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Gatan, Inc. v. Nion Co.

United States District Court, N.D. California

May 8, 2018

GATAN, INC., Plaintiff,
v.
NION COMPANY, Defendant.

          ORDER RE PLAINTIFF'S TRADE SECRETS DESIGNATION RE: DKT. NO. 164

          PHYLLIS J. HAMILTON, UNITED STATES DISTRICT JUDGE

         The court is in receipt of the parties' joint letter brief requesting the court to determine whether Gatan, Inc. has sufficiently identified its alleged trade secrets pursuant to Cal. Civ. Proc. Code § 2019.210. Specifically the parties ask the court to resolve two issues: (1) Did this court's order denying Nion Company's motion to dismiss, Dkt. 128 (the “MTD Order”), plaintiff's Third Amended Complaint (the “TAC”) determine that Gatan sufficiently identified the alleged trade secrets consistent with § 2019.210? (2) Does Gatan's trade secrets designation, Dkt. 164-1 (Exhibit A), satisfy § 2019.210?

         BACKGROUND

         As the parties are familiar with the relevant facts and the MTD Order, the court only briefly describes them here. Gatan is a manufacturer of spectrometers, including the Enfinium (a.k.a. the “Quefina”), which is based on the technology of the GIF Quantum, an imaging energy filter. TAC ¶¶ 13-14. In the past, Nion did not market or sell its own spectrometers. TAC ¶ 15. In October 2009, Nion approached Gatan to collaborate on an electron microscope for Arizona State University (“ASU”). TAC ¶ 16. The parties' dispute centers on a February 2, 2010 “Reseller Agreement” between Gatan and Nion (the “Agreement”). Pursuant to the Agreement, the parties worked together to modify a Gatan spectrometer for integration into a Nion microscope for ASU. Gatan accuses Nion of breaching that contract and misusing confidential information divulged under the terms of the Agreement.

         California law requires that a party alleging trade secret misappropriation “identify the trade secret with reasonable particularity” prior to discovery. Cal. Civ. Proc. Code § 2019.210. Often, a trade secret plaintiff satisfies § 2019.210 by producing a trade secrets designation before discovery commences. In response to defendant's request, plaintiff did so on March 5, 2018. Though plaintiff complied with defendant's request, plaintiff contends that it did not need to because the court's MTD Order already determined that the TAC's allegations satisfied § 2019.210. After reviewing Gatan's trade secrets designation, defendant informed Gatan that it believed the designation was insufficient under § 2019.210 and produced its own spectrometer design to aid Gatan in crafting an appropriately detailed designation. Gatan nevertheless determined that it need not amend its designation in light of the TAC's allegations. Specifically, the TAC's allegations that Nion misappropriated and disclosed Gatan's trade secrets through their inclusion in Nion's Small Business Innovative Research (“SBIR”) grant application.

         DISCUSSION

         A. Legal Standard

         “Section 2019.210 provides: In any action alleging the misappropriation of a trade secret under the Uniform Trade Secrets Act (Title 5 (commencing with Section 3426) of Part 1 of Division 4 of the Civil Code), before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code, ” which requires a court to take steps to protect trade secrets during litigation. Advanced Modular Sputtering, Inc. v. Superior Court, 132 Cal.App.4th 826, 833 (2005).

         A plaintiff seeking relief for the misappropriation of trade secrets “must identify the trade secrets and carry the burden of showing that they exist.” MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 522 (9th Cir. 1993). “While the Ninth Circuit has yet to decide whether Section 2019.210 of the California Code of Civil Procedure applies to actions in federal court, courts in this district have routinely applied the trade secret disclosure provisions in Section 2019.210.” Openwave Messaging, Inc. v. Open-Xchange, Inc., No. 16-CV-00253-WHO, 2018 WL 692022, at *4 (N.D. Cal. Feb. 2, 2018) (collecting cases).

         “The letter and spirit of section 2019.210 require the plaintiff, subject to an appropriate protective order, to identify or designate the trade secrets at issue with sufficient particularity to limit the permissible scope of discovery by distinguishing the trade secrets from matters of general knowledge in the trade or of special knowledge of those persons . . . skilled in the trade.” Advanced Modular, 132 Cal.App.4th at 835 (internal quotation marks omitted; ellipses in original). Contrary to Nion's assertion, that does not require the designation itself to detail how the trade secret differs from matters of general knowledge in the trade. Instead, § 2019.210 “was intended to require the trade secret claimant to identify the alleged trade secret with adequate detail to allow the defendant to investigate how it might differ from matters already known and to allow the court to craft relevant discovery.” Brescia v. Angelin, 172 Cal.App.4th 133, 1447-50 (2009) (emphasis added) (“Absent a showing that elaboration is required to serve the [section's] goals, section 2019.210 should not be construed to require the claimant to explain why the alleged trade secret differs from matters already known in the industry.”).

Reasonable particularity mandated by section 2019.210 does not mean that the party alleging misappropriation has to define every minute detail of its claimed trade secret at the outset of the litigation. Nor does it require a discovery referee or trial court to conduct a miniature trial on the merits of a misappropriation claim before discovery may commence. Rather, it means that the plaintiff must make some showing that is reasonable, i.e., fair, proper, just and rational, under all of the circumstances to identify its alleged trade secret in a manner that will allow the trial court to control the scope of subsequent discovery, protect all parties' proprietary information, and allow them a fair opportunity to prepare and present their best case or defense at a trial on the merits.

Advanced Modular, 132 Cal.App.4th at 835-36 (internal quotation marks and citation omitted); Brescia, 172 Cal.App.4th at 148-49.

         B. Analysis

         1. The MTD Order Did Not Determine That The TAC ...


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