## Facts

- Altavion, Inc. developed “digital stamping technology” (DST), a process for creating self-authenticating documents using barcodes containing encrypted data tied to the original document’s contents.
- Konica Minolta Systems Laboratory, Inc. (KMSL), a research-and-development subsidiary associated with multifunction printer products, entered business discussions with Altavion about embedding DST in KMSL products.
- The parties’ negotiations were governed by a nondisclosure agreement.
- During the negotiations, Altavion disclosed both the overall DST concept and specific design implementations intended to solve document-authentication and copy-detection problems.
- The business negotiations failed, and Altavion later learned KMSL had filed patent applications that encompassed the disclosed DST concept and related design ideas.
- Altavion sued for trade secret misappropriation and related relief under California law.
- After a bench trial, the superior court found KMSL misappropriated Altavion’s trade secrets (both the DST concept as a whole and specific DST design concepts), awarded damages, and awarded attorneys’ fees based on willful and malicious conduct.
- KMSL appealed, challenging the trade-secret findings and the damages/fee awards.

## Issues

1. Whether a concept-level invention disclosed during confidential negotiations can qualify as a protectable trade secret under California’s Uniform Trade Secrets Act (UTSA).
2. Whether using confidential disclosures from NDA-governed negotiations to develop and seek patents on related technology constitutes misappropriation.
3. Whether the trial court properly awarded damages and attorneys’ fees, including findings supporting a fee award for willful and malicious misappropriation.

## Decision

- The Court of Appeal affirmed the judgment for Altavion.
- The court held that Altavion’s DST concept, not only its detailed implementations, could qualify as a trade secret if it satisfied UTSA requirements (secrecy, independent economic value, and reasonable efforts to maintain secrecy).
- The court upheld the finding that KMSL misappropriated Altavion’s trade secrets by using confidential negotiation disclosures beyond the permitted purpose, including pursuing patent protection on technology derived from those disclosures.
- The court affirmed the trial court’s damages award and attorneys’ fee award, including the determination that KMSL’s conduct supported fees under UTSA.

## Legal Principles

- Under California UTSA, a protectable trade secret can include a process or compilation of information, including an integrated concept-level invention, if it derives independent economic value from not being generally known and is subject to reasonable secrecy measures.
- Confidential disclosures made under a nondisclosure agreement during commercial negotiations may remain trade secrets, and use outside the scope of the permitted purpose can constitute misappropriation.
- Seeking patent protection based on confidential information obtained through NDA-governed negotiations does not immunize a party from trade secret liability; misuse is assessed at the time of improper acquisition, use, or disclosure.
- Willful and malicious misappropriation can support an attorneys’ fee award under California UTSA.

## Conclusion

The court affirmed liability and remedies for trade secret misappropriation where a company received a concept-level invention under an NDA, then used it for its own benefit—including patent filings—after negotiations failed, and upheld damages and UTSA attorneys’ fees based on willful and malicious conduct.


Altavion, Inc. v. Konica Minolta Sys. Lab. Inc., 226 Cal. App. 4th 26 (Cal. Ct. App. 2014)