Aqua Connect, Inc. v. Code Rebel, LLC

February 13, 2012
Federal Court
District Court for the Central District of California

On February 13, 2012 the United States District Court for the Central District of California held that Plaintiff Aqua Connect, Inc. (“Aqua Connect”) failed to state a claim of misappropriation where defendant Code Rebel, LLC (“Code Rebel”) reverse engineered its software in breach of an end user license agreement (“EULA”). Aqua Connect argued that the EULA created a “duty to maintain secrecy” which was breached when Code Rebel reverse engineered the software. The district court, however, pointed out that California courts defined the “duty to maintain secrecy” to exist in the context of a fiduciary duty or an employment agreement, and the duty does not arise from a form license agreement. It stated that “nowhere has it been recognized that a party wishing to protect proprietary information may employ a consumer form contract to…change the statutory definition of ‘improper means’ under trade secret law to include reverse engineering.” See DVD Copy Control Association, Inc. v. Bunner, 31 Cal. 4th 864, 901 n.5 (2003) (quoting).

The dismissed the trade secrets claim without leave to amend, because "no additional facts [could] be alleged to support a legally cognizable misappropriation . . . claim."

Aqua Connect, Inc.
Code Rebel, LLC
Uniform Trade Secrets Act

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