Acorn Bay v. CamelBak Products, LLC
- William Alsup
- 3:20-cv-05214
- U.S. District Court · Northern District of California
- 5
In Acorn Bay v. CamelBak Products, Judge Alsup granted in part and denied in part a dismissal motion, allowing some claims to proceed and superseding two others.
Acorn Bay’s claims for breach of the implied covenant of good faith and fair dealing and violation of California Business and Professions Code Section 17200 were superseded; its trade-secret misappropriation, breach-of-contract, and patent claims could proceed.
What happened
Acorn Bay sued CamelBak Products over bite-valve designs, alleging that CamelBak used Acorn Bay’s confidential information after licensing discussions and agreements. The case included trade-secret, contract, unfair-competition, and patent claims.
CamelBak withdrew its challenges to the trade-secret misappropriation and nondisclosure-agreement claims. The court then considered whether California’s trade-secret law superseded Acorn Bay’s claims for breach of the implied promise of fair dealing and violation of California Business and Professions Code Section 17200.
The court ruled that the trade-secret law superseded both of those claims and that the implied-promise claim would also fail as unnecessary. The motion was granted in part and denied in part: the trade-secret misappropriation, breach-of-contract, and patent claims could proceed. Judge Alsup issued the order.
The detailed version
- Acorn Bay v. CamelBak Products, LLC · No. 3:20-cv-05214
- William Alsup
- Dec. 24, 2020
Background
Acorn Bay developed a bite valve for reusable water bottles and approached CamelBak in 2012 about licensing the design. The parties entered a nondisclosure agreement limiting CamelBak’s use of Acorn Bay’s proprietary information during licensing discussions. They later entered an option agreement, followed by a licensing agreement under which CamelBak would work with Acorn Bay to market a product in exchange for per-item royalties and nonrefundable advances.
CamelBak apparently paid the first advance but terminated the licensing agreement before the second advance was due. In January 2019, CamelBak launched Eddy+ drinking valves that Acorn Bay alleged used its technology in violation of the nondisclosure and licensing agreements. Acorn Bay filed this patent and trade-secret dispute.
Motion and analysis
CamelBak moved to dismiss parts of the complaint. During the briefing, the court ordered Acorn Bay to fully disclose its asserted trade secrets before receiving discovery, as required by California Code of Civil Procedure Section 2019.210. At oral argument, CamelBak withdrew its challenges to the pleading of Acorn Bay’s trade-secret misappropriation and breach-of-nondisclosure-agreement claims.
The remaining issue was whether the California Uniform Trade Secrets Act, or CUTSA, superseded Acorn Bay’s claims for breach of the implied covenant of good faith and fair dealing and violation of California Business and Professions Code Section 17200. The court explained that CUTSA provides the exclusive civil remedy for trade-secret misappropriation and supersedes claims based on the same core facts, subject to exceptions including contractual remedies and other remedies not based on trade-secret misappropriation.
The court held that Acorn Bay’s implied-covenant claim was, in substance, a trade-secret misappropriation claim because Acorn Bay’s timeliness argument depended on when it learned that CamelBak had allegedly commercialized products using its trade secrets. CUTSA therefore superseded the claim. The court added that treating the claim as a contract claim would not save it because the allegations repeated the alleged contract breach and sought the same relief as the companion contract claim.
The court also held that CUTSA superseded Acorn Bay’s Section 17200 claim. The complaint described that claim as based on CamelBak’s alleged misappropriation and use of Acorn Bay’s confidential and trade-secret information. The court rejected Acorn Bay’s argument that the contract supplied an independent property right and explained that Section 17200 provides equitable remedies rather than contractual damages.
Disposition
The court granted in part and denied in part CamelBak’s motion. Acorn Bay’s trade-secret misappropriation and breach-of-contract claims could proceed because CamelBak had withdrawn its challenge to them. CUTSA superseded Acorn Bay’s claims for breach of the implied covenant of good faith and fair dealing and violation of Section 17200. CamelBak had not challenged the patent-infringement claim in this motion, so that claim also proceeded. The order was signed by Judge Liam Alsup.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.