Introduction

Trade secret litigation is becoming an ever more important part of intellectual property strategy, particularly in California. For example, trade secret litigation increased in federal courts in 2025, and the most active venue was the Central District of California. There have been numerous developments in trade secret litigation since the beginning of 2025 that have significant impacts on companies doing business in California. These include the confirmation of the availability of worldwide damages when acts take place in part in the United States, the clarification of the significant early disclosures required under California trade secret statutes and relatively relaxed early disclosure requirements for federal trade secret claims, and the possibility of further emphasis on trade secret litigation in light of increased protection of employee mobility in California. Finally, no account of the evolving trade secret litigation landscape in California would be complete without an attempt to grapple with the complex interaction between legal and technological developments related to AI and the protections and risks presented by trade secrets. These developments are important for companies litigating and conducting business in California to consider as part of their trade secret strategy decisions.

Disclosure Requirements and Ultimate Standards of Proof

One of the ever-present issues in trade secret cases is how much the plaintiff needs to disclose about what the alleged trade secrets actually are, and when that disclosure must take place. In August 2025, the Ninth Circuit clarified an important difference between the timing of disclosure under the California Uniform Trade Secret Act (CUTSA) and the federal Defend Trade Secrets Act (DTSA) with respect to these disclosures. In Quintara Biosciences, Inc. v Ruifeng Biztech, Inc., 149 F.4th 1081 (9th Cir. 2025), the court explained that, under DTSA, “a plaintiff must prove that the claimed trade secret has ‘sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons... skilled in the trade’”. Id. at 1087 (emphasis omitted, alteration in original). Importantly, this requirement is formulated not as a discovery obligation but as part of the proof of facts for trial. Hence, as the Quintara court stated, “[w]hether a trade secret is identified with ‘sufficient particularity’ is a question of fact” and “a district court may grant summary judgment only if there is no genuine dispute that a plaintiff could identify a trade secret with ‘sufficient particularity’”. Id. at 1087-88. In contrast, the Quintara court explained that “[s]tate law in California, where this case arises, takes a different approach under CUTSA’s rule that a plaintiff shall identify a trade secret with ‘reasonable particularity’ before discovery commences”. Id. at 1088 (quoting Cal. Civ Proc. Code § 2019.210). Thus, while the California statute requires a certain level of trade secret disclosure before discovery can commence, the federal statute requires that “reasonable particularity” of trade secret allegations be treated as part of the plaintiff’s ultimate proof of facts.

This distinction impacts the claims that can proceed to discovery under the DTSA and CUTSA. In Quintera, the district court struck, or as the Ninth Circuit would write, “functionally dismiss[ed]”, id. at 1089, federal trade secret claims for failure to comply with a discovery order requiring them to be disclosed with “reasonable particularity”, which is the discovery standard from the CUTSA. As the court explained, the district court had “ultimately relied on a California rule that does not control a federal trade-secret claim”. Id. The Ninth Circuit held that it was an abuse of discretion when the district court ordered that the case would proceed on only two of the trade secrets because the other nine had not been disclosed with “reasonable particularity”. Id. This does not appear to have been intended as a narrow holding, as the court further explained that “a DTSA trade-secret claim will rarely be dismissible as a discovery sanction in a situation like this”, and instead the question of whether there is “reasonable particularity” is one to “be resolved on summary judgment or at trial”. Id. at 1091.

The central implication of Quintara is that trade secret plaintiffs filing in California have a particular advantage if they assert claims under the DTSA. Rather than being required to disclose detailed trade secret contentions before discovery can open as required by the CUTSA, plaintiffs under the DTSA can proceed to discovery based on a less stringent standard of disclosure. Essentially a DTSA plaintiff has to meet the pleading standard and, at least on the facts of Quintara, go some amount beyond that in early discovery. But the DTSA plaintiff has through discovery and until the summary judgment stage of the case to meet the statutory particular standard as part of its proof of facts.

Worldwide Damages

Another developing issue is the application of worldwide damages for misappropriation of trade secrets under the DTSA that occur only in part in the United States. In Motorola Solutions, the Seventh Circuit held that “the DTSA rebuts the presumption against extraterritoriality” and “is satisfied if ‘an act in furtherance of the offense [misappropriation of a trade secret] was committed in the United States’”. Motorola Sols., Inc. v Hytera Commc’ns Corp. Ltd., 108 F.4th 458, 483 (7th Cir. 2024) (Cert. Denied 145 S. Ct. 1182 (2025)). The court explained that “unlike copyright’s predicate-act doctrine for extraterritorial application, [the DTSA] does not require a completed act of domestic misappropriation, nor does it impose a causation requirement”. Id. at 487. The court concluded, “[s]o long as an act in furtherance of the offense was committed in the United States,... then all damages caused by the offense are recoverable..., wherever in the world the rest of the underlying conduct occurred”. Id. at 487-88 (internal quotation marks omitted).

Given the Supreme Court’s denial of certiorari, courts sitting in California can be expected to look to this ruling, and at least one has done so. A court in the Northern District of California wrote: “The extraterritorial reach of the Defend Trade Secrets Act is broader than that of the Copyright Act, because the Defend Trade Secrets Act ‘does not require a completed act of domestic misappropriation, nor does it impose a specific causation requirement’”. Beijing Meishe Network Tech. Co. v TikTok Inc., No. 23-cv-06012-SI, 2025 LX 353142, at *58 (N.D. Cal. Sep. 2, 2025) (quoting Motorola Sols., 108 F.4th at 486). In this case, the individual that was the “alleged source of improper acquisition” “lived and worked in China”, and so the Plaintiff relied on acts of further distribution of the application that allegedly improperly used the trade secrets in the United States to meet the “act in furtherance” requirement for extraterritorial application of DTSA based on “U.S.-based employees work with Google and Apple for distribution of the TikTok application in those companies’ respective app stores” and “defendants develop[ing] the ‘video editing functionality’ of TikTok and other allegedly infringing apps in China and in ByteDance, Inc.’s Mountain View, California office”. Id. at *58-59. While the court denied plaintiff’s motion seeking summary judgment that it was entitled to extraterritorial damages, it also rejected the defendants’ argument that “domestic acts of misappropriation that occur as a result of or in parallel with foreign acts are not ‘act[s] in furtherance of the offense’”. Id. at *59-60. The court concluded that “Defendants’ argument carries more weight in the copyright context but reads too much into the law in the trade secret context – at least according to the Seventh Circuit”. Id. at *59.

As illustrated by the TikTok case, the continuing viability of extraterritorial damages for claims of trade secret misappropriation under DTSA without needing to show that the complete act of misappropriation took place in the United States provides an obvious further incentive for trade secret plaintiffs in California to include DTSA claims.

Implications of California’s Ban on Stay-or-Pay Contracts

Another significant development in California is the recent implementation of a statutory ban of so-called stay-or-pay clauses in employment contracts. Assembly Bill (AB) 692 went into effect as Cal. Bus. & Prof. Code § 16608 on 1 January 2026. This new statutory provision states that, subject to certain exceptions:

“[F]or contracts entered into on or after January 1, 2026, it shall be unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, a contract term that does any of the following:

(A) Requires the worker to pay an employer, training provider, or debt collector for a debt if the worker’s employment or work relationship with a specific employer terminates.

(B) Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the worker’s employment or work relationship with a specific employer terminates.

(C) Imposes any penalty, fee, or cost on a worker if the worker’s employment or work relationship with a specific employer terminates.”

Cal. Bus. & Prof. Code § 16608. This new statute is part of a broader legal framework in California protecting employee mobility and expands California’s already broad determination not to enforce restrictive covenants that tend to limit employee mobility. See Cal. Bus. & Prof. Code § 16600 (2025) (“This section shall be read broadly... to void the application of any noncompete agreement in an employment context, or any noncompete clause in an employment contract, no matter how narrowly tailored, that does not satisfy an exception in this chapter”). Because restrictions on employee mobility are one strategy for reducing the risk of loss of trade secrets to competitors, it is reasonable to postulate that – all else being equal – claims of trade secret misappropriation may increase as a result of this further limitation on the viability of such contracts. The magnitude of any such impact of course remains to be seen, particularly given that the new statute applies only to contracts entered on or after 1 January 2026.

Developments at Nexus of Trade Secret and AI

A discussion of the current trends of trade secret litigation in California requires consideration of the interactions between the rapidly evolving AI landscape and trade secret protection. One such point of interaction connects to the broad area of employee mobility. The issue of employee mobility is a well-known concern in the AI industry. In February 2026, xAI’s DTSA trade secret misappropriation claims against OpenAI in connection with OpenAI hiring certain former xAI employees were dismissed with leave to amend for failure to plead sufficient facts to allege direct or indirect liability for misappropriation. X.AI Corp. v OpenAI, Inc., No. 25-cv-08133-RFL, 2026 LX 10330 (N.D. Cal. Feb. 24, 2026). Of particular interest, the court explained that while one employee “did eventually begin working for OpenAI... xAI does not allege that he ever used any of its trade secrets in his new job”. Id. at *17. While the employee “allegedly exfiltrated xAI’s source code” about a month before “beginning his employment with OpenAI (presumably in a role similar to his position at xAI)”, that “is not enough to allow a reasonable inference that [the employee] actually used those trade secrets at OpenAI”. Id. The court explained that holding otherwise would “undercut the well-established principle that mere possession of trade secrets is not sufficient to constitute misappropriation” and “would automatically subject future employers to potential trade secret misappropriation liability every time they hired someone who, without their knowledge beforehand or ratification afterwards, had improperly taken confidential information from their former employer on the way out the door, even if there is no indication that the information was actually used in the subsequent job”. Id. at *17-18 (internal quotation marks omitted). While the principle that mere possession of trade secret information is insufficient to establish misappropriation is not new, the recent battle for AI talent has put a special emphasis on the challenges of protecting trade secrets in the context of employee mobility. xAI has recently amended its pleading, and the outcome of this suit remains to be determined. X.AI Corp. v OpenAI, Inc., No. 25-cv-08133-RFL, Dkt. No. 81 (N.D. Cal. Mar. 17, 2026).

Another intersection between trade secret law and AI was highlighted in a recent decision denying xAI’s request for a preliminary injunction against the California Attorney General to prevent enforcement of Assembly Bill 2013 (“A.B. 2013”, titled “Artificial Intelligence Training Data Transparency”, now Cal. Civ Code § 3111), signed in September 2024. The court explained that A.B. 2013 requires “developers of ‘a generative artificial intelligence system or service’ that is ‘publicly available to Californians for use’ to ‘post on the developer’s internet website documentation regarding the data used by the developer to train the generative artificial intelligence system or service’”, including a “‘high-level summary of the datasets used in the development of the generative artificial intelligence system or service’ addressing, but not limited to, twelve enumerated topics”. X.AI LLC v Bonta, No. CV 25-12295 JGB (SSCx), 2026 LX 151126, at *2-3 (C.D. Cal. Mar. 4, 2026). xAI challenged the law on the basis that it violates the takings clause of the Fifth Amendment because the information about the datasets is trade secret; that it violates the First Amendment; and is unconstitutionally vague. Id., at *5, *9-10. The court found xAI “not likely to succeed on the merits of its Takings Clause claim based on the Complaint as pled”. Id. at *13. While the court noted the “important role of datasets in AI training and development[] and that, hypothetically, datasets and details about them could be trade secrets”, xAI plaintiffs had impermissibly adopted a “generalized, abstract pleading” approach that “inhibited a determination in their favor at this stage”. Id. at *12-13 (C.D. Cal. Mar. 4, 2026). The court likewise found a “distinct possibility” of prevailing on the First Amendment challenge but not “a likelihood of success on the merits”. Id., at *25 (emphasis original). Finally, the court also held that “the record at this stage is insufficiently developed for the Court to determine that Plaintiff is likely to succeed on the merits of its vagueness challenge”. Id., at *28. Because X.AI was decided at the preliminary injunction stage, it remains to be seen whether and to what extent any of these challenges may ultimately succeed. In the meantime, the disclosure requirements of AB 2013 are in tension with efforts to protect AI trade secrets.