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Citcon USA, LLC v. Riverpay, Inc.

United States District Court, N.D. California

June 25, 2019

CITCON USA, LLC, Plaintiff,
v.
RIVERPAY INC., et al., Defendants.

          ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION RE: DKT. NO. 185

          NATHANAEL M. COUSINS United States Magistrate Judge.

         In this trade secrets theft case, plaintiff Citcon moves for a preliminary injunction to prevent defendant RiverPay from using, disclosing, accessing, or copying any of its allegedly misappropriated source code. The Court finds that Citcon failed to identify its source code with sufficient particularity and failed to present admissible evidence of misappropriation. Therefore, Citcon has not demonstrated a likelihood of success on the merits. The Court also finds that Citcon has not shown that it will suffer irreparable harm in the absence of preliminary relief, or that the balance of equities or public interest weigh in its favor. As such, the Court DENIES Citcon's motion for a preliminary injunction.

         I. Background

         Plaintiff Citcon provides services to merchants in the United States to facilitate customer payments using major Chinese mobile payment systems. Dkt. No. 136 at ¶ 13. Citcon brings claims for (1) misappropriation of trade secrets under the DTSA; (2) misappropriation of trade secrets under the CUTSA; (3) conversion of funds; (4) conversion of a POS device, and (5) unfair competition. Dkt. No. 136. Citcon's first two claims include five categories of trade secrets allegedly misappropriated by defendants, one of which is Citcon's source code. Id. at ¶ 55. The Third Amended Complaint defines the allegedly misappropriated source code by listing five payment processing algorithms. Id. at ¶ 55(a). Citcon alleges that defendant RiverPay, which offers competing services, created its products using source code copied from Citcon by defendants Hua and Shi- both former Citcon employees now working for RiverPay. Id. at ¶¶ 15-17, 53-72.

         All parties consented to the jurisdiction of a magistrate judge. Dkt. Nos. 7, 13.

         II. Legal Standard

         A plaintiff seeking a preliminary injunction must demonstrate that “he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Nat'l Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); see also Fed. R. Civ. P. 65. A preliminary injunction is an “extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter, 555 U.S. at 22.

         III. Discussion

         A. Likelihood of Success on the Merits

         To succeed on its trade secret misappropriation claims under both the California Uniform Trade Secrets Act and the Defend Trade Secrets Act, Citcon must show that it possessed a trade secret, that the defendant misappropriated the trade secret, and that the defendant's conduct damaged the plaintiff. Cal. Civ. Code § 3426.1(b); Alta Devices, Inc. v. LG Elecs., Inc., 343 F.Supp.3d 868, 877 (2018).

         Here, Citcon fails to show that it is likely to succeed on its source code trade secret misappropriation claim for two reasons. First, Citcon fails to identify with sufficient particularity what source code has been misappropriated. Second, Citcon fails to provide admissible evidence of misappropriation.

         1. Identification of Source Code

         A party seeking injunctive relief “has the burden to show that the information that was misappropriated constitutes a trade secret” and, to do so, must identify that information “with sufficient particularity.” Agency Solutions Com., LLC v. Trizetto Group, Inc., 819 F.Supp.2d 1001, 1015, 1017 (E.D. Cal. 2011).

         Citcon's motion for preliminary injunction simply refers to the allegedly misappropriated trade secret as its “source code.” Dkt. No. 185 at 7. Citcon describes a few specific categories of source code, but these categories appear to function primarily as exemplars to show instances of alleged misappropriation rather than to define comprehensively the source code at issue in the case. Id. at 5-6. This Court recently held in its order denying defendants' motion for partial summary judgment that the parties currently dispute material facts about the identification of the source code. Dkt. No. 237 at 4-6. That order found a lack of clarity in the record as to the authorship of the source code and as to precisely what of its source code Citcon alleges RiverPay misappropriated. Id. Since then, Citcon has not defined the source code with any more particularity. In contrast, a court in this district recently found that the plaintiff in WeRide had sufficiently identified its source code trade secrets for purposes of a preliminary injunction motion when it filed a twenty-page identification of ten specific trade secrets ...


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