Computer Associates International, Inc. v. Altai, Inc.
Docket: 1090
Court: Court of Appeals for the Second Circuit; July 17, 1995; Federal Appellate Court
Computer Associates International, Inc. (CA) appealed a judgment from the United States District Court for the Eastern District of New York that dismissed its claims against Altai, Inc. for misappropriation of trade secrets, citing the Texas statute of limitations. The case arose when former CA employee Claude F. Arney, III, took proprietary source code to Altai and used it to help develop a program known as OSCAR 3.4, after which Altai produced OSCAR 3.5 without Arney’s involvement or the disputed code. Initially, the district court found in favor of CA regarding copyright infringement for OSCAR 3.4 but against it for OSCAR 3.5, and ruled that CA’s trade secret claims were preempted by the federal Copyright Act. CA appealed the decision on OSCAR 3.5 and the trade secret misappropriation claim. The Second Circuit affirmed the copyright ruling but remanded for further consideration of the trade secrets claim. Upon remand, the district court concluded that CA's trade secret claim was barred by Texas's two-year statute of limitations. CA contended that the discovery rule should apply to extend the limitations period and that the statute’s application violated Texas’s "open courts" provision. The Second Circuit certified two questions to the Supreme Court of Texas regarding the applicability of the discovery rule to trade secret claims and the constitutionality of the limitations period. The Supreme Court of Texas answered both questions in the negative, leading the Second Circuit to affirm the district court's amended judgment dismissing CA's claims.