Commure, Inc. v. Canopy Works, Inc.

Background

Canopy Works, Inc. alleged that it owned trade-secret information relating to technology for protecting healthcare workers. Canopy and its predecessor company had a commercial relationship with Commure, Inc. and its predecessor company, under which Commure provided Canopy’s Strongline® safety solution to healthcare-industry customers. After Canopy ended that relationship, Commure sued Canopy and related defendants. Canopy asserted counterclaims, including claims under the California Uniform Trade Secrets Act and the federal Defend Trade Secrets Act.

Canopy served a document identifying its alleged trade secrets on January 30, 2025. Commure, together with counterclaim-defendants Athelas, Inc., Tanay Tandon, and Dhruv Parthasarathy, moved to strike the identification. Commure also sought a stay of discovery relating to Canopy’s trade-secret claims until Canopy provided an adequate disclosure.

Legal standard

California Code of Civil Procedure § 2019.210 requires a party alleging trade-secret misappropriation under California law to identify the alleged trade secret with “reasonable particularity” before beginning trade-secret-related discovery. The court explained that this requirement helps prevent meritless claims, prevents discovery from being used to obtain an adversary’s trade secrets, helps define the proper scope of discovery, and gives defendants enough information to prepare their defenses.

The requirement does not demand a complete description of every detail or a preliminary trial on whether the information ultimately qualifies as a trade secret. The disclosure must, however, identify the alleged trade secrets clearly enough for the opposing party to investigate them and for the court to manage discovery. The court also explained that the federal Defend Trade Secrets Act does not itself require a particularized disclosure before discovery, although a court may impose disclosure requirements to manage discovery efficiently.

Court’s analysis

Commure raised five main objections: that Canopy had voluntarily disclosed the alleged trade secrets; that Canopy had not adequately described its efforts to preserve secrecy; that Canopy had not described the alleged economic value of the information; that the disclosure lacked reasonable particularity; and that the disclosure did not adequately distinguish the alleged trade secrets from information known in the industry.

The court rejected the first three objections as grounds for striking the disclosure at this stage. Whether Canopy had voluntarily disclosed the information, made reasonable efforts to preserve secrecy, or could establish independent economic value concerned the merits of Canopy’s claims. Canopy did not have to prove those matters in its disclosure as a condition of obtaining discovery. The court denied Commure’s motion to strike on the objections concerning secrecy efforts and independent economic value.

The court agreed in part with Commure’s reasonable-particularity objections. Canopy’s disclosure used broad descriptions such as “architecture,” “infrastructure,” and “software configurations.” The problem was not simply that Canopy used general categories. Rather, the disclosure did not always make clear whether Canopy claimed an entire system or design, only particular features and functions, or a particular combination of those elements. The court also found that Canopy needed to identify more clearly any combinations of known designs, components, or techniques that it contended were trade secrets.

Canopy had informed the court that it wanted to clarify its disclosure and eliminate catch-all language. The court found those clarifications warranted. It required Canopy to amend the disclosure so that it clearly identified the trade secrets within the broader descriptions of its technology and removed the catch-all language. Canopy could amend its descriptions of other alleged trade secrets, but it was not required to do so.

Discovery stay and disposition

The court declined to stay discovery. It held that the California discovery-sequencing requirement applied only to discovery related to trade secrets, and it was not persuaded that discovery concerning Canopy’s other counterclaims and affirmative defenses should be blocked merely because it might overlap with the trade-secret claims. The court also found no clear line between discovery exclusively concerning trade secrets and discovery concerning other matters, including Canopy’s breach-of-contract counterclaim.

The court granted Commure’s motion to strike in part and denied it in part. Canopy was required to re-examine and amend its disclosures for trade secrets 11–12, 14–26, and 30–37, and to eliminate catch-all language. The court denied Commure’s motion to stay discovery.