United States District Court, N.D. California, San Jose Division
OMNIBUS ORDER RE MOTION TO DISMISS, MOTION FOR LEAVE
TO AMEND, MOTION TO CHANGE DEADLINE TO AMEND PLEADINGS, AND
MOTION FOR RELIEF FROM NONDISPOSITIVE PRETRIAL ORDER OF
LAB SON FREEMAN United States District Judge.
Data Corporation (“Space Data”) brings this
action against Defendants Alphabet Inc. and Google Inc.
(collectively, “Google”), alleging that
Google's “Project Loon”-a research and
development project with the mission of providing wireless
services using high-altitude balloons placed in the
stratosphere-improperly and unlawfully utilizes Space
Data's confidential information and trade secrets and
infringes Space Data's patents. Second Am. Compl.
(“SAC”) ¶¶ 11-16, ECF 91. Space Data
asserts four causes of action: (1) patent infringement, under
35 U.S.C. § 1 et seq.; (2) misappropriation of
trade secrets, under the Defend Trade Secrets Act
(“DTSA”), 18 U.S.C. §1836; (3)
misappropriation of trade secrets, under the California
Uniform Trade Secrets Action (“CUTSA”), Cal. Civ.
Code § 3426 et seq.; and (4) breach of
contract. See generally Id. According to the SAC,
Space Data's weather balloons carry radio transceivers,
which operate collectively as a high-altitude communications
platform. Id. ¶¶ 42-47. In late 2007,
Google and Space Data discussed Google investing in or
acquiring shares or assets of Space Data. Id.
¶¶ 74-85, 110. The parties entered into a Mutual
Confidentiality and Non-Disclosure Agreement
(“NDA”) to facilitate their discussions, which
ultimately did not result in a partnership between the
companies. Id. ¶¶ 9, 16, 83, 137-46.
GOOGLE'S MOTION TO DISMISS TRADE SECRET CLAIMS AND THE
BREACH OF CONTRACT CLAIMS IN THE SECOND AMENDED COMPLAINT
Court previously granted Google's motion to dismiss the
trade secret claims and the breach of contract claims with
leave to amend. See generally Order, ECF 59. As
stated on the record and in the prior order, the Court found,
among other grounds, that the first amended complaint did not
satisfy the requirements for pleading the trade secrets with
sufficient particularity, and did not adequately allege
Google's duty not to use the information in the way
alleged. Space Data has since filed a second amended
complaint in an attempt to remedy the deficiencies identified
by the Court. Google again moves to dismiss the trade secret
claims and the breach of contract claims in the SAC. Mot.,
ECF 88. For the reasons stated on the record and below, the
Court GRANTS IN PART Google's motion to dismiss WITH
LEAVE TO AMEND.
survive a Rule 12(b)(6) motion to dismiss, “a complaint
must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007)). When considering a motion to
dismiss, the Court “accept[s] factual allegations in
the complaint as true and construe[s] the pleadings in the
light most favorable to the nonmoving party.”
Manzarek v. St. Paul Fire & Marine Ins. Co., 519
F.3d 1025, 1031 (9th Cir. 2008).
first contends that Space Data's claims for
misappropriation of trade secrets pursuant to both the DTSA
and CUTSA are deficient because Space Data has not alleged
facts sufficient to establish that Google misappropriated the
trade secrets. Mot. 6-7. Specifically, Google argues that
Space Data has not pled facts showing that Google had a duty
not to use the information in the way alleged. Id.
state a claim for misappropriation of trade secrets under the
[CUTSA], a plaintiff must allege that: (1) the plaintiff
owned a trade secret; (2) the defendant misappropriated the
trade secret; and (3) the defendant's actions damaged the
plaintiff.” Autodesk, Inc. v. ZWCAD Software Co.,
Ltd., No. 14-1409, 2015 WL 2265479, at *5 (N.D. Cal. May
13, 2015) (citation omitted). The elements of
misappropriation under the DTSA are similar to those under
the CUTSA. Compare 18 U.S.C. § 1839(5),
with Cal. Civ. Code § 3426.1(b).
the SAC contains more factual details in support of the trade
secret claims relative to the first amended complaint, it
remains deficient in pleading how Google's alleged
conduct is proscribed by the NDA. Space Data alleges only
that Google's “use vastly exceeds the use permitted
under the NDA” and “had a duty to maintain the
secrecy of Space Data's trade secrets.”
E.g., SAC ¶ 253. Such conclusory assertions,
however, are not supported by adequate factual allegations.
For example, the NDA provides that “Google may use
Residuals for any purpose . . .” and defines
“Residuals” to mean “information that is
retained in the unaided memories of Google's employees or
Representatives who had had access to Confidential
Information pursuant to the terms of the [NDA].” Ex. A
to SAC (“NDA”) ¶ 8, ECF 75-1. The SAC does
not sufficiently plead how Google's alleged conduct was
not covered by this provision, or how it went beyond the
scope of the NDA. Factual allegation on these points would be
necessary to adequately plead “defendant's
misappropriation, ” the second element of the trade
secret claim. See, e.g., Farhang v. Indian Inst.
of Tech., Kharagpur, No. 08-02658-RMW, 2010 WL 2228936,
at *15 (N.D. Cal. June 1, 2010) (finding that the mere
allegation that defendants disclosed plaintiffs' trade
secrets without their express or implied consent to be
conclusory and insufficient allegation for the trade secret
claim). Space Data's breach of contract claim is
deficient for the same reasons the SAC has failed to
adequately allege conduct that went beyond the scope
permitted under the NDA. As such, the Court GRANTS IN PART
Google's motion to dismiss on this ground with leave to
further argues that the identification of trade secrets is
vague and ambiguous and that the asserted trade secrets are
not adequately distinguished from public information. Mot.
11-17. Google has overinflated these concerns. Instead, the
Court finds that the asserted trade secrets are sufficiently
identified in the SAC. With respect to identification of
trade secrets in a complaint under the Rule 8 standard, the
SAC contains “reasonable” detail-enough to permit
Google to prepare a defense and for the court to craft limits
on discovery. See Gatan, Inc. v. Nion Co., No.
15-01862-PJH, 2017 WL 1196819, at *6 (N.D. Cal. Mar. 31,
2017) (noting that the party alleging misappropriation need
not “define every minute detail of its claimed trade
secret at the outset of the litigation”) (citation
omitted). Relatedly, Google also raises the issue that Space
Data's amended statement under California Civil Code
§ 2019.210 fails to state the trade secrets with
sufficient particularity. Mot. 17-18. However, the §
2019.210 statement is an issue separate from Google's
motion to dismiss, and the parties do not dispute that.
See, e.g., June 29, 2017 H'rg Tr. 3:10-14; July
6, 2017 H'rg Tr. 12:17-24. Thus, the Court DENIES IN PART
Google's motion to dismiss on these grounds.
Google argues that Space Data fails to allege any act of
misappropriation after May 11, 2016, the date the DTSA was
enacted, in support of the DTSA cause of action. See
18 U.S.C. § 1836. Even assuming that the SAC has alleged
“continuing use, ” as argued by Space Data,
see Opp'n 14, this is insufficient.
E.g., Avago Techs. U.S. Inc. v. Nanoprecision
Prod., Inc., No. 16-03737-JCS, 2017 WL 412524, at *9
(N.D. Cal. Jan. 31, 2017) (finding no “authority
suggesting that the DTSA allows a misappropriation claim to
be asserted based on the continued use of information that
was disclosed prior to the effective date of the
statute”); Cave Consulting Grp., Inc. v. Truven
Health Analytics Inc., No. 15-02177-SI, 2017 WL 1436044,
at *5 (N.D. Cal. Apr. 24, 2017) (finding that “without
facts about when post-enactment use occurred and whether the
information disclosed was new or somehow different from the
prior misappropriation, plaintiff has failed to state a claim
under the DTSA”). Accordingly, the Court GRANTS IN PART
the motion to dismiss the DTSA claim with leave to amend.
foregoing reasons, the Court GRANTS IN PART Defendants'
motion to dismiss claims II, III, and IV on the grounds
discussed above. Space Data shall file an amended complaint
on or before July 20, 2017.
SPACE DATA'S MOTION FOR LEAVE TO FILE A THIRD AMENDED
COMPLAINT TO ADD PATENTS AND MOTION TO CHANGE DEADLINE TO
AMEND THE PLEADINGS
Data moves for leave to amend its complaint to add three
patents, all of which had issued when the motion was heard on
July 6, 2017: U.S. Patent Nos. 9, 643, 706; 9, 632, 503; 9,
678, 193. Mot. for Leave 10, ECF 79. Google opposes the
motion, claiming that Space Data cannot satisfy the
“good cause” standard under Fed. R. Civ. Proc 16
and that adding these patents would prejudice Google's
preparation of its defense based on the current case
schedule. Opp'n to Mot. for Leave, ECF 86.
party moves to amend its pleadings on or before the deadline
to amend the pleadings, a motion for leave to amend is
evaluated under Fed. R. Civ. Proc. 15. See Coleman v.
Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000).
Space Data filed its motion for leave to amend on April 24,
2017, which is also the last day to amend pleadings as set
forth in ...