Waymo v. Uber—the recent battle royale over the future of self-driving car technology—ended in a settlement between the parties, but an important legal question remains decidedly unsettled.  In the words of Judge William H. Alsup, who presided over the case: “Is an engineer really supposed to get a frontal lobotomy before they go to the next job?”

California law fiercely protects employee mobility. As Judge Alsup said, hiring away a competitor's talent is “the American way.” But California also protects trade secrets. What happens when those two important public policies collide? What is the difference between a trade secret and the lessons and skills that any professional engineer gains on the job and that inevitably travel with her as she moves from job to job? And what is the best way for courts to consider claims about thoughts and concepts that may exist in an engineer's own mind?

Employee Mobility Is Good … But Trade Secrets Must Be Protected

The most common way that an employer prevents its employees from working for a competitor is through a covenant not to compete. These covenants are enforceable in forty-seven out of the fifty states and in the District of Columbia—but not in California. The state's public policy in favor of employee mobility prevents California courts from enforcing most covenants not to compete, full stop, even if they are made in another state and enforceable there.  Based on this public policy, California has expressly rejected the doctrine of “inevitable disclosure”—the theory that when a former employee goes to work for a competitor (even one working in the same space), the former employer's trade secrets will inevitably be disclosed. To paraphrase Gordon Gekko's speech that made a surprise appearance in the Waymo v. Uber trial, “employee mobility is good” (whether motivated by greed or otherwise). It drives innovation and increases employees' compensation and benefits, as companies pay top dollar to attract and retain talent.

One of the exceptions, however, is that former employers can take action if an employee walks off with trade secrets and uses them unfairly at her new job. More than 50 years ago, Justice Roger Traynor of the California Supreme Court held that covenants not to compete are enforceable if they are “necessary to protect the employer's trade secrets.” This exception for trade secrets sets up one of the most important fault lines in California trade-secret law today. An engineer—like a lawyer, a doctor, a teacher or any other professional—is expected to improve her skills, hone key talents and gain important experience as she works in her field. She will be better 10 years into her career than she was at the outset. And she cannot possibly be expected to forget those on-the-job lessons if she jumps ship to a competitive company, or starts her own business. So what's a girl to do?

But … What's a Trade Secret?

Both California's Uniform Trade Secret Act (CUTSA) and the Defend Trade Secrets Act (DTSA) say that a “trade secret” can include wide varieties of information so long as it is the subject of reasonable measures to keep it secret and (b) derives independent economic value from its secrecy. In addition, a number of California cases suggest that trade secrets can be stored in memory. In other words, a former employer can still try to bring a misappropriation claim even if a former employee didn't print out or download any of her employer's documents or materials to take with her.

There is an important exception. Engineering concepts that are in the general toolbox of skills expected of an engineer in the field cannot count as trade secrets because they can't reasonably be considered to be secret. Back in 1964, the U.S. Court of Appeals for the Ninth Circuit in Winston Research v. Minnesota Mining & Manufacturing said that “general engineering principles in the public domain and part of the intellectual equipment of technical employees” are not “secret,” and therefore their use cannot be considered to breach the former employer's confidences. This idea remains good law after California's enactment of the Uniform Trade Secret Act.

And How Do You Draw the Line?

California Code of Civil Procedure Section 2019.210 requires a party alleging misappropriation to “identify the trade secret with reasonable particularity” before any discovery takes place, in order to prevent companies from conforming their idea of what a trade secret is to whatever is in its competitor's files. Some California cases suggest that this specificity requirement prevents “employers from using trade secret law as a weapon against employee mobility” because a trade secret identified with specificity will distinguish it from “matters of general knowledge in the trade or of special knowledge of those persons who are skilled in the trade.”

But what if this specificity requirement provides a false sense of security? Even very specific information can be something well-known to engineers in a field—particularly engineers working in highly specialized areas. And a former employer can also argue that a new design that varies in some ways from the old can still reflect trade-secret misappropriation, thus adding some amount of elbow room into the requirement of specificity. Nor does the idea that the concept is known only to the former employer provide a good guidepost. What about a practical lesson that an employee learned on the job and that no one else has quite figured out yet? Of course, new employers must take precautions. But no matter how many precautions new employers take, and no matter how clear they are with incoming employees about the rules, so long as a misappropriation claim can be based on information in an engineer's head, some ambiguity will remain.

One important safeguard under existing law is the requirement that in order to be actionable, acquisition of a trade secret must generally be done through “improper means,” like theft, bribery, misrepresentation or breach of a duty to maintain secrecy. As applied to trade secrets in memory, this requirement can help to distinguish between routine, on-the-job learning and intentional, bad-faith memorization for the purpose of unfair competition.

Additionally, in order to truly guard against misuse of the misappropriation statutes, California courts must vigilantly police the boundary line between a practical skill or lesson learned in the course of employment and something that can properly be defined as a trade secret. This is important to ensure that the trade-secret exception does not swallow up California's public policy in favor of employee mobility.

In Waymo v. Uber, Judge Alsup tentatively planned to instruct the jury that trade secrets “do not cover skills, talents or abilities developed by employees in their employment even though they may be developed at the expense of the employer,” including “trial and error and application of their professional skills on the job,” which “naturally sharpen their skills and accumulate practical lessons that supplement their skills, talents, and abilities.” Thus, even if something might otherwise satisfy the broad definition of a trade secret, it would not qualify as a trade secret if it fell within this carve-out. This type of instruction is essential to help California juries walk the fine line between trade secret protection and employee mobility. Even better would be additional court rulings establishing this line, or even clearer guidance from the legislature.

Some would object that a bright-line rule would unduly tilt the balance in favor of employee mobility and against trade secret protection. Perhaps, but it would also have the salutary effect of making disputes easier to resolve. Without such clear guidance, judges and juries will need to continue struggling to deal with a gray area of the law where the finer factual points of each individual case will be left to dictate an inevitably blurry boundary line (provided those cases go to verdict!).

Karen L. Dunn and Meredith R. Dearborn are partners at the law firm Boies Schiller Flexner, and represented Uber and Ottomotto in Waymo v. Uber Technologies, No. 17-0939 WHA, which went to trial in February of this year. The case settled after four days of evidence.