## Facts

- Cadence Design Systems, Inc. developed electronic design automation software, including Framework II (DFII) source code treated as a trade secret.
- Several Cadence employees left in 1991 to form a competing firm, Avant! Corporation (then ArcSys).
- In 1994, a Cadence vice president resigned to join Avant!, prompting Cadence to threaten litigation for trade secret misappropriation and related claims.
- In June 1994, Cadence and Avant! settled and executed a broad mutual release of “any and all claims” existing as of the settlement date.
- In December 1995, Cadence discovered evidence that DFII source code had been stolen in 1991 and used by Avant! in its products.
- Cadence sued in federal court for trade secret misappropriation under the California Uniform Trade Secrets Act (CUTSA).
- The federal district court granted summary judgment to Avant!, reasoning the 1994 release barred Cadence’s claims; the Ninth Circuit certified a question to the California Supreme Court on CUTSA claim accrual.

## Issues

1. Under CUTSA, does a trade secret misappropriation claim arise only once at the initial misappropriation, or does it arise anew with each subsequent use or disclosure by the same defendant?
2. For limitation and release purposes, does “continuing misappropriation” constitute a single claim or multiple separately accruing claims?

## Decision

- The California Supreme Court answered the certified question: as between the same plaintiff and the same defendant, continued improper use or disclosure after the initial misappropriation is part of a single claim for “continuing misappropriation.”
- The claim accrues at the time of the defendant’s initial misappropriation; later uses or disclosures do not create new, separately accruing claims.
- The court returned the matter to the Ninth Circuit for further proceedings consistent with this interpretation of California law.

## Legal Principles

- Under Civil Code § 3426.6, “a continuing misappropriation constitutes a single claim of misappropriation.”
- CUTSA does not treat each later use or disclosure of the same trade secret by the same defendant as a separate misappropriation that restarts accrual or limitations.
- The single-claim rule supports commercial certainty and avoids indefinite exposure based solely on ongoing effects of an initial misappropriation.
- This accrual rule can affect the reach of broad releases covering claims existing as of a given date, because ongoing use may be part of a claim deemed to have arisen at the initial misappropriation.

## Conclusion

The court held that CUTSA treats ongoing use or disclosure of a misappropriated trade secret by the same defendant as one continuing claim accruing at the initial misappropriation, not as a series of new claims triggered by later uses.


Cadence Design Sys., Inc. v. Avant! Corp., 29 Cal. 4th 215 (Cal. 2002)