Unreported / Non-Citable
Background
In 2014, Cryplex, Inc. and Bitmain Technologies Holding Company discussed Cryplex's proposed cryptocurrency mining chip and a possible acquisition of Cryplex by Bitmain. Cryplex and Bitmain's subsidiary, Bitmain Technologies Limited, executed a mutual nondisclosure agreement effective May 28, 2014. In July 2014, Cryplex gave a presentation in Hong Kong that it later asserted disclosed its trade secrets, but it did not mark the presentation as confidential or proprietary. After that meeting, Bitmain's Jihan Wu sent an e-mail styled as a 'Memorandum' (MOU) outlining acquisition terms, funding, and performance milestones; neither party signed the MOU.
Cryplex then revised the MOU's terms internally: chief operating officer Haris Basit drafted a 'Rewritten Memorandum with Detailed Milestones' that altered milestone parameters and expanded Bitmain's obligations, and Cryplex sent Bitmain a draft stock purchase agreement containing terms not found in the MOU. At an August 2014 meeting in Beijing, the parties still had not agreed on the performance milestones, which Cryplex later acknowledged was an 'essential' term. On November 8, 2014, Bitmain said it would not proceed with the acquisition. In early 2015, Bitmain agreed to hire Cryplex's Peter Holm at the rate Basit proposed, a hiring Cryplex had recommended 'very highly.'
On November 8, 2018, Cryplex sued Bitmain for breach of the NDA, trade secret misappropriation, breach of the MOU, and unfair business practices. The trial court dismissed the fourth cause of action on demurrer on May 14, 2019, granted Bitmain summary judgment on February 14, 2025, and entered judgment for Bitmain with prejudice on March 13, 2025. Cryplex appealed only the summary adjudication of the trade secret and MOU claims.
The Court’s Holding
The Court of Appeal reviewed de novo and affirmed. On the breach of MOU claim, the court held that Bitmain demonstrated Cryplex cannot prove the first element of a contract claim—the existence of a contract—because the undisputed facts showed no mutual assent. The MOU was unsigned; Cryplex's own personnel described it as leaving 'many things ambiguous' and kept revising the milestones; and Cryplex's draft agreement added different terms, making it a counteroffer that Bitmain never accepted. Because the parties did not agree 'upon the same thing in the same sense,' no contract formed, and the court did not reach whether the MOU was sufficiently definite.
The court declined to consider arguments Cryplex raised for the first time in its reply brief and held that Cryplex forfeited its 'binding contract to negotiate' theory by not raising it in the trial court. It also found Cryplex's reliance on Smissaert and Banner unavailing because those cases apply only where all essential terms were definitely agreed upon in the writing—not shown here, given the unresolved milestones.
On the trade secret misappropriation claim, the court held that the three-year limitations period under Civil Code section 3426.6 began accruing no later than March 2015. The sole inference from the undisputed facts was that Cryplex had reason to suspect misappropriation by November 2014 or, at the latest, March 2015: it had shared its asserted trade secrets without confidentiality designations, never asked Bitmain to return or destroy the materials, and its own personnel expressed concern in 2014 about having 'shared everything with Bitmain.' Cryplex's November 2018 complaint was therefore untimely, and the court affirmed the judgment.
Key Takeaways
- An unsigned memorandum of understanding that the parties themselves treated as ambiguous and kept revising does not create a binding contract, because the parties did not mutually assent to the same terms.
- A draft agreement that adds new or different terms operates as a counteroffer; if the original offeror does not accept it, no agreement is effectuated.
- Arguments raised for the first time in a reply brief, or not raised in the trial court, are forfeited on appeal.
- Under the Uniform Trade Secrets Act's discovery rule, the limitations period begins to run once the plaintiff has reason to suspect injury and some wrongful cause; a plaintiff cannot wait for the facts to find it.
- A party that shares asserted trade secrets without confidentiality designations and never demands their return or destruction risks a time-barred misappropriation claim.
Why It Matters
Although unpublished and not citable under California Rules of Court, rule 8.1115, the decision applies settled California contract-formation principles to preliminary acquisition negotiations: continued negotiation and revision of essential terms after an unsigned memorandum prevents contract formation. It also illustrates the appellate forfeiture rules the court enforced against Cryplex's late-raised theories.
The trade secret ruling shows how the discovery rule can bar a claim where the plaintiff's own conduct—sharing technical information without confidentiality markings and failing to demand its return—demonstrates early inquiry notice of suspected misappropriation.