Jobscience, Inc. v. CVPartners, Inc. et al

Filing 68

ORDER GRANTING MOTION TO STRIKE MISAPPROPRIATION OF TRADE SECRETS CLAIM AND ORDER RE SOURCE-CODE COMPARISON by Judge Alsup re 51 Motion to Strike ; 54 ; 59 ; 62 ; 66 Discovery Letter Brief (whalc1, COURT STAFF) (Filed on 5/1/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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JOBSCIENCE, INC.,

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For the Northern District of California

United States District Court

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No. C 13-04519 WHA

Plaintiff,

REDACTIONS UNDER SEAL

v.

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CVPARTNERS, INC., a California
Corporation; SKIPAN, LLC, a Delaware
Limited Liability Company; SKIPAN
SAAS, LLC, d.b.a. TALENT ROVER, a
Delaware Limited Liability Company;
BRANDON METCALF, an individual;
KENT GRAY, an individual; and DOES
1–100,

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Defendants.

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ORDER GRANTING
MOTION TO STRIKE
MISAPPROPRIATION OF
TRADE SECRETS CLAIM AND
ORDER RE SOURCE-CODE
COMPARISON

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INTRODUCTION

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In this action involving allegations of copyright infringement and misappropriation of

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trade secrets for recruiting software, defendants move to strike the misappropriation of trade

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secrets claim and object to plaintiff’s identification of alleged trade secrets. For the reasons

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stated herein, the motion is GRANTED.

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STATEMENT

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Plaintiff Jobscience, Inc. develops and licenses recruiting software. Defendants are

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individuals and entities alleged to have copied Jobscience’s software application, which was

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licensed to defendant CVPartners, Inc. Jobscience has obtained copyrights for versions of the

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code.

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In September 2013, Jobscience commenced this action. In November 2013, Jobscience
filed a first amended complaint alleging thirteen claims for relief. A January 2014 order granted

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in part and denied in part defendants’ motion to dismiss. Notably, the misappropriation of trade

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secrets claim was dismissed because it was preempted by the Copyright Act and the complaint

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relied on nothing more than a vague reference to “software code, methods and other trade

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secrets” (Dkt. No. 29).

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A February 2014 order then (among other things) granted plaintiff’s motion to amend the

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first amended complaint to add a trade-secrets claim. The claim, however, could not cover

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software code because of the preemption problem. Because defendants raised serious challenges

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to the existence of trade secrets, Jobscience was ordered to file a detailed description of the

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alleged misappropriated trade secrets. At oral argument, counsel was warned to “be specific.
If it’s not specific, then [Defendants] can bring motions” (Feb. 27, 2014 Hr’g. Tr. 21–22).

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For the Northern District of California

United States District Court

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A companion order instructed defendants to turn over every version of the allegedly copied

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source code for a source-code comparison. Plaintiff chose and paid for an expert to analyze the

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code.

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Plaintiff then filed a second amended complaint alleging copyright infringement, breach

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of contract, misappropriation of trade secrets, unfair competition, and constructive fraud

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(Dkt. No. 45).

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Three weeks later, plaintiff filed a statement of trade secrets, organized as a three-page

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narrative with three schematics. Contrary to the instructions in the February 2014 order, plaintiff

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did not include a numbered list of the precise trade secrets with the specific elements for each

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trade secret. Instead, Jobscience alleged that it had “

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,” derived “

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.” The process was “not known to the

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general public” and Jobscience maintains its secrecy by requiring confidentiality agreements to

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access its products. Jobscience stated that the process has independent economic value as

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demonstrated through customers “paying to use it,” but the secrets “are not evident in a reading

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of [the] code.” Jobscience does not claim that the existence of relational databases or their use of

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supporting business processes are trade secrets (Dkt. No. 48-4).
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The instant defense motion seeks to strike plaintiff’s misappropriation of trade secrets
claim and objects to plaintiff’s statement of confidential trade secrets.
On April 7, Jobscience filed a letter, appending the expert report of Kenneth Amron.

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Jobscience asked Mr. Amron to “determine whether [defendants’] Talent Rover code base

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exhibits evidence of code copying.” Of the files Mr. Amron analyzed, he found “strong

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evidence of copying” (Dkt. No. 54).

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On April 18, defendants filed a letter identifying deficiencies with Mr. Amron’s report

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and qualifications. Defendants argued that Mr. Amron failed to perform a proper comparison of

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source code and argued that the “Court should either strike the copyright claim as a sanction for
violating the February 28 Order or require Plaintiff to complete an actual source code

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For the Northern District of California

United States District Court

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comparison using CodeSuite” (Dkt. No. 62).

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The fact discovery deadline is October 31, 2014. This order follows full briefing and oral
argument.

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ANALYSIS

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1.

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Even though defendants styled this motion as a “motion to strike,” they essentially move

MOTION TO STRIKE.

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to dismiss the misappropriation of trade secrets claim based on inadequate disclosure in

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Jobscience’s statement of trade secrets. Section 3426.1(d) of the California Civil Code defines

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trade secret as:

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information, including a formula, pattern, compilation, program,
device, method, technique, or process, that:

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(1) Derives independent economic value, actual or potential,
from not being generally known to the public or to other persons
who can obtain economic value from its disclosure or use; and

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(2) Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
The February 2014 order stated (Dkt. No. 43):
Experience has shown that it is easy to allege theft of trade secrets
with vagueness, then take discovery into the defendants’ files, and
then cleverly specify what ever happens to be there as having been
trade secrets stolen from plaintiff. A true trade secret plaintiff
ought to be able to identify, up front, and with specificity the
particulars of the trade secrets without any discovery. This order
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51 Cal. 4th 310 (2011), is misplaced. In Silvaco, the court found that the design itself could not

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constitute a trade secret because it was evident to anyone running the program. Other than the

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source code (preempted here), the design information failed to describe a trade secret. See also

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Agency Solutions.Com, LLC v. TriZetto Grp., Inc., 819 F. Supp. 2d 1001, 1021 (E.D. Cal. 2011)

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(Judge Anthony Ishii) (diagram and functional description failed to constitute a trade secret).

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In defense of its vagueness, Jobscience argues that the Copyright Act does not preempt its

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“copyright does not extend to methods and processes” (Opp. 6) (emphasis in original).

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This misses the point. Just because something is not copyrightable (or patentable), does not make

” because

it a trade secret. Some information, like the vague information referenced in Jobscience’s

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For the Northern District of California

United States District Court

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statement, is simply too well-known in the field to provide the basis for an intellectual-property

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claim. That Jobscience was unable to capture its “15 years of research and development work

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leading to the current Jobscience product” in a copyright does not somehow render it a trade

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secret.

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Jobscience cites Advanced Modular Sputtering, Inc. v. Superior Court,

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132 Cal. App. 4th 826, 835–36 (2005), for the proposition that “reasonable particularity” does not

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mean that the plaintiff needs to “define every minute detail of its claimed trade secret at the outset

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of the litigation.” But the plaintiff in Advanced Modular Sputtering was able to identify eight

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alleged trade secrets:

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each with several discreet [sic] features that, in combination with
one another, formed the alleged trade secrets. It has described how
it believes the combination of these features distinguish the alleged
trade secrets from the prior art, or matters within the general
knowledge of persons in the sputtering industry.

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Id. at 836. By contrast, Jobscience’s statement is woefully deficient. We cannot tell where the

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claim ends and the known art begins. We cannot tell what the secret is to achieving the criteria

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for the recruiting software.

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In the alternative, Jobscience “requests that the Court allow Jobscience to amend the

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[trade secret] Statement to provide further detail or cure any deficiencies.” At this point,

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Jobscience has now had two opportunities to state a claim for the misappropriation of trade
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secrets. Each time, it has failed. No more tries will be allowed, especially now that plaintiff’s

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counsel have seen the accused source code. The trade secrets claim is DISMISSED.
SOURCE-CODE COMPARISON.

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Defendants object to the expert report of Kenneth Amron based on inadequate

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qualifications, failure to compare at least 668 files of Defendants’ 701 files, and failure to use a

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source-code comparison program like CodeSuite (Dkt. No. 62).

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In February 2014, plaintiff was allowed to conduct a source-code comparison. On April

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7, plaintiff filed a letter, appending the expert report of Kenneth Amron. Plaintiff asked Mr.

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Amron to “determine whether [defendants’] Talent Rover code base exhibits evidence of code
copying.” Mr. Amron stated the “review was requested as an effort to ‘identify evidence of

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For the Northern District of California

United States District Court

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copying’ . . . . Other comparisons of source code copying were not performed, owing to limited

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time available for this review.” Mr. Amron reviewed the code using defense counsel’s laptop

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which was pre-installed with “Beyond Compare” a “file and directory comparison utility” and “a

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trial version of slickEdit 2013,” a “software project editing tool.” He found that plaintiff’s source

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code contained 2,072 files and defendant Skipan SAAS LLC’s source code had 701 files. He

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found 33 identical file names. He then looked at the code within the files with the identical file

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names and opined that he found “strong evidence of copying.” Rather than isolate any actual

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copying, Mr. Amron identified similarities in file names (Dkt. No. 54 at ¶¶ 1, 31, 50, 51, 204).

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Names cannot be copyrighted. Mr. Amron found no passages of copying. He merely

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concluded “strong evidence of copying,” cherry-picking similar file names. This falls short.

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There either is or is not identical passages of source code. This kind of comparison is possible

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and often done. Why hasn’t Mr. Amron done it?

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On April 18, defendants filed a letter identifying deficiencies with Mr. Amron’s report and

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qualifications. Defendants appended the declaration of Robert Zeidman, the founder of Zeidman

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Consulting and the creator of a tool called “CodeSuite,” which includes a function called

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CodeMatch. The tool “conducts source code comparisons by calculating source code correlation.

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CodeMatch analyzes each source code file using specific algorithms and finds similarities.” It

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has been used in “roughly seventy lawsuits” (Zeidman Decl. ¶¶ 1, 5, 6, 7).
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Defendants argue that Mr. Amron has not performed a proper comparison of source code

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and suggests that the “Court should either strike the copyright claim as a sanction for violating the

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February 28 Order or require Plaintiff to complete an actual source code comparison using

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CodeSuite” (Dkt. No. 62). Possibly this will be done eventually, but for now, both sides will be

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given a chance to retain experts to render expert reports on source-code comparisons. The reports

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should address the issues raised at the May 1 hearing, including identification of any passages of

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copied code. Defendants should then bring a summary judgment motion on the

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copyright-infringement claim. The opposition should append any expert report relied upon.

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Defendants may then depose plaintiff’s expert on the issue. Both sides should put forth their best
case on the copying issue.

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For the Northern District of California

United States District Court

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CONCLUSION

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For the reasons stated herein, the motion to strike is GRANTED. The misappropriation of

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trade secret claim (third claim for relief) is DISMISSED. Leave to amend will not be allowed.

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The temporary discovery stay is LIFTED. Even though there is no trade secrets claim, redactions

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have been applied to this order to preserve any appeal of the misappropriation of trade secret

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claim.

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The copyright-infringement issue will be addressed at summary judgment. All existing
deadlines remain in place (Dkt. No. 30).

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IT IS SO ORDERED.

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Dated: May 1, 2014.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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