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Atpac, Inc., A California Corporation v. Aptitude Solutions

April 11, 2011

ATPAC, INC., A CALIFORNIA CORPORATION, PLAINTIFF,
v.
APTITUDE SOLUTIONS, INC., A FLORIDA CORPORATION, COUNTY OF NEVADA, A CALIFORNIA COUNTY, AND GREGORY J. DIAZ, AN INDIVIDUAL, DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiff AtPac, Inc., filed this action against defendants Aptitude Solutions, Inc. ("Aptitude"), County of Nevada, and Gregory J. Diaz alleging breach of contract, misappropriation of trade secrets under the California Uniform Trade Secrets Act ("CUTSA"), Cal. Civ. Code §§ 3426-3426.11, and copyright infringement. Aptitude now moves for summary judgment on the misappropriation of trade secrets claim pursuant to Federal Rule of Civil Procedure 56(a) on the ground that it is preempted by the copyright infringement claim.

I. Evidentiary Objections "A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence." Fed. R. Civ. P. 56(c)(2). "[T]o survive summary judgment, a party does not necessarily have to produce evidence in a form that would be admissible at trial, as long as the party satisfies the requirements of Federal Rules of Civil Procedure 56." Fraser v. Goodale, 342 F.3d 1032, 1036-37 (9th Cir. 2003) (quoting Block v. City of Los Angeles, 253 F.3d 410, 418-19 (9th Cir. 2001)) (internal quotation marks omitted). Even if the non-moving party's evidence is presented in a form that is currently inadmissible, such evidence may be evaluated on a motion for summary judgment so long as the moving party's objections could be cured at trial. See Burch v. Regents of the Univ. of Cal., 433 F. Supp. 2d 1110, 1119-20 (E.D. Cal. 2006).

Aptitude has filed numerous evidentiary objections to evidence submitted by plaintiff in opposition to the instant motion. (Docket Nos. 125-130.)

Aptitude argues in particular that certain portions of plaintiff's declarations and exhibits should be excluded from consideration by the "sham affidavit rule." "The general rule in the Ninth Circuit is that a party cannot create an issue of fact by an affidavit contradicting his prior deposition testimony."*fn1

Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 266 (9th Cir. 1991). This is because "[i]f a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own prior testimony, this would greatly diminish the utility of summary judgment as a procedure for screening out sham issues of fact." Id. (quoting Foster v. Arcata Assocs., Inc., 772 F.2d 1453, 1462 (9th Cir. 1985)) (internal quotation marks omitted).

The sham affidavit rule may be invoked only if a district court makes "a factual determination that the contradiction was actually a sham" and "the inconsistency between a party's deposition testimony [or interrogatory response] and subsequent affidavit . . . [is] clear and unambiguous." Van Asdale v. Int'l Game Tech., 577 F.3d 989, 998 (9th Cir. 2009) (internal quotations marks and citations omitted). Accordingly, "the non-moving party is not precluded from elaborating upon, explaining or clarifying prior testimony elicited by opposing counsel on deposition; minor inconsistencies that result from an honest discrepancy, a mistake, or newly discovered evidence afford no basis for excluding an opposition affidavit." Messick v. Horizon Indus., Inc., 62 F.3d 1227, 1231 (9th Cir. 1995). Aptitude contends that all references to plaintiff's Supplemental Response to Interrogatories Nos. 1 and 2*fn2 ought to be striken as shams. Plaintiff filed supplemental responses to interrogatories regarding its trade secret and copyright claims after the instant motion was filed, providing more information than had previously been given and fully distinguishing for the first time between what it considered to be a trade secret and what it considered to be covered by copyright law. However, Aptitude has not shown that the supplemental responses are inconsistent with plaintiff's prior testimony, as opposed to merely expanding on it. The court cannot find that the supplemental responses were a "sham," and thus the court overrules those objections based on that ground.

In the interest of brevity, the court will not review the substance or grounds of all the objections here, as the parties are aware of the substance of the objections and the grounds asserted in support of each objection. For the purposes of this motion, Aptitude's objections 1 to 6 to the Thomas Declaration, objections 1 and 2 to the Sandblade Declaration, and objection 15 to the Long Declaration are sustained pursuant to Federal Rule of Evidence 1002 (best evidence rule). Aptitude's objection 3 to the Krugle Declaration, objections 4, 10, 14, 18, and 19 to the Sandblade Declaration, and objection 14 to the Long Declaration are sustained on the ground that the evidence contains legal conclusions. The rest are overruled.

II. Factual and Procedural Background Plaintiff is a software company that develops and licenses computer software, including county clerk-recorder information imaging systems. (Long Decl. ¶ 2 (Docket No. 106).) These systems are designed to, inter alia, electronically cashier, record, track, and query information that is within the purview of a county clerk-recorder and to store images of relevant documents associated with this information. (Id. ¶ 4.) Plaintiff's clerk-recorder imaging information software is distributed under the mark "CRiis," which stands for "Clerk-Recorder Imaging Information System." (Id. ¶ 3.) Plaintiff has secured two copyright registrations with the United States Copyright Office for its CRiis software. (Thomas Decl. ¶ 14 (Docket No. 99).) To register its copyrights, plaintiff utilized the Copyright Office's special procedure designed to permit computer source code to be registered without destroying its potential trade secret status, wherein only a small fraction of the code is disclosed and yet the whole work of software is registered.*fn3 (Id.; see Pl.'s Req. for Judicial Notice Ex. A (Docket No. 111).)

In 1999, plaintiff entered into a License Agreement with Nevada County for the CRiis software and related services to help Nevada County electronically maintain, organize, and protect public information. (Long Decl. ¶ 9.) In November of 2008, Diaz, the Clerk-Recorder of Nevada County, notified plaintiff that Nevada County intended to terminate the License Agreement and obtain the services of Aptitude, one of plaintiff's competitors. (Id. ¶ 12.)

Plaintiff has brought claims for breach of contract against Nevada County and misappropriation of trade secrets and copyright infringement against all defendants arising from defendants' alleged mishandling of the conversion of Nevada County's data from CRiis to Aptitude's software.*fn4 (First Am. Compl. (Docket No. 22).) The items relevant to plaintiff's copyright infringement claim include thousands of computer files that comprise the CRiis software and CRiis graphical user interfaces. (Thomas Decl. ¶ 2, Ex. A.) The items relevant to plaintiff's misappropriation of trade secrets claim include, in brief, the CRiis computer source code, the confidential means of accessing the servers housing plaintiff's software package, the CRiis data schema, data files, methods, processes, and functionalities. (Id. ¶ 3, Ex. A.)

Plaintiff takes several steps to maintain the confidentiality of its alleged trade secrets, including requiring its employees to keep information confidential, requiring licensees to keep information confidential and remove its materials upon expiration of a license, providing a notice of its intellectual property and trade secret rights each time licensees use the CRiis software and requiring them to agree to comply with the license requirements, restricting CRiis login accounts, serving as system administrator of all servers where CRiis software and other trade secrets are kept, restricting access to CRiis source code and data schema to its employees who need it, limiting public search functionality, locating source code behind firewalls, and restricting access to its primary development server. (Sandblade Decl. ¶ 5 (Docket No. 107).)

III. Discussion

Summary judgment is proper "if the movant shows that

there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).*fn5 A material fact is one that could affect the outcome of the suit, and a genuine issue is one that could permit a reasonable jury to enter a verdict in the ...


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