Cypress Semiconductor Corp. v. Superior Court of Santa Clara County

I. Introduction

This case arises under California’s Uniform Trade Secrets Act (Civ. Code, § 3426 et seq. (CUTSA)). The question presented is this: If someone steals a trade secret and then sells it to a third party, when does the statute of limitations begin to ran on any misappropriation claim the trade secret owner might have against the third party? The trial court concluded that the limitations period did not begin to run until the third party had actual notice of the trade secret owner’s claim to the information. For reasons we shall explain, we disagree with the trial court. We conclude that with respect to the element of knowledge, the statute of limitations on a cause of action for misappropriation begins to run when the plaintiff has any reason to suspect that the third party knows or reasonably should know that the information is a trade secret. The third party’s actual state of mind does not affect the running of the statute.

II. Factual and Procedural Background

The trade secret owner in this case is plaintiff Silvaco Data Systems (Silvaco). Silvaco develops and licenses electronic design automation (EDA) software. Customers for EDA software use it to…