GSI Technology, Inc. v. United Memories, Inc.

Filing 807

ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-IN-PART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-IN-PART MOTION FOR PROTECTIVE ORDER by Judge Paul S. Grewal granting-in-part and denying-in-part 561 ; denying 563 ; denying 564 ; granting-in-part and denying-in-part 566 ; denying 632 ; granting 650 ; denying 723 ; granting-in-part and denying-in-part 726 . (psglc1S, COURT STAFF) (Filed on 9/25/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

United States District Court
For the Northern District of California

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SAN JOSE DIVISION

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GSI TECHNOLOGY, INC.,
Plaintiff,

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v.
UNITED MEMORIES INC., et al.,
Defendants.

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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART
MOTIONS FOR SUMMARY
JUDGMENT, GRANTING-IN-PART
MOTIONS TO STRIKE, DENYING
MOTION FOR SANCTIONS AND
GRANTING-IN-PART MOTION FOR
PROTECTIVE ORDER
(Re: Docket Nos. 561, 563, 564, 566,
632, 650, 723, 726)

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About three years ago, Cisco Systems, Inc. picked Defendant Integrated Silicon Solutions,
Inc. over Plaintiff GSI Technology, Inc. for a contract to supply 1.2Gb reduced latency dynamic
random access memory chips. Losing the bid was bad enough for GSI; even worse was learning
that ISSI prepared its winning bid with the help of Defendant United Memories, Inc.—a former
GSI partner. GSI responded with this suit against UMI, and later ISSI, essentially charging both
UMI and ISSI with foul play. All three parties now seek summary judgment on a wide swath of
claims and underlying issues that survived an initial set of dispositive motions. The parties also
dispute certain evidence related to their summary judgment motions, GSI seeks sanctions for ISSI’s
alleged violation of this court’s June 11, 2015 order, and ISSI seeks a protective order regarding
the same.
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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

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Because the court finds certain issues may be resolved as a matter of law, the court
GRANTS summary judgment that:

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1.

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ISSI’s proposal of Nanya as the Atris chip foundry was neither a GSI trade secret nor
misappropriated by ISSI.

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2. ISSI did not misappropriate any ISSI pricing data.

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3. ISSI’s alleged misappropriation of GSI’s purported circuit schematic trade secrets in

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February 2013 did not cause Cisco to choose ISSI’s Atris bid in December 2012.
4. GSI’s “unlawful” Section 17200 claim is preempted.

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United States District Court
For the Northern District of California

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5. The disputed schematics were not available to UMI through reverse engineering.

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The court also GRANTS GSI’s motion to strike the declaration of Dennis Wilson and

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GRANTS-IN-PART ISSI’s motion for a protective order. All other relief requested is DENIED.

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I.

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GSI is a Delaware corporation that designs, develops and markets high-performance

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computer memory, including static random access memory and reduced latency dynamic random

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access memory products.1 UMI is a Colorado company that provides integrated circuit design and

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layout services.2 UMI is a wholly-owned subsidiary of Taiwan-based ProMos Technologies, Inc.3

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In 2007, GSI approached UMI with a proposal to design to provide design and layout

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services for a 576 Mb reduced latency DRAM chip to supply to Cisco.4 A short while later, Cisco

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issued a request for information for a separate project, a 1.2 Gb RLDRAM chip that Cisco would later

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name “Atris.”5 After receiving the RFI, GSI contacted UMI to gauge its interest in aiding GSI with this

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See Docket No. 196 at ¶ 4.

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See id. at ¶ 5.

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See Docket No. 109-3 ¶¶ 3,8.

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See Docket No. 568-8, Ex. 2; Docket No. 568-9, Ex. 3; Docket No. 623-7, Ex. A at 52:3-53:4.

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See Docket No. 82, Ex. A.

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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

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project as well.6 UMI told GSI that Cisco had approached it separately about Atris, and agreed with GSI

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that the 576 Mb chip project and the Atris project were similar and involved the same DRAM

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specification.7 The parties decided to work together to try to leverage the two design projects.8 At first,

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the collaboration was a success: Cisco awarded GSI one of two Atris supply contracts.9

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In 2008, GSI and UMI signed a formal agreement that focused on the 576 Mb chip work.
The agreement established six Project Milestones as well as a “Confidentiality Provision” governing

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the use of any proprietary information exchanged by the parties: “The Receiving Party shall keep

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in confidence all of the Disclosing Party’s Confidential Information received by it. All Confidential

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United States District Court
For the Northern District of California

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Information received by the Receiving Party shall be kept strictly confidential and shall not be used

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or disclosed to any person or entity by the Receiving Party except as necessary to exercise its rights

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and fulfill its obligations under this Agreement. The Receiving Party shall take all reasonable steps

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to prevent unauthorized disclosure or use of the Disclosing Party’s Confidential Information and to

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prevent it from falling into the public domain or into the possession of unauthorized persons.”10
Under an “IP Ownership Clause,” GSI was to assume ownership of the product to be

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designed and delivered by UMI: “GSI shall have sole ownership of all deliverables and the

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Product, and all associated intellectual property rights [excluding only Project Patents owned by

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UMI not applicable here] and all other works of authorship, information fixed in any tangible

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medium of expression (whether or not protectable under copyright laws), inventions (whether or

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See id., Exs. A, B.

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See id., Exs. A, B, L, N, O; Docket No. 568-16, Ex. 10.

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See id., Exs. A, B, C;

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See Docket No. 568-15, Ex. 9.

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Docket No. 196, Ex. 1 at § VI.1. “Confidential Information” is defined as “[a]ll non-public
information that the party disclosing the information (the “Disclosing Party”) designates at the time
of disclosure as being confidential, or if disclosed orally or visually is identified as such prior to the
receiving party (the “Receiving Party”) within thirty (30) days, or which, under the circumstances
surrounding disclosure, the Receiving Party knows or has reason to know should be treated as
confidential without the need to be marked as “confidential.” Id. at § I.1.
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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

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not protectable under patent laws), discoveries, designs, developments, suggestions, ideas,

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improvements, know-how, and other intellectual property rights conceived, developed or reduced

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to practice by GSI, alone or with others, during the course of the Project.”11

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The parties also included a non-compete clause. The non-compete reads:

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[Except for the Product being designed and developed by UMI for GSI
hereunder,] UMI agrees it shall not, directly or indirectly, design or develop, or
contribute to the design or development of, a Low Latency DRAM Product (as
defined below) during the term of this Agreement. “Low Latency DRAM
Product” means a latency optimized and/or address rate optimized memory
product that employs a capacitive charge-based memory cell technology,
including, but not limited to, RLDRAM and FCRAM products.12

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United States District Court
For the Northern District of California

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The “term” of the Agreement is defined as beginning on the effective date of the Agreement and

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ending “at the close of business on the day five (5) years from the Effective Date unless earlier

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terminated by either party pursuant to this Article VII.”13
Work on both the 576 Mb chip and Atris proceeded together.14 UMI successfully met the

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first four milestones set out in the agreement, but problems arose at the fifth milestone, which

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required actual tests of the design specifications.15 GSI was supposed to provide sufficient wafer

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starts for UMI to conduct the chip testing before the testing commenced.16 For reasons the parties

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dispute, the materials were never produced.17 In any event, after GSI learned that ProMos was

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insolvent and was seeking money from the Taiwanese government, GSI grew concerned whether

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Id. at § III.1.

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Id. at § III.6.

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Id. at § VII.2.

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See Docket No. 568-14 at UMI_0012352-53.

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See Docket No. 1 at ¶¶ 24-27.

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Docket No. 196, Ex. 1 at § II.1.2(a).

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See Docket No. 82, Ex. V

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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

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UMI and ProMos could continue with the project.18 UMI told GSI that ProMos believed that “the

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current government strategy is to let the DRAM guys fail and then buy their assets after they go

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bankrupt,” which would include ProMos.19 UMI also admitted that the future of the ProMos

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foundry was uncertain.20 Not looking to take any chances, GSI decided that it would not make

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sense for UMI to continue designing the 576 Mb chip, which was designed specifically to be

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manufactured by ProMos.21

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After GSI told UMI that it was dropping the joint project, UMI offered to sell GSI all of the
Atris design work it had completed and maintained in a schematics database until that date for

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United States District Court
For the Northern District of California

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$42,000.22 GSI’s Vice President of Marketing recommended to GSI’s management team that GSI

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make the purchase: “Work on the [Atris] design is continuing . . . Cadence schematic are now

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complete from pads to core . . . We do not yet own those schematics. The proposed price for them

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is $42k. They will pass on to the new owners of UMI unless we secure them.”23 GSI also

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considered purchasing UMI outright.24 During this exchange, GSI never told UMI that the

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schematics database was confidential or was GSI’s intellectual property.25 GSI decided not to

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purchase the database from UMI.

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See Docket No. 568-39, Ex. 31; Docket No. 568-41, Ex. 33; Docket No. 623-7, Ex. A at 169:2172:11, 255:21-256:16.

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See Docket No. 82, Ex. AS.

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See Docket No. 623-7, Ex. A at 169:2-172:11, 250:2-5.

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See Docket No. 82, Ex. I. at 88:21-90:8, Ex. F. at 133:13-34.

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See Docket No. 109-1, Exs. G at 181:12-182:4; Ex. K at 132:8-24, 247:4-248:19, P, V-Z.

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See id., Exs. V, Z.

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See id., Ex. P.

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See Docket No. 109-3 ¶¶ 10-12.

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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

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Several months later, UMI sent GSI a letter to formally terminate the 576 Mb Agreement
30 days after GSI’s receipt of the letter.26 UMI’s letter purported to terminate because “[i]t is

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apparent that the intent of the agreement [no] longer exist[s] and that GSI does not plan to satisfy

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section II.1.2 (a) Provide sufficient wafer starts.”27 The letter also stated that “[t]o the best of

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[UMI’s] knowledge, no GSI confidential information has been given to UMI by GSI. If this is not a

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true statement please identify the confidential material(s) and we will promptly return them to

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GSI.”28 GSI did not respond and continued on its own to develop both the 576 Mb chip and Atris.

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Ultimately, GSI selected a different foundry and process technology.29 The redesign, however,

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United States District Court
For the Northern District of California

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delayed GSI’s progress—GSI made the 576 Mb chip available for customer sampling only in May

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2011.30 By that time, Cisco told GSI that because of GSI’s 576 Mb chip delays, it would not be

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using GSI as an Atris supplier.31

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By 2012, Cisco became concerned that it did not have a second supplier for Atris and

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issued another RFI to find one.32 Along with its competitor ISSI, GSI submitted a proposal in

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response to the new RFI, and the decision appears to have come down to a choice between the two

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based on foundry, price, schedule, and strength of supplier. 33 As negotiations between Cisco and

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both GSI and ISSI got underway, Anand Bagchi, a Cisco employee, called a meeting with

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See Docket No. 82-1, Ex. V.

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Id.

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Id.

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See id., Ex. D at 78:4-79:3, Ex. I at 110:21-112:23.

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See id., Ex. X.

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See id., Ex. F at 180:24-181:24, 183:20-185:6; Ex. Y at 81:18-83:1.

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See Docket No. 560-7, Ex. A at 79:2-22; Docket No. 560-9, Ex. B at 210:14-211:5.

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See Docket No. 560-7, Ex. A at 79:2-22; Docket No. 560-9, Ex. B at 210:14-211:5; Docket No.
560-11, Ex. C at 127:10-129:22.
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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

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representatives of GSI and sought a variety of details about GSI’s Atris bid.34 Unbeknownst to

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GSI, Bagchi already had an offer to leave Cisco and join ISSI, which he accepted.35 Bagchi then

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became ISSI’s point person on the Atris bid negotiations, and even continued to receive a number

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of emails from Cisco that addressed GSI’s bid.36

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Around the same time, ISSI approached UMI and ProMos about helping with its Atris bid.
ISSI was well aware of UMI’s work for Cisco.37 ISSI told Cisco that it was “co-developing” the

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Atris chip with UMI, which would help it “accelerate time-to-market.”38 UMI participated in

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several pitch meetings between ISSI and Cisco.39 Sometime during the bidding process, ISSI

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United States District Court
For the Northern District of California

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expressed interest in acquiring GSI, but talks were unsuccessful and the idea was abandoned.40 In

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discussion with others, ISSI predicted that GSI would not win a pending lawsuit with Cypress

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Semiconductor.41 After reviewing both GSI and ISSI’s proposals, including Cisco’s revised

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proposal to use Nanya Technology Corporation rather than Powerchip Technology Corporation as

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its foundry, Cisco picked ISSI.42

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When Nanya subsequently complained to ISSI that it could not work with UMI, a ProMos
subsidiary, ISSI hired UMI employees to work on the project.43 ISSI and UMI then executed an

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See Docket No. 564-13, Lasserre Decl. at ¶ 6.

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See Docket No. 568-78, Ex. 65.

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See Docket No. 560-27, Ex. K at 94:10-99:25, 108:12-121:12.

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See Docket No. 570-9, Ex. 4 at 0160845-86; Docket No. 570-35, Ex. 25 at 65:25-67:17, 70:4-11.

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See Docket No. 82-1, Ex. AC.

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See, e.g., Docket No. 570-69, Ex. 59; Docket No. .

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See Docket No. 560-13, Ex. D at 33:9-34:22.

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See Docket No. 560-13, Ex. D at 208:18-215:2.

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See Docket No. 560-35, Ex. O at 117:2-119:23; 126:2-131:8.

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See Docket No. 560-23, Ex. I at 185:7-186:5.

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Case No. 5:13-cv-01081-PSG
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Asset Transfer Agreement, whereby five UMI employees “temporarily” resigned from UMI and

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were offered work at ISSI with an expected end date of October 30, 2013, or the approximate end

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of the employees’ expected work on the Atris project.44 Those five employees nevertheless

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continued to maintain ties with UMI. ISSI would pay their salaries and benefits, but each employee

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would continue to work in their UMI office space, using their UMI telephone number and

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computer.45 The Asset Transfer Agreement also transferred an Atris project database compiled by

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UMI in 2008 and 2009.46

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United States District Court
For the Northern District of California

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GSI soon discovered that ISSI had been working with UMI and filed this suit against UMI
for breach of contract, violation of California’s Unfair Competition Law and a declaratory

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judgment as to the rights conferred by the 576Mb Agreement.47 Among other things, GSI claimed

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that UMI transferred to ISSI nearly 300 GSI schematics developed under the 576 Mb Agreement.48

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GSI later amended its complaint, adding ISSI as a party and four more state law causes of action:

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fraud, false promise, misappropriation of trade secrets and intentional interference with prospective

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economic advantage.49 After the court granted-in-part Defendants’ motion to dismiss, a subset of

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claims remain: GSI’s claims for unfair competition and intentional interference with prospective

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45

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See Docket No. 570-76, Ex. 66.

See Dkt. 82-1, Ex. AI at ¶ 7.1 (indicating that the employees have only “temporarily” resigned
from UMI); Ex. AJ; Ex. U at 181:9-16, 184:24-186:13, 186:24-187:16, 189:19-190:21, 193:14194:25, 195:10-196:11, 197:1-18, 208:24-209:12, 211:18-212:9; see also, e.g., Docket No. 82-1,
Ex. AT, at UMI_0012974 (tying “expected end date” to Atris project end date of October 30,
2013).

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See Docket No. 570-76, Ex. 66.

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See Docket No. 1. GSI moved for a temporary restraining order against UMI, which the court
denied. See Docket No. 24. The court later denied GSI’s motion for preliminary injunction. See
Docket Nos. 160, 176, 203.
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See Docket No. 570-31, Ex. 22 at ¶¶ 51-54, 57, 63-69.

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See Docket No. 159.

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ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

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economic advantage against ISSI and GSI’s claim for misappropriation of trade secrets against

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both ISSI and UMI.50
UMI filed an initial motion for summary judgment on GSI’s claim that it misappropriated

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GSI’s secrets, focusing exclusively on GSI’s underlying ownership of the 576 Mb trade secrets

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GSI identified, and GSI’s reasonable efforts to preserve these secrets.51 The court denied UMI’s

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motion, and denied UMI’s later motion for reconsideration.52
All parties now seek summary judgment.53 GSI further requests that the court strike the

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declaration of Theresa Chen, filed in support of ISSI’s motion for summary judgment,54 and the

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United States District Court
For the Northern District of California

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declaration of Dennis Wilson,55 filed in support of UMI’s motion for summary judgment, and grant

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sanctions against ISSI for failure to properly respond to GSI’s interrogatory no. 13. 56 As to

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interrogatory no. 13, ISSI moves for a protective order.57

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II.

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This court has jurisdiction under 28 U.S.C. § 1331. The parties further consented to the
jurisdiction of the undersigned under 28 U.S.C. § 636(c) and Fed. R. Civ. P. 72(a).58

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See Docket No. 227 at 17. The court dismissed GSI’s federal RICO and antitrust claims but
retained supplemental jurisdiction under 28 U.S.C. § 1367. See id. at 6-11.
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See Docket No. 320.

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See Docket Nos. 320, 450, 554, 717.

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See Docket No. 561; Docket No. 560-5 at 1; Docket No. 564; Docket No. 570-5 at 1; Docket No.
563-4 at 1; Docket No. 566; Docket No. 568-5 at 1.
See Docket No. 632.

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See Docket No. 650.

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See Docket No. 723.

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See Docket No. 726.

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See Docket No. 236 at 11.

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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

Pursuant to Fed. R. Civ. P. 56(a), summary judgment is appropriate when “there is no

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genuine issue as to any material fact and the moving party is entitled to judgment as a matter of

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law.” Material facts are those that may affect the outcome of the case.59 A dispute as to a material

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fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the

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non-moving party.60 All evidence must be viewed in the light most favorable to the non-moving

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party.61 At this stage, a court “does not assess credibility or weigh the evidence, but simply

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determines whether there is a genuine factual issue for trial.”62 Initially, the moving party bears the

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burden to show that no genuine issue of material fact exists.63 If this burden is met, the burden

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United States District Court
For the Northern District of California

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shifts to the non-moving party.64 Applying these standards to the claims, defenses and evidence in

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the record, no reasonable jury could dispute a discrete set of issues contested by the parties, as

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outlined below.

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III.
ISSI seeks summary judgment on: (1) GSI’s trade secret claims as to the 2012 Atris bid; (2)

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GSI’s technology trade secret claims; (3) GSI’s “unlawful” Section 17200 claim and its tortious

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interference with prospective economic advantage claim; (4) GSI’s “unfair” Section 17200 claim;

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and (5) ISSI’s estoppel defense.65 A few discrete issues within these topics are not in genuine

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dispute; the rest are.

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59

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See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (“Only disputes over facts that
may affect the outcome of the suit under governing law will properly preclude the entry of
summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.”).
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See id.

61

See Anderson, 477 U.S. at 248; see also Bierman v. Int’l Bus. Mach. Corp., Case No. 10-cv4199-PJH, 2012 WL 506562, at *5 (N.D. Cal. Feb. 15, 2012).
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House v. Bell, 547 U.S. 518, 559-60 (2006).

63

See Celotex Corp. v. Caltrett, 477 U.S. 317, 323-24 (1986).

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See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 630, 630 (9th Cir. 1987).

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See Docket No. 561; Docket No. 560-5 at 1.

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Case No. 5:13-cv-01081-PSG
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First, no reasonable jury could find that proposing Nanya as the Atris chip foundry is a GSI

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trade secret that ISSI misappropriated after Bagchi joined ISSI from Cisco. To establish that ISSI’s

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switch to Nanya misappropriated a GSI trade secret, GSI must establish that ISSI did not

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independently derive the idea.66 GSI admits that Nanya and Powerchip were the only two viable

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foundry choices.67 GSI also admits that until Cisco made it clear that it would not accept it, GSI

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had long proposed Powerchip’s 63 nanometer foundry technology, including in the proposals

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referenced in the emails that Bagchi received.68

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United States District Court
For the Northern District of California

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Critically, there is no dispute that by the third quarter of 2012, Cisco expressed concerns
about using Powerchip and asked ISSI if it could use the Nanya foundry in July 2012, well before

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Bagchi joined ISSI in October 2012 and allegedly conveyed GSI’s bid information.69 GSI itself

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recognized Cisco’s concerns.70 When Cisco made this request, ISSI already was using Nanya for

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another project and began investigating switching the Atris project to Nanya to stay in Cisco’s

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good graces.71 While ISSI did not formally switch its proposal to Nanya until later, ISSI’s shift

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towards Nanya is reflected in August 2 and October 3, 2012 emails.72 On September 27, 2012,

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66

See Cal. Civ. Code § 3426.1(a) (explicitly excluding independent derivation from the acts that
may constitute misappropriation); Sargent Fletcher, Inc. v. Abie Corp., 110 Cal.App.4th 1658,
1659 (2003).
See Docket No. 560-15, Ex. E at 56:20-57:14.

68

See Docket No. 570-72, Ex. 62.

69

See Docket No. 560-7, Ex. A at 92:25-93:13, 289:7-19.

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See Docket Nos. 560-13 at 63:15-64:23 and 560-19 at 66:2-11, 69:1-24.

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71

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See Docket No. 560-25, Ex. J at 306:14-311:8; Docket No. 560-51, Han Decl.; Docket No. 56053, Howarth Decl. at ¶ 6.
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See Docket No. 560-25, Ex. J at 308:24-311:8 (Aug. 2, 2012; “K.Y. told me Nanya will be the
foundry Fab.”), 306:14-308:23 (Oct. 3, 2012; ISSI told United Memories, “From the process point
of view, we are leaning towards NTC 42-nanometers.”); Docket No. 560-53, Ex. A at
ISSI_0481478 (October 3, 2012; an ISSI executive wrote, “I suggest to have Cisco project to be on
NTC’s fab ! We need to have backup source in case PSC experience trouble and this might be the
good candidate to try it out !”; ISSI’s CEO responded, “I agree. Cisco prefers NTC, and this will be
11
Case No. 5:13-cv-01081-PSG
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1

Cisco asked ISSI to confirm that Nanya would “support the foundry business.”73 By October 5,

2

2012, ISSI asked Nanya for its design kit “[a]s early as possible” and “by end of Oct.” to evaluate

3

whether Nanya’s design information could meet “the product spec.”74 GSI’s own Vice President

4

testified that using Powerchip or Nanya for foundry services is not GSI’s intellectual property.75 In

5

short, even if Cisco’s foundry preference could be somehow be claimed as a trade secret belonging

6

to GSI, GSI offers nothing to disprove that ISSI independently derived its choice to propose

7

Nanya.76

8

United States District Court
For the Northern District of California

9

Second, no reasonable jury could find that ISSI misappropriated any GSI trade secret in its
pricing proposal to Cisco or that any such misappropriation influenced Cisco’s decision. GSI

10

alleges ISSI acquired GSI’s pricing proposal in October 2012 when Bagchi joined ISSI and later

11

received the Cisco emails, and then used the information to raise ISSI’s price but still keep it lower

12

than GSI’s.77 Bagchi may have coordinated ISSI’s bid revision process78 and have known GSI’s

13

pricing proposal when ISSI revised its bid.79 But throughout 2012 ISSI’s prices were always lower

14

than GSI’s,80 both before and after Bagchi joined:

15
16
17

a good opportunity to work with them on design and provide another foundry for long-term
support.”).

18

73

Docket No. 560-55, Ex. B at ISSI_0268496-97, Ex. C. at ISSI_0244405-06.

19

74

Docket No. 560-51, Ex. B at ISSI_0493128-29; Docket No. 560-49, Ex. A at ISSI_0493128-29.

20

75

See Docket No. 560-15, Ex. E at 53:1-21; Docket No. 560-13, Ex. D at 80:8-18.

21

76

22

Cf. CQ, Inc. v. TXU Mining Co., L.P., 565 F.3d 268, 275 (5th Cir. 2009) (finding no trade secret
in strategic recommendation between two generally known alternatives).

23

77

See Docket No. 629-4 at 7-10.

24

78

See Docket No. 629-29, Ex. 22 at 138:25-139:20.

25

79

26

See Docket No. 629-8, Ex. 3 at 272:2-12. In the absence of imminent harm, mere possession of
trade secrets is not enough. See FLIR Sys., Inc. v. Parish, 174 Cal. App. 4th 1270, 1279 (2009).
80

27
28

See Docket No. 560-47, Ex. F at 0155469; Docket No. 560-31, Ex. M at 10099382.

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Quarter

1

ISSI

GSI

1
2
3
4
5
6
7
8
9
10
11
12

2
3
4
5
6
7
8

United States District Court
For the Northern District of California

9
10

There is no evidence that ISSI ever considered prices as high as the lowest quarterly price that GSI
proposed (i.e.,

11

).

More importantly, GSI offers no evidence whatsoever—circumstantial or otherwise—that

12

Bagchi disclosed GSI’s pricing to anyone else at ISSI, let alone to Ron Kalakuntla, the ISSI

13

executive responsible for raising ISSI’s prices in the final Cisco bid.81 Nor does GSI offer any

14

evidence that any particular gap between GSI and ISSI’s price was key to winning the bid. Mere

15

speculation is not enough.82

16

Third, no reasonable jury could find that a substantial factor in GSI’s losing the Cisco bid

17

in 2012 was ISSI’s alleged acquisition of its trade secrets when it bought UMI’s schematics

18

database in 2013. An alleged misappropriation must cause the claimed injury,83 and it must be a

19
20
21
22
23
24

81

See Docket No. 560-33, Ex. N at 294:1-25; Docket No. 560-27, Ex. K at 268:23-275:6.

82

25

See Nelson v. Pima Cmty. College, 83 F.3d 1075, 1081-82 (9th Cir. 1996) (“[M]ere allegation
and speculation do not create a factual dispute for purposes of summary judgment.”).

26

83

27
28

See, e.g., Integral Dev. Corp. v. Tolat, No. C 12-06575 JSW, 2014 WL 721844 (N.D. Cal. Feb.
24, 2014).
13
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1

substantial factor.84 The “substantial factor standard is a relatively broad one, requiring only that

2

the contribution of the individual cause be more than negligible or theoretical.”85
The undisputed evidence from Cisco is there was a “strong consensus on ISSI/Nanya,” that

3

“the pricing was just hugely different,” and that “pricing” and “perceived risk of the supply

5

chain”—i.e., the foundry choice—were factors in the decision.86 Cisco explained that ISSI

6

proposing Nanya “was an advantage to ISSI,” “because it spread our exposure to another foundry”:

7

that is, the first source Atris supplier might use Powerchip.87 Cisco was concerned about the

8

Powerchip foundry, and thought that Nanya was in a better financial condition.88 “Pricing [wa]s

9
United States District Court
For the Northern District of California

4

always important for Cisco,” and “ISSI ha[d] a more competitive pricing than GSI.”89 And while

10

GSI proposed a faster time-to-market schedule, this timeline was less important to Cisco, because

11

Cisco already had a first-source supplier in place.90 ISSI’s having UMI on the design team also was

12

a major factor.91 When asked why Cisco selected ISSI, Cisco answered that it was due to price, the

13

foundry selection of Nanya, and that Cisco had “confidence” that ISSI “has the technical

14

capability.”92 Cisco felt that GSI lacked DRAM experience compared to ISSI.93

15

84

16
17
18

See CACI § 4401 (model trade secret jury instruction); Witkin, SUMMARY OF CALIFORNIA LAW,
Torts § 18 (2014).
85

People v. Holmberg, 195 Cal. App. 4th 1310, 1321 (2011); see also Premier Displays & Exhibits
v. Cogswell, No. SACV 09–354 JVS (ANx), 2009 WL 8623588, at *10 (C.D.Cal. Dec. 23, 2009).
86

19

See Docket No. 560-35, Ex. O at 126:2-127:3, 117:2-119:23 (“a large part was based on pricing,
and a large part was based on the full supply chain that the vendor had.”)

20

87

Id. at 130:12-131:14.

21

88

See Docket No. 560-29, Ex. L at 15:6-19; 32:17-33:17.

89

Id. at 41:11-14; 44:25-45:5.

90

Id. at 47:8-48:4; 48:19-49:2.

91

Id. at 68:22-69:18.

92

Id. at 51:13-52:19.

93

Id. at 83:12-84:17.

22
23
24
25
26
27
28

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1

GSI alleges that ISSI knew it would lack the technical capabilities to bid for the Atris
contract without GSI’s schematics.94 But even if that were undisputed, it would not establish that

3

any future misappropriation influenced Cisco’s decision, nor could it. Cisco would have needed to

4

be aware that ISSI would use GSI’s trade secrets to develop its Atris chip. None of GSI’s evidence

5

supports that inference. The best GSI can do is point to evidence that Cisco knew that ISSI

6

intended to partner with UMI and Cisco viewed UMI’s prior experience designing RLDRAM chips

7

as a positive feature of ISSI’s bid.95 Valuing UMI’s experience designing chips for GSI is a far cry

8

from believing that UMI would illegally use GSI trade secrets on future projects.96 There is simply

9
United States District Court
For the Northern District of California

2

no evidence of any such causation.

10

GSI’s reliance on San Jose Construction, Inc. v. S.B.C.C, Inc.97 is not helpful. In that case,

11

the defendant hired one of the plaintiff’s former employees.98 The employee allegedly pilfered the

12

plaintiff’s trade secrets to help poach the plaintiff’s clients.99 The alleged misappropriation

13

occurred before the plaintiff lost clients but arguably caused injury by reducing transition delays

14

normally associated with clients switching companies.100 The court found a triable issue as to

15

whether the reduction in delays was caused by misappropriation or by the clients’ affinities for the

16

employee.101 The case stands for the unremarkable notion that a party’s presentation of evidence

17

supporting an alternative explanation for an injury does not preclude a reasonable jury from finding

18
19

94

See Docket No. 629-4 at 21-22.

20

95

See Docket No. 229-33, Ex. 25 at 68:22-69:25.

21

96

22

See Morlife, Inc. v. Perry, 66 Cal. Rptr. 2d 731, 737 (1997) (distinguishing trade secrets from the
“general knowledge, skill, and experience” gained from working for prior employers).
97

67 Cal. Rptr. 3d 54 (2007).

98

See id. at 57-60.

99

See id. at 60-61.

23
24
25
26

100

See id.

27

101

See id. at 64-65.

28

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1

that misappropriation caused the injury.102 But nothing in San Jose Construction suggests causation

2

is a triable issue where a plaintiff presents no evidence that future misappropriation caused its

3

injury.
Fourth, GSI’s “unlawful” Section 17200 claim is preempted. To prevail on its claim, GSI

4
5

must prove, among other things, an independently unlawful act.103 At the same time, California law

6

creates a comprehensive scheme to regulate claims concerning alleged misuse of confidential

7

business information.104 As a result, the California UTSA preempts any “claims that are based on

8

the same nucleus of facts as the misappropriation of trade secret claims for relief.”105
To avoid this fate, GSI characterizes the underlying offense as conversion of “273 non-

United States District Court
For the Northern District of California

9
10

trade secret schematics” that GSI owns under the 576 Mb Agreement and that have value “because

11

they are tangible documents that provide the blueprint for GSI’s chip.”106 Even if the contract gave

12

GSI ownership of the electronic schematic files under the terms of the agreement—an issue the

13

court previously found to be in genuine dispute107—an ownership contract is insufficient to prevent

14

preemption of tort claims like the “unlawful claim” Section 17200 here.108 In addition, a party

15

cannot escape the UTSA’s preemptive effect merely by labeling the information it seeks to protect

16
17
18
19
20
21
22
23
24

102

See id. (reversing summary judgment because a triable issue existed as to whether
misappropriation or some alternative explanation caused the plaintiff’s injury ).
103

See Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular Tel. Co., 973 P.2d 527, 539-40 (1999)
(“By proscribing ‘any unlawful’ business practice, ‘section 17200 “borrows” violations of other
laws and treats them as unlawful practices’ that the unfair competition law makes independently
actionable.”) (citing State Farm Fire & Cas. Co. v. Superior Court, 53 Cal. Rptr. 229, 234 (1996));
Della Penna v. Toyota Motor Sales, U.S.A., Inc., 902 P.2d 740, 751 (1995).
104

See Cal. Civ. Proc. Code §§ 3426-3426.11.

105

See Cal. Civ. Code § 3426.7(b); see also Lifeline Food Co. v. Gilman Cheese Corp., Case No.
5:15-CV-00034-PSG, 2015 WL 2357246, at *5 (N.D. Cal. May 15, 2015).
106

See Docket No. 629-4 at 25-26.

107

See Docket No. 450.

108

See Cal. Civ. Code § 3426.7(b).

25
26
27
28

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1

as something other than a trade secret.109 While GSI professes a desire to protect its physical, rather

2

than any intellectual, property, its claim plainly arises from the same nucleus of fact as a potential

3

trade secret claim. GSI cites to Mattel Inc. v. MGA Entertainment, Inc., in which the court held that

4

UTSA preemption does not preclude conversion claims predicated on dominion over physical

5

works.110 What GSI ignores, however, is the key paragraph in Mattel that explains that preemption

6

still applies if the physical works lack any value separate from the information contained within

7

them.111 There is no evidence in the record here that the schematics have any value separate from

8

the information that they contain.112
GSI’s assertion that its “unfair” Section 17200 claim can support its “unlawful” Section

United States District Court
For the Northern District of California

9
10

17200 similarly is unpersuasive. The “unfair” prong and “unlawful” prongs of Section 17200 are

11
12
109

13
14
15
16
17
18
19
20
21

While certain states take a different approach, California courts follow the majority view. See,
e.g., K.C. Multimedia, Inc. v. Bank of America Tech. & Operations, Inc., 90 Cal. Rptr. 3d 247, 264
(2009); Silvaco Data Sys. v. Intel Corp., 109 Cal. Rptr. 3d 27, 53 (2010), disapproved on other
grounds by Kwikset Corp. v. Superior Court, 246 P.3d 877 (2011) (same). The majority of federal
decisions applying California law follow K.C. Multimedia, including SunPower Corp. v. SolarCity
Corp., No. 12–CV–00694–LHK, 2012 WL 6160472, at *1, 3-9 (N.D. Cal. Dec. 11, 2012)
(comprehensive preemption ruling rejecting rulings that pre-dated or ignored Silvaco and K.C.
Multimedia); Mattel, Inc. v. MGA Entm’t, Inc., 782 F. Supp. 2d 911, 986-87 (C.D. Cal. 2011)
(“UTSA supersedes claims based on the misappropriation of confidential information, whether or
not that information meets the statutory definition of a trade secret.”); Wang v. Palo Alto Networks,
No. 12–05579 WHA, 2013 WL 415615, at *4 (N.D. Cal. Jan. 31, 2013) (rejecting ruling that
“conflicts with K.C. Multimedia”). See also In re Salazar, 470 B.R. 557, 561 (S.D. Cal. 2012)
(quoting Hayes v. County of San Diego, 658 F.3d 867, 870 (9th Cir. 2011)) (“In deciding an issue
of state law, when there is relevant precedent from the state’s intermediate appellate court, the
federal court must follow the state intermediate appellate court decision unless the federal court
finds convincing evidence that the state’s supreme court likely would not follow it.”).

22

110

782 F. Supp. 2d 911, 997 (C.D. Cal. 2011).

23

111

See id.

24
25
26
27
28

112

Cf. NetApp, Inc. v. Nimble Storage, Inc., 41 F. Supp. 3d 816, 834-35 (N.D. Cal. 2014);
SunPower Corp. v. SolarCity Corp., No. 12–CV–00694–LHK, 2012 WL 6160472 (N.D. Cal. Dec.
11, 2012); AirDefense, Inc. v. AirTight Networks, Inc., No. C 05-04615JF, 2006 WL 2092053
(N.D. Cal. Jul. 26, 2006); Digital Envoy, Inc. v. Google, 370 F. Supp. 2d 1025 (N.D. Cal. 2005);
Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210 (2010).
17
Case No. 5:13-cv-01081-PSG
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1

both means of establishing that unfair competition has occurred.113 Once unfair competition is

2

established, the remedies afforded to a claim relying on either prong are identical. 114 Usually when

3

a party asserts both “unfair” and “unlawful” Section 17200 claims, the conduct that forms the basis

4

for each claim is different. As a result, a party may be able to receive different remedies from the

5

two claims.115 But where, as here, an “unfair” Section 17200 claim underlies the “unlawful”

6

Section 17200 claim, both claims establish that the same conduct is unfair competition. In that

7

scenario, any injunction or restitution recoverable through the “unlawful” claim already is

8

recoverable through the “unfair” claim.116
As for the remainder of GSI’s claims against ISSI, genuine disputes remain that require a

United States District Court
For the Northern District of California

9
10

trial to sort out. For example, a genuine dispute exists as to whether ISSI acquired GSI’s

11

“commingled” circuit schematics while having reason to know that the information was a trade

12

secret.117 ISSI is right that a party has reason to know that information is a trade secret only if

13

known facts would have made a reasonably prudent acquirer suspicious.118 The knowledge that

14

GSI previously worked with UMI would not by itself be enough for a reasonably prudent person to

15
16

113

See Cal. Bus. & Prof. Code § 17200.

17

114

See id. at §§ 17206-07.

18

115

See Cal. Bus. & Prof. Code. § 17205 (remedies under Section 17200 are cumulative).

19
20
21
22
23
24
25
26
27
28

116

In contrast, there is precedent for parties to base TIPER claims on underlying Section 17200
violations. See Hilderman v. Enea TekSci, Inc., 551 F. Supp. 2d 1183, 1197 (S.D. Cal. 2008).
Because GSI shows there is a dispute of material fact as to its Section 17200 “unfair” claim, as
discussed below, ISSI is not entitled to summary judgment on GSI’s TIPER claim.
117

See Cal. Civ. Code § 3426.1(a)-(b); Ajaxo Inc. v. E*Trade Grp., Inc., 135 Cal. App. 4th 21, 66
(2005).
118

See Cal. Civ. Code § 19; Ralph Andrews Prods., Inc. v. Paramount Pictures Corp., 271 Cal.
Rptr. 797, 800 (1990), modified (Aug. 8, 1990) (citing Hobart v. Hobart Estate Co., 159 P.2d 958
(1945)) (equating facts that a reasonably prudent person would have suspected as information that
the party should have known); Mediostream, Inc. v. Microsoft Corp., 869 F. Supp. 2d 1095, 1114
(N.D. Cal. 2012) (holding that plaintiff failed to allege that purchaser had reason to know that
information it acquired from co-defendant included the plaintiff’s trade secrets).
18
Case No. 5:13-cv-01081-PSG
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1

suspect that UMI would transfer GSI trade secrets.119 But GSI presents more than enough evidence

2

for a reasonable jury to find that by the time the schematics were transferred, ISSI’s employees—

3

the same designers who worked for UMI on GSI’s Atris project—knew that they were getting UMI

4

secrets.120 A company is deemed to have notice of any facts its employees or agents “ought, in

5

good faith and the exercise of ordinary care and diligence, to communicate to the [company].”121
Similarly, a material dispute exists as to whether ISSI’s combined conduct was “unfair”

6

under Section 17200 by threatening competition in the RLDRAM market. An unfair business

8

practice is conduct that “threatens an incipient violation of an antitrust law, or violates the policy or

9
United States District Court
For the Northern District of California

7

spirit of one of those laws because its effects are comparable to or the same as a violation of the

10
11
12
13

law, or otherwise significantly threatens or harms competition.”122 GSI presents evidence that goes
119

In California, parties cannot substantiate trade secret misappropriation claims against a
competitor solely on the basis that a former employee now works for a competitor. See, e.g.,
Cypress Semi. v. Maxim Integrated Prod., Inc., 186 Cal. Rptr. 3d 486, 504 (2015).
120

14
15
16
17

See, e.g., Docket No. 629-12, Ex. 8 at HARDEE000046-63; Docket No. 629-44, Ex. 37. See
also Docket No. 570-76, Ex. 66; Docket No. 570-77, Ex. 67. For this same reason, even if
California law offers ISSI a safe harbor under Section 3426.1(b)(2)(C), ISSI also is not entitled to
summary judgment that it qualifies for the safe harbor provision, nor is it entitled to summary
judgment that it did not engage in “willful and malicious misappropriation.” See Docket No. 560-5
at 23-24. See Ajaxo, 135 Cal. App. 4th at 65-67.
121

18
19
20
21
22

Cal. Civ. Code § 2332. See also Hatfield v. Levy Bros., 18 Cal. 2d 798, 806 (1941) (where
employee, acting within the scope of his employment, had knowledge, the employer cannot assert
he had no knowledge; knowledge is imputed). If the employee had such a duty, the fact that the
employee did not actually communicate the information is irrelevant; knowledge is imputed.
O’Riordan v. Fed. Kemper Life Assur., 36 Cal. 4th 281, 288 (2005); People v. Forest E. Olson,
Inc., 137 Cal. App. 3d 137, 139-40 (1982); Allergan, Inc. v. Merz Pharms., No. SACV 11–446 AG
(Ex), 2012 WL 781705, at *12-13 (C.D. Cal. Mar. 9, 2012) (holding employer liable for
misappropriation).
122

23
24
25
26
27
28

See Prakashpalan v. Engstrom, Lipscomb & Lack, 223 Cal. App. 4th 1105,1133-34 (2014)
(stating rule); Wilson v. Hynek, 207 Cal. App. 4th 999, 1007-08 (2012). See also Cel-Tech, 973
P.2d at 544-68 (applying Section 17200 by assessing the impact of alleged conduct on market
competition); ProconGPS, Inc. v. Star Sensor LLC, Case No. 11-cv-03975-SI, 2011 WL 5975271,
at *3 (N.D. Cal. Nov. 29, 2011) (“Harm to a competitor is not the same as harm to competition,
and Skypatrol must allege conduct that significantly threatens or harms competition in order to
state a claim.”) (citing Watson Labs, Inc. v. Rhone-Poulenc, Inc., 178 F. Supp. 2d 1099, 1118-19
(C.D. Cal. 2001)).
19
Case No. 5:13-cv-01081-PSG
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beyond ISSI leveraging GSI trade secret assets to cement its position with Cisco, including ISSI’s

2

licensing practices and acquisition strategy.123 GSI also presents evidence that ISSI knew UMI

3

could not design a RLDRAM chip for ISSI because of its “conflict” arising from its work with

4

GSI.124 As shown in documents produced by ISSI (and former UMI) employee Kim Hardee, there

5

is evidence that ISSI knew of the exact terms of the 576Mb Agreement, had a marked up copy of

6

the Agreement in January 2013, and specifically made notes on its copy of the Agreement about its

7

ownership and non-compete provisions.125 In addition, while GSI does not contest that its

8

disparagement allegations are insufficient to support a Section 17200 claim by themselves, GSI

9
United States District Court
For the Northern District of California

1

offers evidence that ISSI’s allegedly disparaging remarks are part of a pattern of conduct that

10

shows intent to exclude GSI from the RLDRAM market. A reasonable jury could infer from this

11

combined conduct that ISSI violated Section 17200’s “unfair” prong.126
There also are genuine issues regarding ISSI’s estoppel defense, including whether GSI had

12
13

a duty to disclose the existence of its non-compete agreement with UMI.127 As just one example,

14

ISSI argues that, even though GSI and ISSI did not have a fiduciary relationship, GSI delegated to

15

itself the duty to inform others about the non-compete when it precluded UMI from doing so

16

through a non-disclosure agreement.128 But ISSI cites no case law supporting its position that the

17

123

See Docket No. 629-4 at 28-29.

124

See Docket No. 570-9, Ex. 4 at ISSI_0228486.

125

See Docket No. 629-12, Ex. 8.

18
19
20

126

21
22
23
24
25
26

ISSI also argues it is entitled to summary judgment on GSI’s unfair competition claim because
GSI cannot prove ISSI had the knowledge or intent to interfere with the GSI-UMI non-compete
agreement. See Docket No. 654-4 at 14-17. But Section 17200 does not require proof of intent, see
Cel-Tech, 973 P.2d at 533, 568 (affirming the lower court’s decision that unfair competition claims
do not require proof of “injurious intent”), and GSI’s Section 17200 claim is based on conduct
beyond ISSI’s alleged interference with the GSI-UMI non-compete agreement.
127

See Moore v. State Bd. of Control, 112 Cal. App. 4th 371, 385 (2003) (requiring “a showing of
special circumstances, such as a confidential or fiduciary relationship or an undertaking to provide
advice by one who claims to be informed and knowledgeable in the matter”).
128

27
28

See Docket No. 654-4 at 19-20.

20
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1

existence of a non-disclosure agreement creates an obligation to disclose the object of the non-

2

disclosure agreement. That is unsurprising; nondisclosure agreements would have little use if they

3

automatically created a duty to disclose the material they purport to keep secret. There also is a

4

genuine dispute whether ISSI knew certain relevant facts, as discussed above, such that it could be

5

fairly be said to have relied on GSI’s silence to its detriment.129
IV.

7

GSI in turn requests summary judgment against ISSI on (1) ISSI’s affirmative claim

8

seeking a bad faith determination and related attorney’s fees and costs, pursuant to Cal Civ. Code §

9
United States District Court
For the Northern District of California

6

3426.4; and (2) ISSI’s “readily ascertainable” affirmative defense.130 Once again, genuine issues

10

remain in dispute that preclude summary judgment.
First, summary judgment is not warranted as to ISSI’s affirmative claim for a bad faith

11
12

determination and related attorneys’ fees and costs.131 A trade secret defendant is entitled to fees

13

and costs when the plaintiff has (1) initiated or (2) maintained a trade secret lawsuit in “bad

14

faith.”132 The statute serves to punish trade secret plaintiffs who bring or maintain cases for

15

ulterior, anticompetitive purposes.133

16

In California, a two-prong test is used to establish bad faith: (1) objective speciousness of

17

the claim, and (2) subjective bad faith in bringing or maintaining the claim.134 “Objective

18

speciousness exists where the action superficially appears to have merit but there is a complete lack

19
20
21

129

See Life v. Los Angeles Cnty, 227 Cal. App. 3d 894, 902 (1991); Traders & Gen. Ins. Co. v.
Pac. Emp’rs Ins. Co., 130 Cal. App. 2d 158, 164 (1955).
130

See Docket No. 570-5 at 1.

23

131

See Cal. Civ. Code § 3426.4.

24

132

Id.

25

133

22

26

See Gemini Aluminum Corp. v. Cal. Custom Shapes, Inc., 95 Cal. App. 4th 1249, 1262 (2002)
(noting that the legislature enacted the statute to deter “specious” actions).
134

27
28

FLIR Sys., Inc. v. Parrish, 174 Cal. App. 4th 1270, 1275 (2009).

21
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1

of evidence to support the claim.”135 A plaintiff’s “reasonable suspicion” of wrongdoing does not

2

prevent a finding of bad faith136 and nor do instances of wrongdoing on the part of a defendant.137

3

Subjective bad faith “means the action was commenced or continued for an improper purpose, such

4

as harassment, delay, or to thwart competition.”138 Conduct constituting subjective bad faith must

5

be “at least reckless or grossly negligent, if not intentional and willful.”139 A plaintiff’s “subjective

6

belief in the merits” does not preclude a finding of bad faith.140
The parties’ respective papers make clear a host of underlying factual issues remain in

7

dispute. The court has already ruled that no reasonable jury could find in GSI’s favor on certain

9
United States District Court
For the Northern District of California

8

trade secret and Section 17200 claims. And ISSI has presented significant evidence that GSI never

10

had documents or testimony to support certain elements of these claims, acted with improper

11

motive, maintained allegations that it knows to be false, and improperly amended its trade secret

12

claims to thwart ISSI’s redesign efforts.141

13

Second, a reasonable jury could find for ISSI on its fifth affirmative defense that the trade

14

secret information is readily ascertainable. The readily ascertainable test asks whether the

15

135

Id. at 1276.

16

136

See id. at 1278 n.4.

17

137

18

See id. at 1279; SASCO v. Rosendin Elec., Inc., 207 Cal. App. 4th 837, 842, 847-48, as modified
on denial of reh’g (Aug. 7, 2012).

19

138

20

139

21

SASCO, 207 Cal. App. 4th at 847 (citations omitted).

Gemini, 95 Cal. App. 4th at 1261; accord Stilwell Dev., Inc. v. Chen, No. CV86-4487-GHK,
1989 WL 418783, at *3 (C.D. Cal. Apr. 25, 1989).
140

22

Cypress, 186 Cal. Rptr. 3d 486.

141

23
24
25
26
27
28

See, e.g., Docket No. 626-5 at 9-15; Docket No. 560-43, Ex. V at 270:12-271:25, Depo. Ex. 41
at 1-6 (“If UMI is involved, that would delay ISSI by yet another 6 months. And I wiill [sic] be
very happy to tell Cisco if this is the case. . . . I would love nothing more than [to] threaten a
lawsuit and let ISSI and Cisco know so we can tip the scales back in our favor.”); Docket No. 56013 at 93:23-94:19, 98:4-99:4, Depo. Ex. 504 at GSI10051765-70 (same); id. at 100:5-103:4 (“Our
hope was that UMI couldn’t aid ISSI, and ISSI would either be left on their own or delayed, and
that would make our bid look more attractive.”); id. at 105:20-106:20, Depo. Ex. 505 at
GSI10133901 (“We may get UMI out of the equation, not just delayed, with this plan.”).
22
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1

information, even if not found in one single published source, nonetheless can easily be gathered

2

together from various sources through a minimum of time and labor.142 The more difficult

3

information is to obtain, and the more time and resources expended by an employer in gathering it,

4

the more likely it is to not be readily ascertainable.143

5

GSI says ISSI did not obtain a copy of the chip to conduct a reverse engineering analysis,
cannot establish that the trade secrets can be reverse engineered without undue burden and

7

expense, and has no evidence that the trade secrets are readily ascertainable.144 GSI also contends

8

that ISSI’s actions undercut its defense: that is, because ISSI purchased designs from UMI rather

9
United States District Court
For the Northern District of California

6

than creating its own, because ISSI does not have an Atris on the market yet, and because ISSI

10

claims its schematics are AEO, so such schematics must not be readily ascertainable.145
GSI may be right that ISSI has not substantiated any reverse engineering claims.146 But

11
12

ISSI presents more than sufficient evidence that even if certain circuit schematics that GSI claims

13

as trade secrets really are secret, each would nonetheless have been readily ascertainable by ISSI

14

by gathering together certain materials available to ISSI at the time.147 This is more than enough to

15

create a genuine issue of material fact.

16

V.

17

In its second round of requests, UMI seeks summary judgment that (1) it did not breach the

18

non-compete provision of the 2008 agreement, because that provision terminated with the contract

19
142

See Pooley et al., TRADE SECRET PRACTICE IN CALIFORNIA § 1.8A (CEB 2012).

143

See Morlife, Inc. v. Perry, 56 Cal. App. 4th 1514, 1522 (1997).

144

See Docket No. 570-5 at 19-23.

145

See Docket No. 669-5 at 14-15.

24

146

See Docket No. 626-5 at 2; Docket No. 242 at 43-44.

25

147

20
21
22
23

26
27
28

See, e.g., Docket No. 626-23, Ex. LL at ¶ 585 (“[T]o the extent any claimed circuit schematic
nevertheless otherwise constitutes a trade secret, all 25 of the claimed circuit schematics are at least
readily ascertainable to ISSI through relevant product specifications, patents, textbooks, and past
designs that are readily at hand to ISSI.”).
23
Case No. 5:13-cv-01081-PSG
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no later than August 2009, and so UMI’s activities, years later, could not, as a matter of law,

2

breach an expired obligation; (2) that even if the non-compete provision was in effect in the August

3

2012-March 2013 time frame, GSI waived arguing that the Atris chip at issue is an LLDRAM

4

subject to the contract’s non-compete provision, because GSI had encouraged UMI to continue to

5

work on an Atris design during the parties’ contractual relationship (even though the contract at

6

issue prohibited UMI from either directly or indirectly designing, developing or contributing to the

7

design or development of an LLDRAM other than the 576 Mb product); (3) GSI’s

8

misappropriation of trade secrets claim is time-barred under the three-year statute of limitations for

9
United States District Court
For the Northern District of California

1

misappropriation of trade secrets and (4) GSI suffered no cognizable damages as a result of UMI’s

10

conduct.148 Once again, the record confirms that genuine issues of material fact are disputed,

11

precluding summary judgment.

12

First, because the non-compete provision survived UMI’s efforts to terminate the

13

agreement, a reasonable jury could find that UMI breached it. Contract interpretation usually is a

14

matter of law to be determined from the writing alone.149 In ascertaining whether a contract’s

15

language is ambiguous, courts look to the “instrument’s language.”150 Extrinsic evidence may only

16

be considered if a contract is ambiguous.151 A contract is ambiguous when it is susceptible to more

17
18
19
20
21

148

22

149

23

See Docket No. 563-4 at 2.

See Cal. Civ. Code § 1639; Ad Two, Inc. v. City of Denver ex rel. Manager of Aviation, 9 P.3d
373, 376 (Colo. 2000).

24

150

25

151

26
27
28

Ad Two, Inc., 9 P.3d at 376.

See Cal. Civ. Code § 1639; Chambliss/Jenkins Assocs. v. Forster, 650 P.2d 1315, 1318 (Colo.
App. 1982) (“[W]ritten documents containing ambiguities or unclear language must be construed
in accordance with the intent of the parties, and relevant extraneous evidence may be considered to
resolve the factual questions of the parties’ intent.”).
24
Case No. 5:13-cv-01081-PSG
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1

than one reasonable interpretation.152 The fact that parties may have different interpretations of the

2

contract does not by itself create an ambiguity justifying consideration of parole evidence.153

3

Here, the plain language of Section VII.5 makes clear the non-compete provision survives
any purported termination; parole evidence is neither required nor permitted. The survival

5

provision provides: “the provisions of Articles III [including the non-compete obligation], IV and

6

V of this Agreement shall survive expiration or termination of this Agreement permanently.”154

7

UMI is right that under the term provision, “[t]he term of this Agreement shall commence on the

8

Effective Date and shall expire and be ended at the close of business on the day (5) years from the

9
United States District Court
For the Northern District of California

4

Effective Date, unless earlier terminated by either party pursuant to this Article VII.”155 But the

10

only reasonable way to read the term provision is that it is subject to and modified by the survival

11

provision. In other words, the survival provision provides that certain provisions do not expire

12

along with the term upon a party’s termination pursuant to Article VII. For the non-compete

13

provision, that means that upon termination UMI may not compete for the full five years. UMI’s

14

read would undercut any meaning to the survival provision, something this court must strive to

15

avoid.156
UMI maintains that even if the non-compete survived, GSI waived it by permitted UMI to

16
17
18

partner with it on Atris in 2008 and 2009. To establish waiver, UMI must prove by clear and
152

19

See Browder v. U.S. Fid. & Guar. Co., 893 P.2d 132, 133 (Colo. 1995), overruled on other
grounds by Hoang v. Assuance Co. of Am., 149 P.3d 798 (Colo. 2007).

20

153

See USI Properties E., Inc. v. Simpson, 938 P.2d 168, 173 (Colo. 1997).

21

154

Docket No. 196, Ex. 1 at § VII.5.

22

155

Docket No. 196, Ex. 1 at § VII.2.

23

156

24
25
26
27
28

See Cal. Civ. Code § 1641 (“The whole of a contract is to be taken together, so as to give effect
to every part, if reasonably practicable, each clause helping to interpret the other.”); Concerning
Application for Water Rights v. N. Colo. Water Conservancy Dist., 677 P.2d 320, 326 (Colo. 1984)
(same). Even if there were a conflict between the survival and term provisions, the more specific
survival provision controls the more general “term” provision. See Cal. Civ. Proc. Code § 1859;
Kavruck v. Blue Cross of Cal., 108 Cal. App. 4th 773, 781 (2003); Restatement (Second) of
Contracts § 203(c); Holland v. Bd. of Cnty.Comm’rs, 883 P.2d 500, 505 (Colo. App. 1994)
25
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1

convincing evidence that (1) GSI knew UMI was required to not engage in Atris design activities

2

for others; and (2) GSI freely and knowingly gave up its right to prohibit UMI from engaging in

3

Atris design activities in 2012.157 But even before considering how knowledge of UMI’s Atris

4

activities for GSI could effect a waiver of UMI’s Atris activities for ISSI, the language of Section

5

X.7 makes clear that no waiver in 2008 or 2009 continues in 2012: “[n]o waiver of any term,

6

provision or condition of this Agreement, whether by conduct or otherwise, in any one or more

7

instances, shall be deemed to be or construed as a further or continuing waiver of any such term,

8

provision or condition of this Agreement.”158
Second, a reasonable jury could find that GSI’s trade secrets claim against UMI is timely.

United States District Court
For the Northern District of California

9
10

UMI provides evidence that GSI should have anticipated that by April 2009 that UMI would

11

engage in any misappropriation, and therefore, GSI’s misappropriation claim was time-barred as of

12

April 2012.159 But there is other evidence that GSI learned of UMI’s alleged misappropriation only

13

within the limitations period.160 For example, GSI presents evidence that it only learned of the

14

purported trade secret misappropriation when UMI produced the Asset Transfer Agreement

15

between UMI and ISSI in the course of this litigation in May 2013.161 A statutory period does not

16

begin to run until the plaintiff knew or should have known that a violation actually occurred.162 A

17

reasonable fact finder could go either way.

18
19
20

157

See DRG/Beverly Hills, Ltd. v. Chopstix Dim Sum Café & Takeout III, Ltd., 30 Cal. App. 4th 54,
61 (1994).
158

21

Docket No. 196, Ex. 1 at § X.7. The same evidence precludes summary judgment on UMI’s
alternative theory of equitable estoppel.

22

159

23

160

24

See Docket No. 624-18, Ex. Q at 13 (“GSI was unaware that UMI transferred GSI’s 576 Mb
Trade Secrets to ISSI until 2013.”).

25

161

26

162

27
28

See Docket No. 563-4 at 12-15.

See, e.g., id.; Docket No. 623-22, Ex. R.

See Menefee v. Ostawari, 228 Cal. App. 3d 239, 245 (1991) (“a cause of action accrues when,
under the substantive law, the wrongful act is done and liability arises, i.e., when a suit may be
brought”); Chasteen v. UNISIA JECS Corp., 216 F.3d 1212, 1217 (Colo. 2000) (statute of
26
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Third, a reasonable jury could find that GSI suffered harm as a result of UMI’s alleged

1

misconduct. UMI argues GSI’s claim of “about $40 million,... based on lost sales of Atris chips to

3

Cisco as its second source supplier” does not prove actual damages163 because Cisco’s independent

4

choice of ISSI broke the chain of causation.164 UMI also argues GSI’s claim that “UMI’s

5

fraudulent conduct also induced GSI to make payments to UMI totaling $542,400” is belied by the

6

evidence because UMI granted GSI a license to UMI’s material and completed its end of the

7

bargain.165 But GSI presents sufficient evidence that it would not have worked with UMI on Atris

8

but for its promise not to compete,166 and a defendant’s wrongful act need not be the sole and only

9
United States District Court
For the Northern District of California

2

cause of the injury.167 Contribution to injury is enough unless the intervening act is wholly

10

unforeseeable.168 GSI also presents sufficient evidence that without UMI’s contributions, ISSI

11

would not have been able to meet Cisco’s timeline or complete Atris.169 A jury must decide.

12

limitations does not begin to run until the plaintiff “learns a defendant improperly disclosed trade
secrets”).

13

163

See Docket No. 563-4 at 15; Docket No. 563-12, Ex. 40 at 52.

15

164

See Docket No. 563-4 at 15.

16

165

14

17

See Docket No. 563-4 at 16; Docket No. 563-22, Ex. 41; Docket No. 563-12, Ex. 39 at 47-49;
Docket No. 563-8, Ex. 17 at 264-265, 314; Docket No. 563-22, Ex. 42 at ¶¶ 15, 17.
166

18

See Docket No. 196, Ex. 1 at § G.

167

19
20
21
22

See Third Eye Blind, Inc. v. Near N. Entm’t Ins. Servs., LLC, 127 Cal. App. 4th 1311, 1319-21
(2005); Brown v. Silvern, 45 P.3d 749 (Colo. App. 2001); Schrimsher v. Bryson, 58 Cal. App. 3d
660, 664 (1976); Sanders v. Acclaim Entm’t, Inc., 188 F. Supp. 2d 1264, 1276 (D. Colo. 2002). To
the extent causation was addressed in the court’s order on Defendants’ motions to dismiss, GSI
correctly notes that it was in the context of standing to pursue an antitrust injury, not under
traditional tort theories. See Docket No. 227 at 8.
168

23
24
25
26
27
28

See Charles O. Bradley Trust v. Zenith Capital LLC, No. 04-cv-02239, 2008 WL 3400340, at
*5 (N.D. Cal. Aug. 11, 2008); Schrimsher, 58 Cal. App. 3rd at 664; Sanders, 188 F. Supp. 2d at
1276.
169

See Docket No. 623-19, Ex. L at 89; Docket No. 624-14, Ex. M at 429. As noted above, GSI
also presents sufficient evidence that it would never have hired UMI—and consequently, would
have never made payments to UMI under the Agreement—if GSI had known UMI intended to
compete against it. See, e.g., Docket No. 196, Ex. 1 at § G. Payments made pursuant to a contract
are permitted as damages in an action involving fraudulent inducement to enter a contract. See,
27
Case No. 5:13-cv-01081-PSG
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1

VI.

2

GSI requests summary judgment against UMI on (1) five discrete issues within its breach of
contract claim, namely, that the non-compete provision is valid and lasts for a duration of five

4

years, the non-compete provision applies to Atris as an LLDRAM product, UMI’s activities with

5

respect to Atris were in breach of the contract’s non-compete provision, UMI breached the

6

confidentiality provision as a matter of law, and GSI owns the schematics at issue in the lawsuit;

7

(2) four elements of GSI’s ninth cause of action for fraud—falsity, knowledge of falsity, intent to

8

induce reliance, and actual reliance; and (3) UMI’s “readily ascertainable” affirmative defense, or

9
United States District Court
For the Northern District of California

3

in the alternative, the reverse engineering portion of that defense.170 Once again, summary

10

judgment as to certain issues is warranted; as to the rest, it is not.

11

First, there is no genuine dispute that the non-compete provision is valid. Plainly there was

12

consideration for the non-compete.171 While Colorado law limits non-compete covenants that

13

restrict an individual from an entire profession, non-compete covenants involving businesses that

14

do not entirely restrain a business are not suspect or prohibited.172 Even if Colorado’s restrictions

15
16
17

e.g., Denevi v. LGCC, 121 Cal. App. 4th 1211, 1220 (2004); Elk River Assocs. v. Huskin, 691 P.2d
1148, 1153 (Colo. App. 1984).
170

18

See Docket No. 566; Docket No. 568-5 at 1.

171

25

“[A]ny benefit to a promisor or any detriment to a promisee at the time of the contract—no
matter how slight—constitutes adequate consideration.” Lucht’s Concrete Pumping, Inc. v. Horner,
255 P.3d 1058, 1061 (Colo. 2011) (upholding non-compete executed two years after employment
agreement). UMI suggests that it received no consideration for the non-compete agreement because
the parties intended the non-compete agreement to last beyond the design phase of the contract,
into a support period, and the agreement obligated GSI to provide separate consideration for
support provided during that period. Although GSI agreed to pay separate consideration for
services provided during a three-year support period, that consideration was specifically for
“support of failure analysis” services. Docket No. 196, Ex. 1 at § II.1.1(d). The non-compete
agreement is supported by the original consideration of the Agreement, “[i]n the absence of the
[non-compete] restrictions contained in this Agreement, GSI would not have considered selecting
UMI.” Id. at § G.

26

172

19
20
21
22
23
24

27
28

See Energex Enters., Inc. v. Anthony Doors, Inc., 250 F. Supp. 2d 1278, 1281 (D. Colo. 2003)
(limiting Colorado’s statutory prohibition against covenants not to compete to contracts involving
individuals); see also Colo. Rev. Stat. § 8-2-113(2) (voiding any term which “restricts the right of
28
Case No. 5:13-cv-01081-PSG
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1

did apply here, UMI presents no evidence that it was entirely restrained from its business. The only

2

evidence shows that it was at most restricted from designing an LLDRAM chip as defined in the

3

agreement, while remaining free to pursue other DRAM opportunities. And there is no

4

requirement, as UMI suggests, that a non-compete agreement explicitly list the trade secrets it is

5

designed to protect.173

6

There also is no genuine dispute that the non-compete provision did not terminate along

7

with the “term of the contract” in 2009 when the parties’ relationship dissolved. As discussed

8

above, the contract’s non-compete and survival provisions are clear.174

United States District Court
For the Northern District of California

9

There is, however, a genuine dispute as to whether the contract provision applies to Atris as

10

a LLDRAM product. GSI used a different definition of “LLDRAM” in its related agreement with

11

ProMOS (concerning fabrication of the 576Mb chip).175 There also is conflicting evidence whether

12

Atris is “latency optimized” and/or “address rate optimized,” as the LLDRAM definition in the

13

agreement requires.176 A jury must decide.

14
15
16

any person to receive compensation for performance of skilled or unskilled labor for any
employer” (emphasis added)).
173

17
18
19
20
21
22
23
24

See DoubleClick Inc. v. Paikin, 402 F. Supp. 2d 1251, 1254, 1257-58 (D. Colo. 2005)
(upholding non-compete which “generally prohibited [the defendant] from ever disclosing [the
plaintiff’s] confidential information” under the trade secret exception); Energex, 250 F. Supp. 2d at
1281-82 (noting that trade secret exception would save non-compete designed to prevent disclosure
of “Confidential Information,” defined in the contract as including “trade secrets,” with no further
explanation of those trade secrets). UMI also incorrectly cites Saturn Sys., Inc. v. Militare, 252
P.3d 516, 527-28 (Colo. App. 2011), as holding a “non-compete agreement enforceable only
because the trade secrets were expressly and unambiguously identified in the contract clause at
issue.” Docket No. 636-4 at 15. What Saturn held is that the non-compete at issue in that case was
enforceable because (1) it was not a standalone provision, separate from the non-disclosure clause;
and (2) it was not a “naked covenant restricting all competition” and instead was a “narrowly
tailored provision restricting [the defendant] only from soliciting [the plaintiff’s] clients as a way of
protecting [the plaintiff’s] trade secrets and confidential information.” 252 P.3d at 527-28.
174

See Section V, supra; Docket No. 196, Ex. 1 at § VII.5; Docket No. 176 at 15-16.

175

See Docket No. 636-29, Ex. K at Art. 1.7.

176

See Docket No. 636-25, Ex. J at ¶¶ 11-13.

25
26
27
28

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1

A genuine dispute also exists as to whether UMI breached its confidentiality agreement.

2

The contract itself does not exactly specify what falls under “confidential information.”177 The

3

parties genuinely dispute what constitutes GSI’s confidential information: increments of

4

schematics, schematics themselves, or the entire chip design.178 UMI also provides sufficient

5

evidence that it made reasonable efforts to protect the confidentiality of whatever GSI confidential

6

information UMI may have had in its possession.179
Second, a genuine dispute exists as to GSI’s fraud claim. Among other things, the parties

7

genuinely dispute whether they planned to enter into a separate Atris contract and whether GSI

9
United States District Court
For the Northern District of California

8

should have paid for UMI’s Atris if GSI wanted it.180 They further genuinely dispute whether GSI

10

got its bargain for the full benefit of UMI’s 576 Mb chip design work, and the meaning of GSI’s

11

declining UMI’s Atris offer.181 It also is genuinely disputed whether GSI’s claimed injuries arise

12

from UMI’s conduct.182

13

Third, with one exception, a genuine dispute exists as to UMI’s readily ascertainable

14

affirmative defense. A reasonable jury could find that the 25 schematics claimed by GSI “standing

15

alone” and isolated from a chip design layout are readily ascertainable by UMI and others having

16

access to UMI’s independently-created commodity DRAM designs and publicly available

17

materials, including patents.183 The one exception concerns reverse engineering, which UMI does

18

not address anywhere in its papers at all.

19

177

See Docket No. 636-4 at 2-3; Docket No. 196, Ex. 1 at §§ I.1, VI.2.

20

178

See Docket No. 658-4 at 9-10.

21

179

See Docket No. 636-4 at 22-24.

22

180

See Docket No. 563-10, Ex. 28 at GSI0030485-86.

23

181

24

See Docket No. 176 at 7; Docket No. 245 at ¶ 64; Docket No. 563-8, Ex. 17 at 335:1-336:11,
336:17-23

25

182

26

See Docket No. 227 at 14; Docket No. 563-12, Ex. 40; Docket No. 563-12, Exhibit 39 at 47-49;
Docket No. 563-8, Ex. 17 at 264:21-256:27, 20, 314:1-11, 14; Docket No. 196, Ex. 1 at § G.
183

27
28

See Docket No. 636-4 at 4-5.

30
Case No. 5:13-cv-01081-PSG
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1

VII.

2

GSI also moves for issue and evidence sanctions, or in the alternative, to compel ISSI to
comply with the court’s June 11 order regarding its interrogatory no. 13, and to allow the

4

supplemental opinion of Robert Murphy.184 GSI claims ISSI violated the court’s order granting

5

GSI’s motion to compel ISSI to ““[d]escribe in detail, all work product [ISSI] ha[s] created or

6

developed that incorporates or leverages the information transferred to [ISSI] pursuant to the

7

February 1, 2013 Asset Transfer Agreement” (“ATA”) with United Memories, Inc. (“UMI”).”185

8

GSI further requests an order that says (1) ISSI incorporated or leveraged at least 190 GSI

9
United States District Court
For the Northern District of California

3

schematics it acquired from UMI into its final Atris design; (2) ISSI incorporated into its Atris

10

design, but then later removed, at least 30 other GSI schematics ISSI acquired from UMI; and (3)

11

ISSI is barred from introducing any fact or expert evidence at trial or other proceedings to show

12

ISSI did not incorporate or leverage GSI-owned schematics in its Atris design.186 Alternatively,

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GSI seeks an order compelling ISSI to comply with the order regarding interrogatory no. 13 and to

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allow its expert Murphy to supplement his May 8, 2015 expert report to address ISSI’s further

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response.187

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ISSI, for its part, moves for a protective order preventing GSI from seeking any further
discovery from ISSI, whether regarding interrogatory no. 13 or any other topic.188
ISSI’s response to interrogatory no. 13 is comprehensive. ISSI tasked five engineers to

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spend over two days creating a 16-page, substantive response to one interrogatory.189 GSI’s

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requests that the court find GSI owns certain circuit schematics are too drastic, and the court has

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184

See Docket Nos. 723, 722-4.

185

See Docket No. 722-4 at 1; Docket No. 601.

186

See Docket No. 722-4 at 1.

187

See id.

188

See Docket No. 727-3 at 3.

189

See Docket No. 743 at 2.

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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

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already stricken GSI’s attempts to supplement the Murphy report as untimely. 190 Sanctions are

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unwarranted. GSI’s motion accordingly is DENIED, and ISSI’s motion is GRANTED-IN-PART as

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to interrogatory no. 13.

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VIII.
Finally, GSI’s motion to strike the declaration of Theresa Chen on the grounds that Chen

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was never disclosed as a potential witness in ISSI’s initial disclosures191 is DENIED as not

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contained within the opposition brief,192 as “the additional or corrective information [was]

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otherwise . . . made known to [GSI] during the discovery process or in writing.”193
GSI’s motion to strike the declaration of Dennis Wilson on the grounds that UMI failed to

United States District Court
For the Northern District of California

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disclose Wilson as an expert194 is GRANTED.195
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See Docket No. 722-4 at 1; Docket No. 600.

191

See Docket No. 632.

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192

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See Apple, Inc. v. Samsung Elecs., Ltd., Case No. 11-cv-01846-LHK, 2011 WL 7036077 at *3
(N.D. Cal. Dec. 2, 2011) (denying defendant’s separate motion to exclude declaration in support of
plaintiff’s summary judgment motion on the grounds that it was not contained within defendant’s
opposition brief and thus failed to comply with Civ. L.R. 7-3(a)), aff’d-in-part, vacated-in-part on
other grounds, 678 F.3d 1314 (Fed. Cir. 2012).
193

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Fed. R. Civ. P. 26(e)(1)(A); see also Tumbling v. Merced Irrigation Dist., No. 08-cv-1801-LJO,
2010 U.S. Dist. LEXIS 101404, at *56-57 (E.D. Cal. Sept. 27, 2010); SEC v. Berry, No. 07-cv04431-RMW, 2011 U.S. Dist. LEXIS 64436, at *4-5 (N.D. Cal. June 16, 2011) (holding that a
witness had been “otherwise made known” to defendant through plaintiff’s interrogatory response);
Docket No. 657-3, Baskin Decl. Ex. A; Docket No. 657-5, Baskin Decl. Ex. B at 238:3-13; see
also Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001) (“Two
express exceptions ameliorate the harshness of Rule 37(c)(1): The information may be introduced
if the parties’ failure to disclose the required information is substantially justified or harmless.”)

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194

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195

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See Docket No. 650.

See Docket No. 553 at 2:5. Wilson’s declaration does not qualify as an expert report because it
does not purport to contain “a complete statement of all opinions the witness will express,” as Rule
26(a)(2)(B)(i) requires. See Docket Nos. 636-25, 636-26, 636-27. Second, few of Wilson’s
opinions supply “the facts or data considered by the witness in forming them,” as Rule
26(a)(2)(B)(ii) requires. Id. Under Rule 26(a)(2)(B)(ii), each opinion must be substantiated with the
precise “reasoning and thought process that led to the ultimate decision,” and an expert’s general
qualifications are insufficient. See Henson v. Baker School Dist. No. 12 Bd. of Trustees, 2013 WL
5786592, at *3 (D. Mont. Oct. 28, 2013) (quoting United States v. GC Quality Lubricants, Inc.,
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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER

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SO ORDERED.

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Dated: September 21, 2015

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_________________________________
PAUL S. GREWAL
United States Magistrate Judge

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United States District Court
For the Northern District of California

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2002 WL 34376587, at *2 (M.D. Ga.Sept. 27, 2002)). Third, the declaration is missing “a list of all
publications authored in the previous 10 years,” as Rule 26(a)(2)(B)(iv) requires. See Docket Nos.
636-25, 636-26, 636-27. Fourth, the declaration fails to list “all other cases in which, during the
previous 4 years, the witness testified as an expert at trial or by deposition,” as Rule 26(a)(2)(B)(v)
requires. Id. Finally, the declaration omits “a statement of the compensation to be paid for the study
and testimony in the case,” as Rule 26(a)(2)(B)(vi) requires. Id.
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Case No. 5:13-cv-01081-PSG
ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT, GRANTING-INPART MOTIONS TO STRIKE, DENYING MOTION FOR SANCTIONS AND GRANTING-INPART MOTION FOR PROTECTIVE ORDER