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Cybertek Computer Products, Inc. v. Whitfield, 1977 Cal. App. LEXIS 2140, 203 U.S.P.Q. (BNA) 1020 (Cal. Super. 1977) (full-text).

Factual Background[]

Defendant Whitfield worked for Plaintiff Cyberteck for several years and was an integral part of their creation of software dealing with online life insurance. Defendant signed a nondisclosure agreement at the end of 1970 and quit working for Plaintiff in early 1971. Whitfield then went to work for Defendant Tracor, at first on a consulting basis, and then as a full-time employee. Tracor employed Whitfield to create for them a system with substantially similar capabilities as the program that Plaintiff had previously designed.

There is no contention that Plaintiff did not satisfy the requirements for a trade secret. Plaintiff contends that Whitfield disclosed to Tracor information concerning Plaintiff's trade secrets that he was obligated to keep secret. Defendants contended that the nondisclosure agreement signed by Whitfield in 1970 was invalid as a non-competition agreement, and should not apply. Further, Defendants contend that any and all information that Whitfield provided to Tracor was commonly known in the computer industry and as such could not be a trade secret. Finally, Defendants argue that the creation of Tracor's system was independently developed through Whitfield's expertise in the field, not by copying Plaintiff's design.

Trial Court Proceedings[]

The court held that the nondisclosure agreement signed by Whitfield was valid and if Whitfield provided Tracor with confidential information, then both would be in violation of the nondisclosure agreement and trade secret laws.

In addition the court held that, while some of the components that comprised Plaintiff's system may be common knowledge, "the specific implementation involving a particular combination of general concepts may well amount to a trade secret," and do so in this case.

Finally, the court held that, while not always dispositive, the substantial similarities between Plaintiff's system and Defendant's system supports a finding that Whitfield used confidential information obtained from his work with Plaintiff to create Tracor's system in violation of his nondisclosure agreement, which amounted to misappropriation of Plaintiff's trade secrets.

As Tracor was on notice that the information that Whitfield was divulging was a trade secret, they are liable for misappropriation as well.