taken by Cypress "to protect both its technical information and employee information as confidential information." He declared that Cypress employees signed a "Patent & Confidentiality Agreement" in which they undertook not to "improperly use or disclose Cypress's proprietary information." The agreement, he asserted, "applie[d] to ... the names, skills, and compensation of other Cypress employees." Employees also agreed to be bound by "Cypress's Code of Business Conduct and Ethics," which described "lists of customers, dealers, and employees" as proprietary and confidential information, not to be disclosed. Employees also received "training on their confidentiality obligations," including that "any data regarding Cypress's ... lists of employees..., and the skills and compensation of Cypress's employees and
Also supporting the application was the declaration of a Cypress touch screen technologist referred to as "Employee No. 294**" (Employee 294XX).
In opposition to the application for a temporary restraining order, Maxim manager Bart DeCanne declared that when his business unit had job openings, his practice was to forward a job description to several outside recruiters, one of whom was Mushel. On February 9, 2011, DeCanne told five recruiters, including Mushel, that Maxim was seeking to fill a business manager position and a product definer position. Mushel inquired, "[W]hat are the best companies to hunt people for these 2 positions?" DeCanne sent him a list of five companies, including Cypress. In response to this assignment, Mushel eventually provided Maxim with a number of candidates "from companies on the list other than Cypress, as well as from companies not on the list." One of the candidates presented was Employee 294XX, but DeCanne told Mushel that Maxim did not have a suitable opening for him.
Maxim also filed a declaration by one of its attorneys, Lael Andara, who described how he had identified a number of Cypress touch screen specialists by using only publicly available sources. His efforts were concentrated on LinkedIn.com (LinkedIn), a professional networking Web site. He examined Cypress's own page on LinkedIn, which included a section referring to the change of one employee's position from "Touchscreen Marketing Director" to "Senior Member of Technical Staff." A link to that person's own LinkedIn
The Andara declaration was submitted both in an unexpurgated version, filed conditionally under seal, and a redacted version from which the names and other identifying information of Cypress employees had been removed. Simultaneously with its opposition to the application for a restraining order, Maxim moved to seal the unredacted version of the declaration on the ground that it contained "personal information concerning Cypress employees," which it had withheld from the public record out of consideration for "the employees' privacy rights."
The application for a restraining order was set to be heard on June 17, 2011. On that day the parties stipulated to, and the court ordered, a 30-day "mutual standstill" in which neither party would solicit the other's employees. The court also issued a stipulated order to seal the standstill order, but declared the sealing effective only for "30 days subject to a motion pursuant to Cal. Rules of Court and CCP." It does not appear that such a motion was ever made.
On June 29, 2011, Maxim demanded in writing that Cypress, pursuant to Code of Civil Procedure section 2019.210, "identify the trade secrets that are the subject of [its] claim for misappropriation of trade secrets."
At some point Maxim informed Cypress that it was withdrawing its motion to seal the Andara declaration. Cypress then filed its own motion to seal, to be heard on November 1. In addition to seeking to seal the Andara declaration and its exhibits the motion sought to seal the declaration of Employee 294XX. In support of the motion, counsel for Cypress declared that the redacted material identified "Cypress touchscreen employees," which was "one of the trade secrets alleged in Cypress's complaint." Maxim filed opposition, contending in essence that the identities of these employees, and their possession of touch screen experience, could not possibly be protectable trade secrets — or subject to sealing as such — since that information was available from, and indeed had been taken from, publicly available sources. Cypress filed a reply in which it disputed these premises, but also argued that whether or not the information was even colorably a trade secret, it was required to be sealed under Civil Code section 3426.5, which declares that "a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include ... sealing the records of the action ...." Emphasizing the term "alleged," Cypress argued in effect that the court could not look behind the complaint's characterization of the information as a trade secret, but must instead prevent any disclosure of that information unless and until it had been adjudicated, by trial or summary judgment, not to be a trade secret.
Cypress's motion to seal was heard on November 15, 2011. At the outset of the hearing, the court asked counsel for Cypress to confirm that the gist of his argument was that "even though information may be accessible to the general public, the fact that it's being claimed as a trade secret, until that issue is litigated or adjudicated, you're entitled to protection." Counsel replied, "That's correct." After taking the matter under submission, the court denied the motion.
Maxim's demurrer to the original complaint was never heard because, on October 19, 2011 — the last day to file opposition to the demurrer (see Code
On December 1, Cypress filed a request to dismiss the complaint in its entirety without prejudice. On February 2, 2012, Maxim filed a cost bill claiming $1,049.95. One week later, Maxim filed a motion for attorney fees under section 3426.4 based upon Cypress's "bad faith filing and maintenance of the above-referenced action." After proceedings described more fully below, the trial court granted the motion. On June 1, 2012, the court entered judgment for Maxim in the amount of $180,817.50 plus costs. Eleven days later, Cypress filed this appeal.
The trial court expressly ruled that Maxim was the prevailing party for purposes of section 3426.4. Cypress attacks this ruling on two grounds: that the trial court applied an incorrect standard, and that under a correct standard, "there was no prevailing party." We reject both contentions.
Cypress's first argument is predicated on the trial court's comments concerning its finding of prevailing party status. The order granting the fee
This interpretation of the order fails for several reasons, the least of which is that it ignores the court's use of "cf." to introduce the statutory citation. "The signal `cf.' (Latin: confer, meaning `compare with') is used to introduce a decision [(here, a statute)] that is sufficiently analogous to lend support to the proposition, as where a cited case applies a similar statute." (Cal. Style Manual (4th ed. 2000) § 1:4, p. 10; see The Bluebook: A Uniform System of Citation (19th ed. 2010) § 1.2, p. 55 ["Cited authority supports a proposition different from the main proposition but sufficiently analogous to lend support. Literally, ... `compare.'"].) Nothing in the record suggests that the court felt its ruling was compelled by the cited statute. Instead the court expressly cited that statute as analogous support for its conclusion.
Cypress contends that the court should have applied the rule in Heather Farms, supra, 21 Cal.App.4th at page 1574, under which the governing question is whether the party seeking fees "prevailed on a practical level." We find it far from self-evident that section 3426.4 should be given exactly the same scope as the statute at issue in that case, or the statutes applied in the cases cited by that court. All of those cases were implicitly concerned with the risk that a mechanical definition of "prevailing party" would produce arbitrary or inequitable results in circumstances where the party seeking fees had achieved only a superficial or illusory success. That risk will rarely if ever arise under section 3426.4, which authorizes an award only upon a finding that the action was pursued in bad faith. A statute predicating an entitlement to fees solely or predominantly on status as the prevailing party will inevitably raise the question of why a party achieving only an arguable or equivocal victory should be permitted to recoup fees from an opponent. The analogous question here is why a party who has made a trade secret claim in bad faith should be permitted to inflict the costs of defense on his or her opponent. Given the manifest legislative intention to avoid such impositions, the statute would seem to warrant a liberal construction of "prevailing party," trusting in the "bad faith" requirement to filter out doubtful cases.
We need not finally decide the question, however, for we are satisfied that any reasonable finder of fact would be likely to find that Maxim was the
In contending otherwise, Cypress constructs a kind of carnival fun house in which the facts of the case are distorted into grotesque and nearly unrecognizable shapes. First it asserts that it only dismissed the action because, "after the trial court erroneously denied its motion to seal," it "would have had to place its trade secrets in the public record" in order to continue litigating the matter. No part of this depiction survives scrutiny. First, we perceive no error in the trial court's denial of the motion to seal. That motion rested on the premise that merely by filing a pleading characterizing certain information as a trade secret, a party can compel the courts to withhold that information from the public record until such time as it finally adjudged not to be a trade secret. This premise would have considerable color where the information is at least arguably secret. Here there was no arguably secret information before the court. Nearly all of the information Cypress sought to place under seal had been compiled by its opponent from public sources where — so far as this record shows — it has remained available to this day for anyone with the appropriate subscription to find and peruse. This was not a colorable trade secret, and Cypress's calling it so did not obligate the court to place it under seal or take any other action to prevent its further disclosure. The statute on which Cypress's contrary argument rested obligates the court to employ "reasonable means" to "preserve the secrecy" of an "alleged trade secret." (Civ. Code, § 3426.5, italics added.) Here there were no means, reasonable or otherwise, by which the trial court could comply with this mandate, because there was no secrecy to preserve.
Other circumstances make it highly implausible that Cypress's dismissal of the action was motivated by a desire to prevent the disclosure of information. First, there was no reason to assume or expect that the dismissal would have that effect. Had the information at issue in Cypress's motion to seal been filed by Cypress, it would have been returned to Cypress when the motion to seal
The one exception to the foregoing observations is the one item filed by Cypress that it sought to keep under seal: the unredacted declaration of Employee 294XX. That document presumably was — certainly it should have been — returned to Cypress upon denial of its motion to seal. (See Cal. Rules of Court, rule 2.551(b)(6).) Whether it was or not, Cypress proceeded to include the unredacted document in its appendix on appeal, making no effort to keep it or anything else out of the publicly accessible appellate record. We are thus implicitly asked to believe that an interest so overriding as to compel dismissal of a meritorious lawsuit suddenly became too insignificant to warrant a motion in this court. We decline the request. It is impossible to construe Cypress's dismissal of the action as an attempt to protect information from disclosure — even if information warranting such protection appeared in the record, which it does not.
Finally, we note that the motivation to which Cypress now ascribes its dismissal of the action appears never to have been mentioned in the trial court. There Cypress claimed that it dismissed the matter "because Defendants apparently had ceased their efforts to obtain Cypress trade secrets, thus Cypress achieved its primary litigation objective." In its opposition to the fee motion Cypress explained this supposed victory as follows: "[A]fter Cypress filed suit, Defendants expressly agreed to not solicit Cypress employees for thirty days and thereafter voluntarily refrained from soliciting Cypress's touchscreen employees (at least as far as Cypress is aware). This reality operated as a de facto injunction against further threats to Cypress's trade secrets. At a practical level, Cypress was the prevailing party because it achieved the primary remedy it sought from this Court — an injunction barring any further improper solicitations by Defendants."
Seeking to establish that the dismissal was the result of circumstances beyond its control, Cypress suggested below that the action was dismissed because it was unable to obtain discovery from Mushel. This appears to be its chief explanation for the dismissal in this court, where it successfully sought judicial notice of filings in its action against Mushel reflecting unsuccessful attempts to serve him with process. But the asserted inability to serve Mushel hardly barred Cypress from pursuing other, seemingly more promising avenues of discovery much closer to home. Most obviously, the premise that Maxim was deliberately "targeting" Cypress touch screen employees would seem more readily explored by examining Maxim's own employees and internal correspondence than by deposing Mushel, who declared — and presented e-mail messages tending to show — that he had not been told to focus on Cypress employees, but had been given the names of five companies most likely to employ suitable candidates, and had extended his search beyond those five companies.
Indeed, the notion that Mushel's unavailability wholly thwarted Cypress's prosecution of this action verges on fanciful. Supposing Maxim had given Mushel a purloined list of Cypress touch screen employees — contrary to all
The only plausible explanation for Cypress's dismissal of the action is that it feared a determination on the merits. Had Maxim's demurrer been heard, it would almost certainly have been sustained and there is no reason to believe Cypress was in any position to amend its way past the pleading stage. As will be discussed more thoroughly below, Cypress appeared to possess no facts suggesting that Maxim had done anything unlawful, or was threatening to do so. The trial court could quite properly infer that the suit was dismissed to avoid what was bound to be an adverse adjudication on the merits. The lawsuit thus achieved no legitimate objective. Maxim, in contrast, walked away with all of the rights it had when it was served with the complaint — and all the money, save the attorney fees Cypress had forced it to expend. The trial court did not err in concluding that Maxim was the prevailing party.
We turn to the question whether the trial properly found that Cypress made its claim of trade secret misappropriation in bad faith. At the threshold Cypress contends that the finding was marred by procedural error in that the court erroneously placed the burden on Cypress to persuade the court that the action was not pursued in bad faith. This contention rests on distortions of the record. Cypress first cites the court's remark to counsel for Cypress, at the hearing on the fee motion, that "the burden is on you." But Cypress takes the remark out of context. The court had first asked counsel "where is the evidence that Maxim hired [Mushel] specifically to recruit Cypress employees?" Counsel alluded to a Mushel e-mail message that, as counsel put it, "specifically references Cypress Semiconductor employees as being appropriate."
It was here that the court made the comment now cited by Cypress as proof that the court misallocated the burden of persuasion: "Here is the problem I have with your logic. I understand what you're saying. But you're the plaintiff in the case. And you're asking the defendant to disprove a — the burden really isn't on them. The burden is on you to show that they weren't doing it. [(Presumably meaning, `weren't obtaining names by lawful means.')] And so the fact that the defendant didn't come back and present all this evidence, and we may ultimately not know, doesn't meet your burden as a plaintiff in terms of having facts or evidence upon which to rely." (Italics added.)
These comments concern Cypress's burden of proof as plaintiff in the action, not the burden of persuasion on the fee motion. Any doubt on that score is dispelled by the next paragraph in the transcript, which Cypress neglects to mention: "[I]t kind of dovetails your argument in your papers that you were the prevailing party. I mean with all due respect, I don't think you were. I think the case was dismissed without prejudice. I don't think there was any evidence in the case. ... And I didn't take this lightly. I looked long and hard at this. There is a lot of money at issue. And it's a fairly strict standard that they have to prove, okay? And that's why I wanted to entertain oral argument this morning." (Italics added.) The "they" who had to meet a "fairly strict standard" could only be defendants, whose burden it was on the motion for fees to persuade the court that the action had been maintained in bad faith. Nothing in the transcript suggests that the court misunderstood this basic point.
Cypress also cites this sentence in the court's order granting the fee motion: "Plaintiff relies exclusively on allegations from its first amended complaint to establish merit, but plaintiff fails to present any evidence to support its claim for misappropriation." Again the statement is quoted out of context. What the court wrote is, "`Objective speciousness exists where the
Cypress acknowledges that the trial court's finding of bad faith must be upheld if it is supported by substantial evidence, but it frames the question as whether "Maxim's evidence ... prove[d] objective speciousness." That is not the test. A defendant moving for attorney fees under section 3426.4 is "not required to conclusively prove a negative (i.e., that they did not steal [the plaintiff's] trade secrets). Instead, under the `objectively specious' standard, it [i]s enough for defendants to point to the absence of evidence of misappropriation in the record." (SASCO v. Rosendin Electric, Inc. (2012) 207 Cal.App.4th 837, 848 [143 Cal.Rptr.3d 828].) Further, the sufficiency of the evidence to support a given finding is not tested solely by examining evidence presented by one party, but raises the question whether "on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination .... [W]hen two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court." (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874 [197 Cal.Rptr. 925].)
Elsewhere in the complaint we find an allegation that "[b]y improperly soliciting and targeting Cypress's employees, Maxim has improperly obtained a list or roster of Cypress employees working on touchscreen technology and has improperly used that information to try to poach Cypress employees who have knowledge regarding Cypress's advanced technological achievements in this area." This allegation seems less equivocal than the previous one, but suffers from two major deficiencies. First, an allegation that someone achieved a stated result "improperly" is no substitute for allegations of specific circumstances establishing a breach of duty or otherwise subjecting the actor to liability. Second, the sentence is rendered ambiguous by the introductory phrase, which appears to describe, if rather incoherently, the process by which Maxim secured the "list or roster," opening the possibility that Maxim compiled the list itself by gathering increments of relevant data from Cypress employees or other sources. In fact of course this is precisely what Mushel appears to have done. As reflected in the e-mails presented by Cypress itself, his messages to prospective candidates often included requests that for referrals to any other suitable candidates they might know. Nothing in this record suggests a basis for Cypress to believe, let alone for a court to find, such requests wrongful in themselves. A "list" compiled by Mushel or Maxim by such methods would also be a perfectly legitimate basis for them to search for Cypress employees — and employees of other companies — who might find a place at Maxim.
As Maxim vividly demonstrated, it was not at all difficult to identify dozens of Cypress touch screen specialists without relying on any internal Cypress information. Maxim's attorneys eventually found nearly 100 such names by searching a single Web site and patent records. Cypress never pointed to anything creating even the appearance that Mushel was using protected Cypress information. In other words, even the "apparently" quoted above was never substantiated.
In other words, according to this theory Maxim was seeking to hire Cypress employees so that it could appropriate whatever trade secrets they might know. We may assume that at least some aspects of "Cypress's touchscreen technology" were genuine trade secrets. It is absolutely clear, however, that no such misappropriation had occurred when the complaint was filed. Maxim had extended an offer to one Cypress employee, who initially accepted but was ultimately prevailed upon to remain with Cypress. So far as anything in the record suggests, Maxim never extended an offer to any other "touchscreen employee." Therefore it never had the occasion or opportunity to engage in the posited brain-picking. As reflected in the last sentence quoted above, the claim was purely one of threatened misappropriation.
Cypress expressly disclaimed any reliance on the doctrine of inevitable disclosure, but in the absence of that doctrine we can detect no basis for its allegation of threatened misappropriation. Indeed, the result condemned in Whyte, supra, 101 Cal.App.4th at page 1461 — "to enjoin [hiring of its] ... employee[s] without proof of [any] ... actual or threatened use of trade secrets" — is precisely what Cypress prayed for here: "a preliminary and permanent injunction against Defendants ... enjoining/restraining them from soliciting Cypress's touchscreen employees." Given the complete absence of any coherent factual allegations suggesting a threatened misappropriation, Cypress's second theory of relief was an inevitable disclosure claim, or it was no claim at all — and in either case, it did not state grounds for relief under California law.
We have generally directed our comments to Cypress's original complaint because that pleading reflects the state of Cypress's knowledge and understanding when it initiated the suit. These comments apply just as well, however, to the amended complaint, which did nothing to supply the missing factual allegations.
This brings us to the question whether the trial court properly found that the "subjective" element of bad faith was present. (See FLIR Systems, supra,
Second, Cypress's claim of procedural error depends on yet another unnatural construction of the record. In its order granting the fee motion, the court acknowledged that an award of fees required both objective speciousness and "subjective bad faith in bringing or maintaining the action, i.e., for an improper purpose." The court then explained, in two sentences, its finding of objective speciousness. Cypress's entire claim of error rests on the court's failure to similarly explain its finding of subjective bad faith. The mere lack of parallel structure in the trial court's order hardly supports a belief that the court overlooked or ignored the requirement it had just explicitly acknowledged. A far more plausible explanation, given this record, is that the case was so redolent of improper purpose that the court deemed it both unnecessary and unduly burdensome to recite all the evidence supporting such a finding.
Cypress's suggestions to the contrary appear to rest on a passage in Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1263 [116 Cal.Rptr.2d 358], where the court quoted Knight v. City of Capitola (1992) 4 Cal.App.4th 918, 932 [6 Cal.Rptr.2d 874] (disapproved on another point in Reid v. Google, Inc. (2010) 50 Cal.4th 512, 532, fn. 7 [113 Cal.Rptr.3d 327, 235 P.3d 988]), as follows: "`Good faith, or its absence, involves a factual inquiry into the plaintiff's subjective state of mind [citations]: Did he or she believe the action was valid? What was his or her intent or purpose in pursuing it? A subjective state of mind will rarely be susceptible of direct proof; usually the trial court will be required to infer it from circumstantial evidence.'" Both cases predated the above-cited decisions expressing the subjective element in terms of improper purpose, and the case in which the quoted language originated was not decided under section 3426.4, but under a statute authorizing a fee award on a finding that an action against a public entity was "brought ... without `reasonable cause' or without `the good faith belief that there was a justifiable controversy under the facts and law which warranted the filing of the complaint ....'" (Knight, supra, at p. 931, quoting Code Civ. Proc., § 1038, subd. (a).) Neither case holds that a subjective belief in the merits of a claim will bar a fee award under section 3426.4 if the claim was maintained for an improper purpose.
To be sure, a genuine belief that one's claim has merit tends to show that it is being pursued for the proper purpose of vindicating a legal right honestly believed to have been infringed. (See Yield Dynamics, supra, 154 Cal.App.4th at p. 579 [error to exclude evidence tending to support inference that plaintiff's principals "subjectively believed the trade secret claim had merit,
If anything, the evidence of improper purpose was stronger than the evidence of objective speciousness. First, the parties' presuit correspondence supports a reasonable inference that the actuating motive of Cypress's president Rodgers was to scare Maxim away from attempting to hire any of Cypress's touch screen employees under any circumstances, lawfully or otherwise. In the letter commencing this exchange, Rodgers wrote to Maxim's president Doluca, "The purpose of this letter is to inform you that Maxim is seeking to obtain Cypress's proprietary information illegally by targeting Cypress employees skilled in our touchscreen technology. If Maxim persists in these actions, Cypress will sue Maxim and enjoin it from creating or distributing any products using any touchscreen expertise obtained from Cypress through former employees." Critically, Rodgers acknowledged that "`[t]his is America;' and ... employees can change jobs when they want." This was followed by a discourse assertedly demonstrating that "Maxim's motive — technology — is clear." After boasting of Cypress's superior expertise in touch screen technology, Rodgers asserted that Maxim had "made a ... critical mistake in its effort to illegally appropriate our touchscreen systems knowledge. Your company hired an Israeli headhunter to hire our engineers — specifically our touchscreen engineers — and we have it in writing."
The final two paragraphs of the letter again threatened litigation, and resulting expense, if Maxim did not desist from its attempts to hire Cypress employees: "You might know of me well enough to know that I do not make idle threats. Read it again: The next time a Cypress employee working on touchscreen technology is illegally solicited or offered employment by Maxim, Cypress will sue your company, pursuing all legal remedies available to prevent Maxim from stealing our IP through unlawful hiring. practices. [¶] ... The next person you try to hire illegally from Cypress will not be cheap for your company, as Cypress will spare no effort or legal expense to protect its people and its technology."
This letter supports an inference that the purpose of the lawsuit was to impose a financial penalty upon, and thereby deter, Maxim's attempts to hire Cypress technical employees. Indeed, it might be inferred that the purpose of the lawsuit was to inhibit not only Maxim but other competitors as well from attempting to engage in the same, entirely lawful conduct. Such an inference gains weight from a press release apparently issued by Cypress on the day it dismissed the action. In it, Cypress "announced that it ha[d] dropped its trade secret lawsuit against Maxim Integrated Products. The lawsuit charged Maxim with trying to gain access to Cypress's touchscreen intellectual property by unfairly targeting key Cypress employees. Cypress dropped the lawsuit `without prejudice,' so it can be filed again in the future if necessary. [¶] `We are well aware that our people are our greatest asset,' said T.J. Rodgers, President and CEO of Cypress. `We will not tolerate unfair attempts to lure our employees away in order to gain access to our trade secrets. In this case, Maxim has been unsuccessful, both in hiring our people and in making inroads in the touchscreen market, allowing us to drop the suit. However, we will file again if we perceive more unfair efforts to hire away our employees.'"
The trial court was also entitled to conclude that the litigation was conducted in a manner calculated to magnify Maxim's legal expenses by impeding the progress of Cypress's own lawsuit while employing tactics that were discourteous and inconsiderate at best, and vexatious and oppressive at worst. For example, Cypress waited to amend its complaint until the last day on which it could have filed opposition to the demurrer interposed by Maxim nearly four months earlier. As previously noted, the amended complaint added nothing of substance to its predecessor. Yet its filing required Maxim to demur a second time, and delayed any determination on the legal sufficiency of the pleading for another four months.
An inference of dilatory and oppressive intent is also supported by Cypress's belated and evasive response to Maxim's demand for specification of the trade secrets at issue. As counsel pointed out, Cypress was not entitled to withhold a definitive statement of the alleged trade secrets until some later time. He cited Perlan Therapeutics, Inc. v. Superior Court (2009) 178 Cal.App.4th 1333, 1350 [101 Cal.Rptr.3d 211], where the court wrote that a party was not entitled to describe a trade secret so vaguely as to amount to an
Further similar evidence appears in Cypress's responses to discovery. On December 13, 2011, counsel for Maxim sent a "meet and confer" letter to opposing counsel protesting, among other things, an objection to an interrogatory as "vague and ambiguous" when it asked Cypress to "`identify' what you allege in the complaint to be `confidential' and a `trade secret.'" In response to a interrogatory seeking the basis for its asserted belief that Maxim had misappropriated or misused Cypress's touch screen technology, Cypress had written that it was "in the process of investigating and compiling documentation regarding its allegations in its Complaint." As counsel correctly observed, this was "in effect an admission that there are no facts or documents that support the claims in the Complaint." Cypress also apparently refused to provide discovery concerning "how Cypress protects its confidential information as well as how it recruits potential employees."
Naturally these tactics necessitated considerable effort by opposing counsel, who declared in support of the fee motion that his office had prepared a motion to compel discovery when it became aware of the dismissal of the action. This occurred, counsel for Maxim declared, when he learned — along with the rest of the world — about Cypress's press release. A mere three days earlier, counsel for Cypress had written to him suggesting that they meet in about two weeks to discuss the long-brewing dispute over Cypress's failure to make discovery. Counsel for Cypress made no apparent effort to notify Maxim of the dismissal, and indeed did not send a copy of the dismissal until five days after it — and the press release — were promulgated.
Finally, the trial court was also entitled to take note of the transparent unsoundness of Cypress's generation of further litigation — and litigation expense — through its transparently unsound attempts to seal a compilation of Cypress touch screen technicians prepared by Maxim (i.e., its attorneys) from public sources. Admittedly, Maxim itself generated some early confusion by seeking to file this information under seal. Once it abandoned that effort, however, it had to be clear to Cypress and its counsel that nothing in the record could overcome the presumption in favor of public accessibility in court proceedings.
In sum, the record amply supported the trial court's implied finding that the action was maintained for an improper purpose.
The judgment for fees is affirmed.
Premo, J., and Elia, J., concurred.