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COMPUTER ASSOCS. INTL. v. ALTAI

August 20, 1993

COMPUTER ASSOCIATES INTERNATIONAL, INC., Plaintiff,
v.
ALTAI, INC., Defendant.


PRATT


The opinion of the court was delivered by: GEORGE C. PRATT

PRATT, Circuit Judge (sitting by designation):

 In August 1988, Computer Associates ("CA") sued Altai, Inc. ("Altai"), alleging both copyright infringement and trade-secret misappropriation. After a bench trial, I held that Altai's OSCAR 3.4 computer program had infringed CA's copyrighted CA-SCHEDULER program, but that Altai's OSCAR 3.5 program did not infringe CA's copyrighted ADAPTER because the two were not substantially similar. With respect to CA's trade-secret-misappropriation claim, I concluded that it was preempted by federal copyright law, see 17 U.S.C. § 301(a), and dismissed it accordingly. Computer Assocs. Int'l, Inc. v. Altai, Inc., 775 F. Supp. 544 (E.D.N.Y. 1991).

 CA appealed from the portion of the judgment that dismissed its OSCAR 3.5 copyright-infringement and trade-secret claims. The second circuit affirmed the copyright infringement ruling, but vacated the preemption ruling and remanded the trade-secret claim for further proceedings. Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992). A misappropriation-of-trade-secrets claim is not preempted if it contains an "extra element" such that the nature of the state-law claim is "qualitatively different" than a federal copyright-infringement claim. Id. at 716. The second circuit concluded that the "extra element" in CA's trade-secret claim was that Altai's use of copyrighted expression may have violated "a duty of confidentiality established by state law", id. at 719, and therefore the state-law claim was not preempted by federal law.

 With respect to OSCAR 3.4, the second circuit remanded for "reconsideration of those aspects of CA's trade secret claims related to Altai's alleged constructive notice of Arney's theft of CA'S trade secrets and incorporation of those secrets". Id. at 720. With respect to OSCAR 3.5, the second circuit held that Altai had "actual notice of Arney's earlier trade secret violations" and remanded "for such further inquiry anticipated by the district court". Id. at 721. On remand, the parties briefed the trade-secret issues under Texas law, as well as the statute-of-limitations issue first raised in Altai's answer and further urged by Altai in its post-trial memorandum. CA also moved to reopen discovery and trial in order to present newly discovered evidence.

 I conclude that CA's trade-secret claim is barred by the applicable statute of limitations. Therefore, the complaint is dismissed and CA's motion for reopening discovery is denied as moot.

 DISCUSSION

 The facts are set forth fully in my earlier decision, Computer Assocs., 775 F. Supp. at 549-55, and the second circuit's opinion, Computer Assocs., 982 F.2d at 697-700; familiarity with those decisions is presumed.

 In my prior opinion I opined that if there were no preemption I would have been inclined to reject Altai's statute-of-limitations defense. Now, however, in view of the remand and Altai's reassertion of the statute of limitations as a bar to the resurrected trade-secret claim, it is necessary to examine more closely the argument advanced by Altai.

 In Texas the limitations periods for various actions are set forth in the Civil Practice and Remedies Code. Section 16.003 is generally applicable to torts including misappropriation of trade secrets. See, e.g., Coastal Distributing Co. v. NGK Spark Plug Co., 779 F.2d 1033 (5th Cir. 1986) (applying Tex. Rev. Stat. Ann. art. 5526, precursor to Tex. Civ. Prac. & Rem. Code § 16.003, to trade-secret claim). Subsection (b) of § 16.003 covers wrongful death actions, while subsection (a) covers all other torts. Section 16.003(a) reads as follows:

 
a person must bring suit for trespass for injury to the estate or to the property of another, conversion of personal property, taking or detaining the personal property of another, personal injury, forcible entry and detainer, and forcible detainer not later than two years after the day the cause of action accrues.

 Tex. Civ. Prac. & Remedies Code § 16.003(a) (Vernon 1986) (emphasis added). The question of when a cause of action "accrues", and thus when the running of the statute of limitations commences, is a question of law to be determined by the court. Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990); Willis v. Maverick, 760 S.W.2d 642, 643 (Tex. 1988).

 Generally, a cause of action accrues when "the wrongful act effects an injury, regardless of when the plaintiff learned of such injury". Moreno, 787 S.W.2d at 350; Saenz v. Keller Industries of Texas, Inc., 951 F.2d 665, 668 (5th Cir. 1992); Robinson v. Weaver, 550 S.W.2d 18, 19 (Tex. 1977). The "purpose" of a limitation statute is to compel the exercise of a right of action within a reasonable time so that the opposing party has a fair opportunity to defend while evidence is fresh and witnesses are available. Moreno, 787 S.W.2d at 352; Gaddis v. Smith, 417 S.W.2d 577, 578 (Tex. 1967). Therefore, according to the general rule of accrual, when facts come into existence that authorize a ...


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