SoCal Diesel v. Extrasensory Software CA2/1 ( 2021 )

Filed 5/3/21 SoCal Diesel v. Extrasensory Software CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
opinions not certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been certified for publication or ordered published for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
SOCAL DIESEL, INC., B290062, B293020
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC597857)
v.
PUBLIC—REDACTED
EXTRASENSORY SOFTWARE, VERSION OF OPINION
INC., et al.,
Redacts material from sealed
Defendants and Respondents. *
record. (Civ. Code, § 3426.5;
Cal. Rules of Court, rules 8.45,
8.46(f)(1) & (f)(2).)
*
This case involves material from a sealed record. In
accordance with Civil Code section 3426.5 and California Rules of
Court, rules 8.45, 8.46(f)(1) and (f)(2), we have prepared both
public (redacted) and sealed (unredacted) versions of this opinion.
We hereby order the unredacted version of this opinion sealed.
APPEAL from orders of the Superior Court of Los Angeles
County, David Sotelo, Judge. Reversed and remanded with
directions.
Hacker Law Group, Jeffrey A. Hacker and Kristen E.
Green for Plaintiff and Appellant.
Karish & Bjorgum, A. Eric Bjorgum and Marc Karish for
Defendants and Respondents.
___________________________________
SoCal Diesel, a manufacturer of devices that communicate
with computers on truck engines, sued Extrasensory Software, a
competitor, and Ira and Robyn Emus, its principals, for trade
secret misappropriation, alleging defendants stole an algorithm
used in SoCal’s products. After presentation of the plaintiff’s
evidence, the court granted nonsuit as to Robyn, finding no
evidence supported the allegation that she misappropriated any
trade secret. After a jury verdict in favor of SoCal, the trial court
granted Extrasensory’s and Ira’s motion for new trial, finding no
evidence suggested the algorithm in their product was (1) similar
to SoCal’s algorithm or (2) wrongfully acquired.
We conclude the court improperly granted a new trial, as
no reasonable fact finder could conclude from the evidence that
defendants’ algorithm was not substantially similar to SoCal’s,
nor that it was reverse engineered by proper means. We further
conclude nonsuit was improperly granted as to Robyn, whom
evidence suggested oversaw Extrasensory’s operations and knew
that Ira had misappropriated SoCal’s algorithm. Accordingly, we
reverse the court’s orders and remand the matter with directions
to vacate nonsuit and consider defendants’ other grounds for new
2
trial, and if none pertain, reinstate the jury verdict and conduct
further proceedings consistent with this opinion.
BACKGROUND
A. The Trade Secret
A modern truck engine is controlled by a computer, called
an Engine Control Module (Control Module), which receives
signals from sensors throughout the vehicle, interprets them, and
uses the results to communicate with actuators that adjust such
factors as ignition timing, air-fuel ratios, and idle speed. The
Control Module thus “tunes” the engine, while it is running, to
meet desired performance and emissions goals. Embedded
software in modern Control Modules is complex and
sophisticated, able to monitor and regulate hundreds of
parameters to optimize performance.
The group of settings necessary to achieve a particular
performance profile is called a “tune.”
A Control Module can be accessed by way of an “Onboard
Diagnostics” (OBD) port under the driver’s-side dashboard. A
mechanic can attach a cable between the OBD port and a
personal computer to receive information from and convey
commands to the Control Module.
Data streams to and from the Control Module may be
intercepted by a “can analyzer,” which gathers the data in binary
(1’s and 0’s) or hexadecimal form.
The performance and emissions goals established by a
truck manufacturer are achieved by the “stock” tune, which the
manufacturer pre-programs into the Control Module before it
leaves the factory. Because an engine must meet various
environmental, fuel-use, and longevity standards, the stock tune
is relatively conservative.
3
But some modern Control Modules can be reprogrammed
by truck owners.
An owner who has modified an engine with nonstandard
equipment—for example a turbo- or supercharger, or high
performance spark plugs or fuel injection—or who wishes to
operate the vehicle in nonstandard conditions—such as in racing,
towing, or offroading—may desire a tune different from the stock
tune.
SoCal manufactures diesel racing parts, assembles racing
engines, and distributes competition performance vehicle parts.
It manufactures the Cummins Engine CSP5 Switch (the Switch),
an accessory that reprograms the Control Module of Cummins
diesel engines such as those found on late model Dodge Ram
trucks. The Switch attaches to a truck’s dashboard and can hold
up to five tunes. The user reprograms the Control Module with
any of the tunes simply by turning a knob.
The Switch employs software (CSP5 or EFILive software)
created by and licensed from EFILive Limited (EFI), which can
reprogram a Control Module to implement any one of five preset
tunes. The software exists not only on the Switch, but must also
be installed on the user’s personal computer [REDACTED].
Before the Switch can reprogram the Control Module, it must
initiate an identification algorithm that causes the module to
recognize the Switch user as an authorized tuner. Without this
authorization, the Control Module will be “locked,” i.e., will reject
any switching attempt.
That identification algorithm is the trade secret alleged
here.
The identification algorithm “unlocks” the Control Module
by [REDACTED].
4
[REDACTED]
(At the time of trial, EFI had licensed only two CSP5 ID
Codes, one to SoCal and one to Starlite Diesel, which is not a
party here. Starlite’s device operates similarly to SoCal’s, but
uses a mobile device rather than a Switch.)
In the first step of the algorithm, [REDACTED].
[REDACTED]
[REDACTED]
[REDACTED]
[REDACTED]
[REDACTED]. If it corresponds with [REDACTED], the
Switch will be recognized as an authorized input device, and the
Control Module will accept its tunes.
Another EFI device, called an “AutoCal,” can also retune a
Control Module using EFI CSP5 software. This device is in the
nature of a thumb drive, designed for those users who prefer that
tunes be developed by technicians away from the user’s vehicle
and then sent to the user.
SoCal identifies as its trade secret the combination of the
algorithm, including its methods and the values (constants) it
uses to compute [REDACTED] values, and its (SoCal’s) ID Code.
Defendants identify this as “Algorithm 1,” and a similar
algorithm possessed by Starlite Diesel as “Algorithm 2,” which
differs from Algorithm 1 only in that it has a different
[REDACTED] user ID Code. [REDACTED]
Although defendants’ algorithm needs no [REDACTED]
ID Code, defendants concede that they [REDACTED] SoCal’s ID
Code into each of their switches.
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B. The End User License Agreement
Using any device with CSP5 software requires that the
software first be installed on a PC. Before a user can install
CSP5 software on a PC, he or she must accept an End User
License Agreement (EULA) by selecting the “I Do Accept” option
displayed at the beginning of installation.
The EULA prohibits use of CSP5 software and any
connected device for purposes of decompiling, accessing or
otherwise reverse engineering the CSP5 algorithm. The
agreement provides: “By connecting the EFILive software to any
electronic control module, you confirm that you have read and
agreed to the EFILive Terms and Conditions. [¶] If you do not
agree with the EFILive Terms and Conditions, you must not use
the EFILive software to connect to any electronic control
module.” It provides that the user may not “modify, reverse
engineer, decrypt or decompile the EFILive software or
configuration files, or any part of them.”
When an AutoCal is sold to a technician, the EULA will pop
up on the technician’s computer screen during installation.
When the technician sends the tuned AutoCal to an end user,
however, the EULA will not follow.
EFI assigned its rights to enforce the EULA to SoCal.
C. Alleged Misappropriation of the Trade Secret
Ira and Robyn Emus were the sole officers, directors,
shareholders, and employees of Extrasensory, which like SoCal
manufactures tuning accessories for diesel engines. Both were
formerly authorized sellers of EFI devices, but the relationship
ended acrimoniously in 2012.
In 2014, defendants began manufacturing and selling
switches that defeated the EFI software lock.
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D. Litigation
On October 14, 2015, SoCal sued Ira, Robyn, and
Extrasensory for misappropriation of trade secrets (and other
claims) under Civil Code section 3426, alleging they
misappropriated the Switch algorithm. After summary
adjudication of some claims, the matter went to jury trial only on
this claim.
At trial, SoCal presented evidence that Robyn ran
Extrasensory’s operations, while Ira was its technical expert.
Robyn knew about the EULA through her tenure as an EFI
distributor, and planned with Ira to acquire and use SoCal’s
algorithm. Specifically, Robyn testified that defendants’ switch
needed EFI’s code to operate, and that EFI’s altering its software
in 2013 caused their prototype switch to cease working. She had
written, “There is no way to screw with our switch functionality
and not also screw with [SoCal’s Switch],” and testified that she
knew that defendants’ switch used SoCal’s ID Code. Robyn
testified, “They had changed the protocol, in my opinion, when
they realized that we knew how to do it. So they changed it and
then Ira figured it out again.”
Ira testified that in 2013 he [REDACTED], and advertised
on Craigslist for a “hacker” to help him [REDACTED] derive an
algorithm that would overcome the EFI software lock. That
effort proving fruitless, Ira placed another ad on an international
job Web site for engineers and programmers, and over the next
months interviewed several individuals until he found Pavel
Simonov, a programmer based in Russia, to whom he sent the
same information. Simonov agreed to “reverse engineer” the
software for $5,000, and was ultimately successful. (The parties
characterize Ira’s efforts as “reverse engineering.” We utilize this
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terminology for purposes of the appeal, without deciding whether
it is accurate.)
Ira modified and incorporated Simonov’s algorithm into
switches he then manufactured and sold.
It was undisputed at trial that Ira’s algorithm caused his
switch to [REDACTED], just as SoCal’s algorithm did (although
in Ira’s switch, this number was calculated from the ID Code
rather than [REDACTED]), employed the same [REDACTED]
SoCal’s algorithm used, [REDACTED].
Ira admitted his efforts required decompiling EFI’s
intellectual property, which was subject to the EULA, which
prohibited decompiling or reverse engineering. When asked
whether his efforts violated the EULA, he responded, “no one has
ever respected the end user license agreement.” When asked a
second time, Ira responded, “the EULA was never enforced. In
all my years of working with EFILive, the EULA was never
enforced.”
After SoCal rested its case-in-chief, the trial court granted
Robyn’s motion for nonsuit, finding that no evidence suggested
she participated in or had reason to know about any
misappropriation of SoCal’s algorithm. Because she had no
understanding of computer programming, she could not know
that the algorithm was misappropriated as opposed to reverse
engineered. The court found it “inherently improbable that
[Robyn] committed any act directly or indirectly[,] implied or
tacit[,] that would subject her to personal liability . . . .” The
court further found that SoCal’s maintenance of the action
against Robyn was in bad faith, and granted her motion for fees
and costs, awarding $198,485.24.
8
The court denied Ira’s and Extrasensory’s motion for
nonsuit.
Ira testified he has never known the content of SoCal’s
algorithm, even during trial. He merely [REDACTED].
Defendants presented evidence that Josh Chavez, a
programmer from Arizona, independently reverse engineered the
EFI software lock using an AutoCal, without using SoCal’s
algorithm, as did Dan Smith, defendants’ computer expert.
Smith and Josh Chavez both testified that defendants’ algorithm
was not similar to SoCal’s, but instead functioned like the EFI
algorithm operating on a Control Module, in that it could
[REDACTED]. (Smith testified that he reverse engineered
SoCal’s algorithm using only a pre-tuned AutoCal (and Control
Module [REDACTED]), and never encountered the EULA.)
It was undisputed, however, that defendants’ algorithm (1)
used SoCal’s user ID Code, even though it did not have to; (2)
[REDACTED].
Defendants’ algorithm differed from SoCal’s in that it
employed different calculations and operations to ultimately
obtain the same [REDACTED].
Throughout trial, SoCal attempted to rely upon the EULA.
However, the trial court undercut SoCal’s efforts to do so by
repeatedly ruling that the EULA could not “trump” or “govern
over” California law, and issuing jury instructions to that effect.
On March 23, 2018, the jury returned a special verdict
finding that Ira and Extrasensory misappropriated SoCal’s trade
secret, and awarded disgorgement of profits in the amount of
$482,000.
Ira and Extrasensory moved for judgment notwithstanding
the verdict (JNOV) and a new trial.
9
On June 14, 2018, the court denied defendants’ motion for
JNOV but granted the motion for new trial. It found that no
substantial evidence suggested SoCal’s switching algorithm “was
the same as” defendants’ algorithm.
The court found that whereas [REDACTED]. As a result,
the court found, “[defendants’] switching algorithm would
function with different [manufacturer IDs], something that
[plaintiff’s] switching algorithm would be unable to do. Put
another way, plaintiff’s switching algorithm is a
[REDACTED]. . . . The switching algorithms were not simply
different sets of instructions that would produce the same
outputs for a given input. The algorithms were different in
substance.”
The court further found that “[o]ther than innuendo, no
substantial evidence was presented that [defendants]
‘misappropriated’ or wrongfully obtained plaintiff’s designated
Trade Secret (the combined algorithm and manufacturer I.D.).”
(Internal quotations omitted.) Instead, the evidence showed that
Ira reverse engineered a “separate and distinct” algorithm, which
is permissible. “Had Ira Emus simply misappropriated the
relevant information given to him under the confidentiality
agreement, there would have been no need to even attempt
reverse engineering and, more importantly, the switching
algorithms would have simply been the same.”
SoCal appealed separately from the orders granting Robyn
nonsuit and granting Ira’s and Extrasensory’s motion for new
trial. We consolidated the appeals.
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DISCUSSION
A. New Trial
SoCal contends the trial court abused its discretion in
granting defendants’ motion for new trial. We agree.
A new trial may be granted only on grounds specified in
Code of Civil Procedure section 657, one of them being
“Insufficiency of the evidence to justify the verdict.”
“Trade secret” means “information, including a
formula, pattern, compilation, program, device, method,
technique, or process, that: [¶] (1) Derives independent economic
value, actual or potential, from not being generally known to the
public or to other persons who can obtain economic value from its
disclosure or use; and [¶] (2) Is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.”
(Civ. Code, § 3426.1, subd. (d).)
Algorithms and computer code can be trade secrets.
(Altavion, Inc. v. Konica Minolta Sys. Lab., Inc. (2014) 226
Cal.App.4th 26, 59.) Software in a product remains a trade secret
when it is not necessarily revealed during the product’s use.
(Ibid.)
“Misappropriation” of a trade secret means “Acquisition of
a trade secret of another by a person who knows or has reason to
know that the trade secret was acquired by improper means.”
(Civ. Code, § 3426.1, subd. (b).)
“Improper Means” includes theft, “inducement of a breach
of a duty to maintain secrecy, or espionage through electronic or
other means.” (Civ. Code, § 3426.1, subd. (a).)
However, “[r]everse engineering or independent derivation
alone shall not be considered improper means.” (Civ. Code, §
3426.1, subd. (a).)
11
We review an order granting a new trial for abuse of
discretion. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th
826, 860.) “[O]n appeal from an order granting a new trial upon
the ground of the insufficiency of the evidence to justify the
verdict . . . , such order shall be reversed as to such ground only if
there is no substantial basis in the record” supporting it. (Code
Civ. Proc., § 657.)
“Thus, . . . an order granting a new trial under [Code of
Civil Procedure] section 657 ‘must be sustained on appeal unless
the opposing party demonstrates that no reasonable finder of fact
could have found for the movant on [the trial court’s] theory.’
[Citation.] Moreover, ‘[a]n abuse of discretion cannot be found in
cases in which the evidence is in conflict and a verdict for the
moving party could have been reached . . . .’ [Citation.] In other
words, ‘the presumption of correctness normally accorded on
appeal to the jury’s verdict is replaced by a presumption in favor
of the [new trial] order.’ ” (Lane v. Hughes Aircraft Co. (2000) 22
Cal.4th 405, 412.) “The reason for this deference ‘is that the trial
court, in ruling on [a new trial] motion, sits . . . as an independent
trier of fact.’ [Citation.] Therefore, the trial court’s factual
determinations, reflected in its decision to grant the new trial,
are entitled to the same deference that an appellate court would
ordinarily accord a jury’s factual determinations. [¶] The trial
court sits much closer to the evidence than an appellate court.
Even the most comprehensive study of a trial court record cannot
replace the immediacy of being present at the trial, watching and
hearing as the evidence unfolds. The trial court, therefore, is in
the best position to assess the reliability of a jury’s verdict and, to
this end, the Legislature has granted trial courts broad discretion
to order new trials.” (Ibid.)
12
Here, the trial court found that SoCal failed to establish
either that defendants copied SoCal’s algorithm or that they
misappropriated as opposed to permissibly reverse engineered it.
If supported by the evidence, these findings undermined the
essential assertions forming the basis of the jury’s verdict—that
defendants obtained SoCal’s trade secret by improper means—
and therefore ostensibly provided a sufficient basis for ordering a
new trial.
However, we conclude the record fails to support either
finding.
Although Smith and Chavez opined that defendants’
algorithm was not similar to SoCal’s, what they in fact described
was substantively identical. In Step One, [REDACTED].
Defendants attempt to distinguish the manner in which
Ira’s and SoCal’s algorithms [REDACTED]. But it was
undisputed that Ira’s algorithm would not work without
[REDACTED].
Only the specific operations employed to reach interim
values were different. The initial values, end value, and all
constants were the same, and both algorithms “functioned
substantially the same way and accomplished substantially the
same result.” (Sinclair v. Aquarius Electronics, Inc. (1974) 42
Cal.App.3d 216, 222.)
Parties “cannot escape responsibility by showing that they
have improved upon or modified plaintiff’s process. Even though
they may have modified or improved the plaintiff’s process they
are still wrongfully using its property.” (By-Buk Co. v. Printed
Cellophane Tape Co. (1958) 163 Cal.App.2d 157, 169; see also
American Can Co. v. Mansukhani (7th Cir. 1984) 742 F.2d 314,
328-329 [“a party may not use another’s trade secret, even with
13
independent improvements or modifications, so long as the
product or process is substantially derived from the trade
secret”].)
“One who seeks to pirate an invention, like one who seeks
to pirate a copyrighted book or play, may be expected to introduce
minor variations to conceal and shelter the piracy. Outright and
forthright duplication is a dull and very rare type of
infringement. To prohibit no other would place the inventor at
the mercy of verbalism and would be subordinating substance to
form.” (Graver Tank & Mfg. Co. v. Linde Air Products Co. (1950)
339 U.S. 605, 607.) “If the law were not flexible enough to reach
such modifications, trade secret protection would be quite
hollow.” (American Can Co. v. Mansukhani, supra, 742 F.2d at p.
329.)
The jury was entitled to accept Smith’s and Chavez’s
descriptions of the algorithms, but whether the algorithms were
similar or dissimilar was an ultimate fact solely for the jury to
decide.
We conclude the jury could not have found the algorithms
were materially dissimilar.
No evidence was cited to support, and none supported, the
trial court’s conclusion that defendants’ algorithm was robust
enough to use different ID Codes [REDACTED]. On the
contrary, the undisputed evidence from both sides established
that defendants’ switch used, and was required to use, SoCal’s ID
Code [REDACTED].
Neither did evidence support the court’s finding that Ira
appropriated the trade secret by proper means. It was
undisputed that installing CSP5 software on any Switch or other
connecting device was subject to the EULA, which prohibited
14
decompiling or reverse engineering. Ira also essentially conceded
that he deliberately violated the EULA for the purpose of reverse
engineering the CSP5 software. He was asked twice at trial
whether his efforts violated the EULA, and his only response was
that “the EULA was never enforced.”
Entering into a contract with the intention of breaching it
constitutes fraud. (Lazar v. Superior Court (1996) 12 Cal.4th
631, 638.)
Civil Code section 3426.1 states that “Reverse engineering
or independent derivation alone shall not be considered improper
means.” (Civ. Code, § 3426.1, subd. (a), italics added.) Use of the
word “alone” indicates that reverse engineering attended by some
delict is improper.
“ ‘The basic logic of the common law of trade secrets
recognizes that private parties invest extensive sums of money in
certain information that loses its value when published to the
world at large.’ [Citation.] Based on this logic, trade secret law
creates a property right ‘defined by the extent to which the owner
of the secret protects his interest from disclosure to others.’ ”
(DVD Copy Control Assn., Inc. v. Bunner (2003) 31 Cal.4th 864,
880.) “By sanctioning the acquisition, use, and disclosure of
another’s valuable, proprietary information by improper means,
trade secret law” “recognizes that ‘ “good faith and honest, fair
dealing, is the very life and spirit of the commercial world.” ’ ”
(Id. at p. 881.)
Fraudulent violation of EFI’s EULA, which expressly
prohibited the very measures employed here and was designed to
avoid the very result obtained, defeated EFI’s (and by assignment
SoCal’s) efforts to protect its interest, and cannot be considered
good faith and honest, fair dealing. We conclude the deliberate
15
violation was an improper means by which to reverse engineer
SoCal’s algorithm. (See Viken Detection Corp. v. Videray Techs.,
Inc. (D.Mass. Jan. 7, 2020, Civil A. No. 19-10614-NMG) 2020
U.S.Dist. Lexis 2138, at pp. *10-11.)
Defendants argue the EULA is irrelevant because reverse
engineering can never be an improper means of obtaining a trade
secret. Untrue. As stated above, Civil Code section 3426.1,
subdivision (a) provides that “Reverse engineering or
independent derivation alone shall not be considered improper
means.” (Italics added.) Reverse engineering accomplished by
fraud is not reverse engineering alone. Entering into a EULA
with the intention of violating its terms is fraud.
Defendants argue that reverse engineering is proper where
a rightful user is “examining or testing a product to determine
whether it works.” Perhaps so, but nothing suggests that was
defendants’ purpose here. On the contrary, defendants
admittedly reversed engineered SoCal’s algorithm in order to
create their own competing product.
Defendants argue that SoCal’s counsel characterized them
as “cheaters” during opening argument, which inflamed the jury’s
passions, and in closing argument asserted that defendants
violated the EULA, which misrepresented the law. Defendants
argue a new trial is warranted because of counsel’s misconduct.
We disagree. Characterizing defendants as cheaters was no more
inflammatory than SoCal’s theory that defendants deliberately
schemed to misappropriate its trade secret. An attorney “ ‘may
vigorously argue his case and is not limited to “Chesterfieldian
politeness.” ’ ” (People v. Fields (1983) 35 Cal.3d 329, 363.) And
as discussed above, counsel’s characterization of the law was
correct.
16
Defendants argue a new trial is warranted on the issue of
damages because Chavez’s independent reverse engineering of
the SoCal algorithm vitiated some of SoCal’s damages by
reducing the period during which the algorithm was entitled to
protection. We are in no position to reweigh the evidence on
damages, and thus cannot from our vantage point order a new
trial based on them. However, it not being clear from the record
to what extent the trial court evaluated whether damages were
excessive, (it having concluded that a new trial was required on
other grounds), we will remand the matter with directions for the
court to conduct such further proceedings as it sees fit.
B. Grounds for Nonsuit
SoCal contends nonsuit as to Robyn was improper. We
agree.
A motion for nonsuit tests the legal sufficiency of a
plaintiff’s evidence, operating, in effect, as a demurrer to the
evidence. The motion lies when the plaintiff’s evidence, taken as
true and construed most strongly in favor of the plaintiff, entitles
the plaintiff to no relief under any theory. (Castaneda v. Olsher
(2007) 41 Cal.4th 1205, 1214-1215.) In a proper case the court
has the duty to forestall the cost and delay of a meritless lawsuit
by granting nonsuit. (O’Keefe v. South End Rowing Club (1966)
64 Cal.2d 729, 746.)
A nonsuit motion may be made “[o]nly after, and not before,
the plaintiff has completed his or her opening statement, or after
the presentation of his or her evidence in a trial by jury.” (Code
Civ. Proc., § 581c, subd. (a).) The motion may be granted as to
“some but not all of the issues involved in the action.” (Code Civ.
Proc., § 581c, subd. (b).)
17
Because a nonsuit deprives the plaintiff of the right to have
a claim determined by a jury, California courts take a restrictive
view of the circumstances under which it may be granted.
(Carson v. Facilities Development Co. (1984) 36 Cal.3d 830, 838.)
In reviewing a judgment of nonsuit, we are “guided by the
same rule requiring evaluation of the evidence in the light most
favorable to the plaintiff. ‘The judgment of the trial court cannot
be sustained unless interpreting the [proposed] evidence most
favorably to plaintiff’s case and most strongly against the
defendant and resolving all presumptions, inferences and doubts
in favor of the plaintiff a judgment for the defendant is required
as a matter of law.’ ” (Carson v. Facilities Development Co.,
supra, 36 Cal.3d at p. 839.)
An officer or director of a corporation may not use her
position as an agent of the corporation to escape liability for
“personally direct[ing] or participat[ing] in . . . tortious conduct”
(Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490,
504), but is liable to a third party “[w]hen [her] acts are wrongful
in their nature” (Civ. Code, § 2343). Thus, “a corporate officer or
director may be liable for an intentional tort” committed by the
corporation at the officer or director’s behest. (PMC, Inc. v.
Kadisha (2000) 78 Cal.App.4th 1368, 1372.)
Here, Robyn testified that defendants’ switch needed EFI’s
code, and consequently SoCal’s algorithm, to operate, and that
EFI’s altering its software in 2013 caused their prototype switch
to cease working. She testified, “They had changed the protocol,
in my opinion, when they realized that we knew how to do it. So
they changed it and then Ira figured it out again.” Undisputed
evidence thus established that Robyn planned with Ira to acquire
and use SoCal’s trade secret. She knew about the EULA through
18
her tenure as an EFI distributorship, knew that it prohibited
reverse engineering of EFI’s software, and knew defendants’
switch could not be created without such reverse engineering.
Robyn controlled Extrasensory’s actions, and thus directly
participated in the misappropriation of SoCal’s trade secret.
A reasonable jury could have inferred from this evidence
that Robyn understood that defendants’ switch needed SoCal’s
algorithm, and ultimately worked only because it had it. She
knew the algorithm could not be obtained without reverse
engineering EFI’s software, and controlled Extrasensory’s actions
in helping Ira to misappropriate SoCal’s trade secret.
The court found, and defendants argue, that Robyn was not
a computer programmer, and did not know what decompiling
hardwired code entailed.
The point is irrelevant, because Robyn knew that the
EULA prohibited decompiling EFI’s hardwired code, no matter
how it was accomplished.
Defendants argue that Robyn, at worst, believed the trade
secret was acquired through reverse engineering, but “reverse
engineering is expressly excluded from the definition of improper
means.” This argument has been discussed and rejected above.
19
DISPOSITION
The orders are reversed, and the matter remanded for
further proceedings consistent with this opinion. Appellant is to
receive its costs on appeal.
NOT TO BE PUBLISHED
CHANEY, J.
We concur:
BENDIX, Acting P. J.
†
FEDERMAN, J.
†
Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.
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