Use Of Software Containing Allegedly Misappropriated Code Does Not, By Itself, Render User Liable For Misappropriation Of Trade Secrets
A trade secret dispute between software publishers does not render a publisher’s customer liable under the California Uniform Trade Secrets Act. In Silvaco Data Systems v. Intel Corp., Silvaco sued Intel for misappropriation of trade secrets. The subject trade secret was software code that Silvaco claimed was misappropriated by another software publisher. That publisher disputed Silvaco’s claim. After Intel’s purchase, Silvaco prevailed on its claim against the other publisher, then sued Intel. The essence of Silvaco’s claim was that Intel, with knowledge of Silvaco’s disputed allegation against the other software publisher, nevertheless purchased software containing the disputed code from that publisher.
The Silvaco court recognized a distinction between use of software and misappropriation of source code contained in the software. The court found that Intel’s purchase and use of software containing disputed code did not render Intel liable for misappropriating the software code because use of the software did not provide Intel any knowledge regarding the software code. The Silvaco court explained its ruling with an analogy to a pie shop customer: “Intel appears to have been in substantially the same position as the customer in the pie shop who is accused of stealing the secret recipe because he bought a pie with knowledge that a rival baker had accused the seller of using the rival’s stolen recipe. The customer does not, by buying or eating the pie, gain knowledge of the recipe used to make it.”