Opinion
An aerospace manufacturer subcontracted with an engineering company for development of a new in-flight aircraft refueling system. Subject to a confidentiality agreement, the manufacturer revealed trade secrets to the subcontractor in order to facilitate the design of a new device for the system. After the relationship disintegrated, the subcontractor contracted with the United States Air Force to create a similar device. The manufacturer sued the subcontractor for misappropriation of trade secrets under the California Uniform Trade Secrets Act (UTSA). The subcontractor denied using trade secrets, claiming it reverse engineered and independently developed the device. The principal issue in this case is who bears the burden of proof with respect to that claim. The manufacturer sought a trial court instruction that placed the burden of proof on the subcontractor, arguing the subcontractor was in the better position to bear that burden. The trial court refused the manufacturer’s proposed instruction. The jury found for the subcontractor.
The law deals with this problem by shifting the burden of producing evidence, not the burden of proof, which remains with the plaintiff or the party asserting an affirmative defense, and does not shift. The practical effect *1664 of this allocation is to require a defendant to produce rebutting evidence once the plaintiff has presented a prima facie and credible case. This is a fair allocation, well suited to a fair result. There are limited exceptions (and some confusion) in the reported cases. But the basic principles controlling this allocation of burdens remain intact. They govern the issue presented in this case.
For this reason, in the published portion of this opinion, we find no error in the court’s ruling on the proposed instruction. We also conclude that under the facts of the case, even if there was error, it was not prejudicial. In the nonpublished portion of the opinion, we reject the claim that evidenсe was improperly admitted.
FACTUAL AND PROCEDURAL SUMMARY
Sargent Fletcher, Inc. (Sargent Fletcher), designs and manufactures in-flight aircraft refueling systems. Able Corporation (Able), is an engineering company that designs mechanical devices for the aerospace industry.
Sargent Fletcher designed the FR-300, an in-flight refueling system, in the late 1950’s. The system typically mounts on the wings of a Lockheed C-130 tanker aircraft and allows mid-air refueling of aircraft such as fighter jets and helicopters. The FR-300 functions using a hose and drogue system. A control assembly runs the hose and reel portion of the hose and drogue system. The control assembly is the “brain” of the system, governing the extension, retraction, and storage of thе hose. The “brain” automatically maintains a constant tension on the probe to prevent the hose from snapping or becoming too loose during refueling. In the early 1990’s, the Air Force contracted with Sargent Fletcher to replace the original FR-300’s “brain,” which had hydro-mechanical controls, with an updated microprocessor-based control system. Sargent Fletcher subcontracted work for development of the microprocessor controls to Able. In order to perform under its contract, Able needed access to Sargent Fletcher’s proprietary information on the FR-300 design. Sargent Fletcher provided that acсess to Able.
In September 1994, while the companies were in the midst of developing the new technology, Sargent Fletcher filed for bankruptcy protection. The company that purchased Sargent Fletcher pulled out of the contract with Able, but the two firms continued to work together without a written agreement.
Able withdrew from the collaboration in December 1995. Able then won an Air Force contract to build a system to replace the FR-300. Sargent Fletcher sued Able, alleging misuse of its trade secret information. Able *1665 generally and specifically denied all allegations in Sargent Fletcher’s complaint and pleaded 14 affirmative defenses, nonе of which asserted reverse engineering or independent derivation.
The case was tried to a jury. The trial lasted seven weeks. Each party presented volumes of evidence bearing on whether Able improperly used Sargent Fletcher’s trade secret. Sargent Fletcher proposed an instmction that would have placed the burden of proof for the element of use of the trade secret onto Able: “If you believe that Sargent Fletcher disclosed any trade secrets for its FR-300 series aerial refueling system to Able, and that Able subsequently manufactured a substantially similar system, the burden then shifts to Able to prove that it in fact developed its hose reel system independently, that is, without the use of any of Sargent Fletcher’s trade secrets.” The trial court rejected the instmction. After five weeks of deliberation, the jury reached a verdict for the defendant, Able. In a special verdict, the jurors found (nine to two) that at least one of Sargent Fletcher’s drawings and specifications contained a trade secret to which Able had access, but that Able did not use one or more of the trade secrets in designing, manufacturing, or testing its own product. Sargent Fletcher has appealed from the ensuing judgment.
DISCUSSION
I
Under the UTSA, a prima facie claim for misappropriation of trade secrets requires the plаintiff to demonstrate: (1) the plaintiff owned a trade secret, (2) the defendant acquired, disclosed, or used the plaintiff’s trade secret through improper means, and (3) the defendant’s actions damaged the plaintiff. (Civ. Code, § 3426.1;
1
see
Frantz v. Johnson
(2000)
During the seven-week trial, the parties presented extensive evidence and testimony to convince the jury that Able did or did not misappropriate Sargent Fletcher’s trade secrets. There is no issue on appeal as to sufficiency of the evidence to support the jury’s verdict in favor of Able. Because there is not, there is no need to discuss the technical details of Sargent Fletcher’s claim that Able improperly used its technology or that Able could not have independently derived or reverse engineered the device. Instead, the issues are whether the trial court erred in rejecting Sargent Fletcher’s proposed jury instruction or in admitting Abie’s documentary evidence and, if so, the effect of that error. The principal objection to the instruction was that it would have shifted the burden of proof to show proper use onto the defendant. Able also asserted various technical objections, which we do not discuss since Abie’s principal objection is well taken.
II
We begin with a discussion of key terms:
burden of proof
and
burden of producing evidence.
Attorneys, judges, and commentators often have confused these terms and the concepts they represent. As the United States Supreme Court observed, “For many years the term ‘burden of proof’ was ambiguous because the term was used to describe two distinct concepts. Burden of proof was frequently used to refer to what we now сall the burden of persuasion—the notion that if the evidence is evenly balanced, the party
*1667
that bears the burden of persuasion must lose. But it was also used to refer to what we now call the burden of production—a party’s obligation to come forward with evidence to support its claim.”
(Director, Office of Workers’ Compensation Programs v. Greenwich Collieries
(1994)
The terms burden of proof and burden of persuasion are synonymous. (1 Witkin, Cal. Evidence (4th ed. 2000) Burden of Proof, § 3, p. 157; 2 McCormick, Evidence, supra, Burden of Proof, § 336, p. 409.) Because the California usage is “burden of proof,” we use that term here.
“Exceрt as otherwise provided by law, a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting.” (Evid. Code, § 500.) To prevail, the party bearing the burden of proof on the issue must present evidence sufficient to establish in the mind of the trier of fact or the court a requisite degree of belief (commonly proof by a preponderance of the evidence). (Evid. Code, §§ 115, 520.) The burden of proof
does not shift
during trial—it remains with the party who originally bears it. (Evid. Code, § 500;
Mathis v. Morrissey
(1992)
Historically in California, the burden of producing evidence or burden of production also has been known as the “burden of going forward” with the evidence.
(People v. Valverde
(1966)
Unlike the burden of proof, the burden of producing evidence
may
shift between plaintiff and defendant throughout the trial. (See Evid. Code, § 550; Cal. Law Revision Com. com., 29B West’s Ann. Evid. Code (1995 ed.) foll. § 550, p. 631; 1 Witkin, Cal. Evidence,
supra,
Burden of Producing Evidence, § 4, pp. 157-158; 2 McCormick, Evidence,
supra,
Burden of Proof, § 336, p. 409.) Initially, the burden of producing evidence as to a particular fact rests on the party with the burden of proof as to that fact. (Evid. Code, § 550, subd. (b); 9 Wigmore, Evidence (Chadbourn ed. 1981) § 2487, p. 293.) If that party fails to produсe sufficient evidence to make a prima facie case, it risks nonsuit or other unfavorable determination.
(Mathis v. Morrissey, supra,
Ill
Sargent Fletcher argues that Able should have borne the burden of proof to demonstrate it did not use the plaintiff’s trade secret through improper means (the second element for misappropriation under the UTS A). Able counters that although the burden of producing evidence may have shifted to it if Sargent Fletcher established a prima facie case, the burden of proof to demónstrate use of a trade secret through improper means remained with the plaintiff, Sargent Fletcher. We agree.
As we have seen, California law provides that “[ejxcept as otherwise provided by law, a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting.” (Evid. Code, § 500.) “The party claiming that a person is guilty of crime or wrongdoing has the burden of proof on that issue.” (Evid. Code, § 520.) In sum, the plaintiff generally bears the burden of proof to establish its prima facie case.
A
As we also have discussed, to prove misappropriation of a trade secret under the UTSA, a plaintiff must establish (among other things) that the defendant improperly “used” the plaintiff’s trade secret. (Civ. Code, § 3426.1.) Thus, under Evidence Code sections 500 and 520, the plaintiff bears the burden of proof on that issue, both at the outset and during trial. On the other hand, the defendant bears the burden of proof on new matter and affirmative defenses.
(Rancho Santa Margarita v. Vail
(1938)
The only California state authority Sargent Fletcher cites is a nonpublished California Superior Court case;
Cybertek Computer Products, Inc. v. Whitfield
*1669
(Super. Ct. L.A. County, 1977, No. 23911). But “[a] written trial court ruling has no precedential value.”
(Santa Ana Hospital Medical Center v. Belshé
(1997)
We turn to the statute. The statutory design indicates that the Legislature did not intend independent derivation or reverse engineering to be new matter or an affirmative defense. The references to independent derivation and reverse engineering are embedded within the definition of improper means. (Civ. Codе, § 3426.1, subd. (a).) They are not set off as separate defenses or even separate definitions. It is the plaintiff’s burden to show improper use as a part of its prima facie case. Proof that defendant’s use resulted from independent derivation or reverse engineering is evidence that there was no improper use on its part. The defendant does not have a “burden of proof’ to make that showing. But it acts at its peril if it fails to present evidence that rebuts the plaintiff’s showing. In some cases, its failure to do so may require judgment in plaintiff’s favor. (See Cal. Law Revision Com. com., 29B West’s Ann. Evid. Code (1995 ed.) foll. § 550, p. 631.)
Stated another way, the two claims (impropеr use and denial of such use) are opposite sides of the same coin. The plaintiff’s proof that another party used plaintiff’s trade secret, to which that party gained access (properly, for a limited purpose, or otherwise), and that the party’s identical or similar product incorporates the same design, is a prima facie showing that the party did not independently derive or reverse engineer the product. (See
Moore v. Kulicke & Soffa Industries, Inc.
(3d Cir. 2003)
*1670
Evidence of independent derivation or reverse engineering directly refutes the element of use through improper means. Thus, a party that claims it independently derived or reverse engineered a сomponent does not introduce “new matter” or an affirmative defense, but a traverse. (See
Rancho Santa Margarita
v.
Vail, supra,
B
Even if the UTSA does not require placing the burden of proof for reverse engineering or independent derivation on Able, Sargent Fletcher argues the trial court should have placed it there bеcause Able is in a better position to bear that burden.
“On rare occasions, the courts have altered the normal allocation of the burden of proof.”
(National Council Against Health Fraud, Inc. v. King Bio Pharmaceuticals, Inc.
(2003)
Courts shift the burden of proof for causation when it is
impossible
for the plaintiff to prove its case otherwise.
(Summers v. Tice
(1948)
In design defect-products liability cases, “ ‘once the plaintiff makes a prima facie showing that the injury was proximately caused by the product’s design, the burden should appropriately shift to the defendant to prove, in light of the relevant factors, that the product is not defective.’ ”
(Campbell
v.
General Motors Corp.
(1982)
Greater access to relevant evidence does not mandate that a defendant bear the burden of proof on the issue. The res ipsa loquitor rule provides an illustration. That doctrine shifts the burden of producing evidence so that plaintiffs may bring tort claims even though they lack specific proof that their injury was caused by negligence of a defendant. (See
Ybarra v. Spangard
(1944)
Courts have refused to shift the burden of proof in other cases wherе plaintiffs lacked access to information, even though the information was more readily available to the defendant. Thus, in employment discrimination cases, courts place the burden of proof on the employee to demonstrate an employer’s discriminatory intent.
(Sada v. Robert F. Kennedy Medical Center
(1997)
*1673 In summary, exceptions to the general rule placing the burden of proof for prima facie elements on defendants are made when it is otherwise impossible for the plaintiff to make its case, and when policy considerations support affording the plaintiff greater protection. The rationale of these exceptions do not apply to the case before us.
First, unlike Summers v. Tice where the plaintiff could never prove which defendant caused his injury, it is not impossible for a plaintiff suing for misappropriation of its trade secret to prove, through civil discovery and its own experts, that the defendant used the trade secret through improper means. The plaintiff can introduce a variety of evidence to raise an inference of improper use: it can demonstrate that defendant had access to its trade secret; that the defendant’s design mirrors the plaintiff’s design; that the defendant could not have discovered the intricate details of the plaintiff’s design independently or through reverse engineering from publicly available material; that the defendant’s design configuration is one of many that were possible and matches the plaintiff’s design; or that the defendant designed the product in less time than typically required to complete the trial and error process of independent derivation or reverse engineering. During its case-in-chief, a plaintiff is not required to prove improper use by presenting evidence specifically refuting reverse engineering or independent derivation, but it may choose to do so since use and nonuse are opposite sides of the same coin. Once credible evidence is presented to establish improper use by the defendant, the burden of producing evidence shifts to the defendant.
Second, the level of access to information and policy considerations do not require shifting the burden of proof in trade secret cases. Defendants almost always are in a better position to know what they did and why they did it. Liberal rules of discovery apply to even up that particular playing field. (See
Forthmann v. Boyer
(2002)
Finally, no other strong public policy interest is suggested to mandate a burden shift to the defendant to prove it did not use the trade secret. Sargent Fletcher argues a failure to place the burden of proof to demonstrate reverse engineering or independent derivation on the defendant will squelch innovation by discouraging future teaming relationships. But as Able has argued, the *1674 opposite may be true—placing the burden of proof on subcontractors might discourage them from entering into team relationships.
We find the trade secret situation more аnalogous to employment discrimination cases. In those cases, as we have seen, information of the employer’s intent is in the hands of the employer, but discovery affords the employee the means to present sufficient evidence to raise an inference of discriminatory intent. The burden of proof remains with the plaintiff, but the defendant must then bear the burden of producing evidence once a prima facie case for the plaintiff is made.
(Sada v. Robert F. Kennedy Medical Center, supra,
We conclude that the trial court correctly refused the proposed instruction that would have shifted the burden of proof.
IV
Even were we to conclude the court should have given а burden-shifting instruction, we also would conclude that Sargent Fletcher was not prejudiced by the court’s failure to do so in this case. Only prejudicial error results in reversal of a judgment. Error is prejudicial when it is probable that the party against whom it was made would have achieved a better result but for the error. (Cal. Const., art. VI, § 13; Code Civ. Proc., § 475;
Soule v. General Motors Corp.
(1994)
Refusal of the instruction did not interfere with Sargent Fletcher’s ability to present its full case, as it did. In the seven-week trial, both parties presented voluminous documentary and testimonial evidence to demonstrate that Able did or did not use Sargent Fletcher’s trade secrets. Each had a full opportunity to present its casе.
Further, other instructions minimized any possible prejudice. The court instructed the jury on the elements of a claim for misappropriation of trade *1675 secrets, stating that “Sargent Fletcher must prove, by a preponderance of the evidence” each of the elements of misappropriation, including “[t]hat Able acquired, used, or disclosed Sargent Fletcher’s [trade] secret in an improper way.” That instruction was followed by another that stated, “Able has not acted improperly and is not liable to Sargent Fletcher if Able designed its product through: 1. Its own, independent efforts to discover or invent the secret; or, 2. Reverse engineering. Reversе engineering is the process of beginning with a product a person lawfully possesses and taking it apart, examining it, or testing it to determine how it works.” The court also instructed the jury that “Sargent Fletcher has the burden of proving by a preponderance of the evidence all of the facts necessary to establish the essential elements of each of its claims. [][] ... [][] Able has the burden of proving by a preponderance of the evidence all of the facts necessary to establish the essential elements of defenses it has raised.”
In fact, Able did shoulder the task of proving independent derivation and reverse engineering. This theme runs throughout the trial trаnscript. Even though, as a matter of law, the burden of proof to demonstrate independent derivation and reverse engineering did not lie with Able, in its opening statement, summation, and throughout the trial, Able argued and presented evidence that it independently developed and reverse engineered the device. The jury was instructed that Able bore the burden of proof for all the defenses it raised. It is highly unlikely that in such a complex case the jury would find the evidence to be in equipoise. Rather, it had to be persuaded one way or the other. Under the instructions it received, the jury would have to find for Sargent Fletcher unless it was convinced of the validity of Abie’s claims of independent derivation and reverse engineering by a preponderance of the evidence, or unless it refused to credit Sargent Fletcher’s case-in-chief. Given the substantial prima facie showing made by Sargent Fletcher, the strong inference is that it was persuaded by a preponderance of the evidence that Able did not use Sargent Fletcher’s trade secrets. The only other inference, that it simply did not credit the plaintiff’s case-in-chief, is hardly helpful to Sargent Fletcher, as it could only lead to a defense verdict. Thus, no matter where the trial court placed the burden of proof, the verdict would have been the same. On this record, Sаrgent Fletcher was not prejudiced by the refusal of the trial court’s instructions.
V *
*1676 DISPOSITION
The judgment is affirmed.
Vogel (C.S.), P. J., and Curry, J., concurred.
Notes
Civil Code section 3426.1 provides: “Definitions.
“As used in this title, unless the context requires otherwise:
“(a) ‘Improper means’ includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Reverse engineering or independent derivation alone shall not be considered improper means.
“(b) ‘Misappropriation’ means:
“(1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
“(2) Disclosure or use of a trade secret of another withоut express or implied consent by a person who:
“(A) Used improper means to acquire knowledge of the trade secret; or
“(B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:
“(i) Derived from or through a person who had utilized improper means to acquire it;
“(ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
*1666 “(iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
“(C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
“(c) ‘Person’ means a natural person, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision or agency, or any other legal or commercial entity.
“(d) ‘Trade secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:
“(1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
“(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
We note, finally, the line of cases, unique to the context in which they arise, holding that in a prosecution for practicing a trade or profession or operating a business without a required license or authorization, the defendant bears the burden of proof to show he or she holds a valid license or other authorization.
(People v. Boo Doo Hong
(1898)
See footnote, ante, page 1658.