VIA Technologies, Inc. (a California corporation) et al v. ASUS Computer International et al

Filing 182

Order by Magistrate Judge Howard R. Lloyd re: Dkt. No. 177 Discovery Dispute Joint Report #1. (hrllc3S, COURT STAFF) (Filed on 10/12/2016)

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E-filed 10/12/2016 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 9 VIA TECHNOLOGIES, INC. (A CALIFORNIA CORPORATION), et al., 10 United States District Court Northern District of California 11 12 13 14 15 Case No.14-cv-03586-BLF (HRL) Plaintiffs, ORDER RE: DISCOVERY DISPUTE JOINT REPORT #1 v. Re: Dkt. No. 177 ASUS COMPUTER INTERNATIONAL, et al., Defendants. Plaintiffs Via Technologies, Inc. (California), Via Technologies, Inc. (Taiwan), and Via 16 Labs, Inc. (together, “VIA”) seek an order compelling the defendants to produce analog 17 schematics corresponding to the schematics identified in VIA’s second amended trade secret 18 disclosure, rather than schematics corresponding only to the titles of the schematics VIA has 19 identified. Additionally, VIA seeks an order compelling the production of digital designs 20 corresponding to those it identified in its trade secret disclosure. VIA argues that these disclosures 21 are compelled by a proper reading of the Court’s order of May 13, 2016 (Dkt. No. 157). 22 Defendants, particularly defendant ASMedia Technology, Inc. (“ASMedia”), argue that they are in 23 compliance with this order and that further discovery related to digital designs is improper. 24 25 Background This dispute has its origins in VIA’s first amended trade secret disclosure, the document 26 that, under California Code of Civil Procedure Section 2019.210, determines the scope of 27 discovery in trade secret misappropriation cases. When VIA requested production related to this 28 disclosure, ASMedia objected and produced only limited documents. In response to VIA’s 1 subsequent motion to compel, the Court found VIA’s disclosure insufficient to identify its trade 2 secrets with “reasonable particularity,” the standard required by Section 2019.210, except for 12 3 schematics the disclosure specifically identified. Dkt. No. 132. The Court ordered the defendants 4 to produce documents corresponding to those 12 schematics. Id. 5 VIA responded to this order by requesting leave to file a motion for partial reconsideration, 6 or, in the alternative, for leave to amend its trade secret disclosure. Dkt. No. 148. The Court 7 denied the motion for partial reconsideration, but granted the request for leave to amend. In the 8 key passage of the order, Judge Grewal stated: 9 10 United States District Court Northern District of California 11 12 13 14 15 In its operative trade secret disclosure, VIA says that its ‘trade secret analog designs . . . include, but are not limited to, the documents produced’ within a Bates range. VIA suggests adding an index listing the schematic and project names corresponding to each Bates-numbered document. To the extent the index contains titles of additional schematics that VIA claims as trade secrets, including those titles in the disclosure itself would identify those schematics as claimed trade secrets with reasonable particularity. That in turn would require Defendants to produce their own schematics corresponding to those titles. But it would not open the door to discovery of all of the schematics for all of Defendants’ USB products, or even to all of the schematics for the functional areas that VIA alleges that Defendants copied. 16 Dkt. No. 157 (emphasis added). Shortly after, VIA timely filed its second amended trade secret 17 disclosure, including a lengthy index listing the titles, project names, and Bates numbers of over 18 one thousand analog schematics, each of which is claimed as an individual trade secret. Dkt. No. 19 164. VIA’s second amended disclosure also includes a list of 39 digital designs that VIA believes 20 defendants copied. Id. 21 The Current Dispute 22 ASMedia responded to the second amended disclosure by producing analog schematics 23 with titles matching the titles of the analog designs that VIA identified. In the Discovery Dispute 24 Joint Report, ASMedia argues that this is all that is required of it. First, ASMedia states that, 25 26 practically, this is all it can provide. As a result of VIA’s designating its schematics “Highly Confidential/Trade Secret,” ASMedia says “the only information [it] can see is the title of the 27 schematics . . . , and thus the only information [it] can use to perform a search is the title of each 28 2 1 schematic.” Dkt. No. 177. ASMedia also argues that, due to the large number of schematics VIA 2 listed (over one thousand), a comprehensive search would be overly burdensome. Second, 3 ASMedia asserts that Judge Grewal’s order “refers specifically to the titles” of the schematics and 4 does not require comparisons of the schematics or their roles, utility, or functions. Finally, 5 ASMedia argues that VIA was barred from seeking discovery on its digital designs because its 6 request for leave to amend was limited to analog schematics. Id. VIA argues that this is a cramped and incorrect reading of Judge Grewal’s order. It argues 8 that the order requires ASMedia to compare its schematics to the schematics VIA claimed as trade 9 secrets in its index (and not just to their titles). To the extent that such comparisons would be 10 overly burdensome, VIA offered to have an independent expert conduct the review of ASM’s 11 United States District Court Northern District of California 7 schematics. VIA also argues that it was permitted to amend its trade secret disclosure to include 12 digital designs, because Judge Grewal’s order “does not expressly bar” such amendments. Id. Discussion 13 14 Turning first to the dispute concerning the scope of analog schematic discovery permitted 15 by Judge Grewal’s order, the Court is persuaded that ASMedia’s reading of the order is incorrect. 16 The order states, “including . . . titles [of additional schematics that VIA claims as trade secrets] in 17 the disclosure itself would identify those schematics as claimed trade secrets with reasonable 18 particularity.” Dkt. No. 157 (emphasis added). The schematics are the claimed trade secrets; the 19 titles here serve only as a means of identifying them. The schematics, not the titles, are being 20 identified and disclosed with reasonable particularity, and they, not the titles, set the scope of 21 discovery. While the next sentence does state that the defendants would need “to produce their 22 own schematics corresponding to those titles,” the word “titles” is again being used as a shorthand 23 for the underlying schematics. The latter sentence does not permit the defendant to disclose only 24 its own schematics with titles matching the titles in VIA’s index; a more in-depth schematic-to- 25 schematic comparison is needed. 26 The Court thus reads Judge Grewal’s order to require ASMedia to disclose its own 27 28 3 1 schematics corresponding to the schematics named by VIA in its index.1 But this interpretation 2 does not resolve all of the issues related to analog schematics presented in the Discovery Dispute 3 Joint Report. Defendants assert that searching for documents that correspond to the listed 4 schematics would be overly burdensome because of the index’s size and impossible because of the 5 “Highly Confidential” designation VIA has assigned to its schematics (making only the titles 6 visible to ASMedia). Dkt. No. 177. The parties propose different solutions to these problems. VIA suggests having an 8 independent expert review ASMedia’s schematics and compare them to VIA’s schematics. 9 ASMedia suggests that VIA identify a small subset of schematics that VIA “truly believes are the 10 most egregious examples of misappropriation and allow ASMedia to see the actual schematics” to 11 United States District Court Northern District of California 7 enable ASMedia to find responsive documents. Id. In crafting the appropriate solution, this Court is guided by the proportionality requirement 12 13 of Federal Rule of Civil Procedure 26(b) and the purposes of the trade secret disclosure required 14 by California Code of Civil Procedure Section 2019.210: (1) “promot[ing] well-investigated 15 claims and dissuad[ing] the filing of meritless trade secret complaints[;]” (2) “prevent[ing] 16 plaintiffs from using the discovery process as a means to obtain the defendant’s trade secrets[;]” 17 (3) “assist[ing] the court in framing the appropriate scope of discovery and in determining whether 18 plaintiff’s discovery requests fall within that scope[;]” and (4) “enabl[ing] defendants to form 19 complete and well-reasoned defenses, ensuring that they need not wait until the eve of trial to 20 effectively defend against charges of trade secret misappropriation.” Computer Econ., Inc. v. 21 Gartner Grp., Inc., 50 F. Supp. 2d 980, 985 (S.D. Cal. 1999); see also Advanced Modular 22 Sputtering, Inc. v. Superior Court, 132 Cal. App. 4th 826, 835-36 (2005). Focusing first on the fourth purpose of Section 2019.210, to enable ASMedia to prepare a 23 24 defense against claims that it has misappropriated trade secrets, it will need to know the substance 25 26 27 28 1 The court repeats Judge Grewal’s note that the scope of discovery created by VIA’s amendment is narrower than the scope sought in VIA’s initial requests for production: this order does not “open the door to discovery of all of the schematics for all of Defendants’ USB products, or even to all of the schematics for the functional areas that VIA alleges that Defendants copied.” Dkt. No. 157. The scope remains limited to the listed schematics themselves. 4 1 of the secrets it has allegedly stolen—that is, the contents of the schematics, not just their titles. 2 VIA’s suggestion that an independent expert review its schematics and search for ASMedia’s 3 corresponding schematics does not serve this purpose. Thus, the Court instructs VIA to allow 4 ASMedia to see the allegedly misappropriated schematics so that ASMedia may produce 5 responsive documents.2 Turning next to look at all of the purposes of Section 2019.210 and Rule 26(b) listed 7 above, none of these interests is served by allowing discovery to go forward on over one thousand 8 schematics. It is impossible for VIA to effectively prosecute and for ASMedia to effectively 9 defend a claim regarding so many trade secrets in a two-week trial. VIA must limit the scope of 10 its trade secret disclosure—and, thus, its requested discovery—to a more reasonably proportional 11 United States District Court Northern District of California 6 number of trade secrets. To the extent that VIA argues that a combination of all of its analog schematics is one of 12 13 its trade secrets (and thus that discovery should be permitted on all one-thousand-plus schematics), 14 the Court is not persuaded that VIA has described how the combination of features in these 15 schematics constitutes a trade secret (or secrets) with sufficient particularity. VIA’s second 16 amended trade secret disclosure states that “VIA is claiming as a trade secret the particular manner 17 in which it has selected, arranged and connected particular schematics components to implement 18 particular functionalities.” Dkt. No. 164-3, at 54. But VIA does not state what these components 19 or functionalities are with sufficient particularity for the Court or the defendants to identify which 20 schematic arrangements and connections are claimed trade secrets. To the extent that VIA 21 suggests that all of the analog schematics and all of the functions are the combination trade 22 secret(s), VIA “is not entitled to include broad, ‘catch-all’ language as a tactic to preserve an 23 unrestricted, unilateral right to subsequently amend its trade secret statement” or “to hide its trade 24 2 25 26 27 28 See Perlan Therapeutics, Inc. v. Superior Court, 178 Cal. App. 4th 1333, 1353-54 (2009) (noting that the court may make plaintiffs “go first” by requiring additional disclosures in a trade secret statement). The court also notes that the disclosure of a plaintiff’s entire trade secret is typically not required to satisfy the “reasonable particularity” standard, Advanced Modular Sputtering, 132 Cal. App. 4th at 836, and the Court does not hold that it is required to satisfy that standard here. Rather, given the circumstances of this case and the Court’s reluctance to revisit Judge Grewal’s order on reasonable particularity, the Court frames this aspect of its order as a practical accommodation to facilitate discovery. 5 1 secrets in ‘plain sight’ by including . . . voluminous attachments in its trade secret statement.” 2 Perlan Therapeutics, Inc. v. Superior Court, 178 Cal. App. 4th 1333, 1350 (2009). Instead, VIA 3 must make a “fair, proper, just and rational” showing “to identify its alleged trade secret in a 4 manner that will allow the trial court to control the scope of subsequent discovery . . . and allow 5 [the parties] a fair opportunity to prepare and present their best case of defense . . . .” Advanced 6 Modular Sputtering, 132 Cal. App. 4th at 835-36. Its vague statements that a combination of 7 features in over a thousand schematics represents a trade secret do not constitute such a showing. VIA makes a proper showing about a combination trade secret in one instance. VIA has 8 identified certain features of its chip designs responsible for power efficiency and described how 10 these components work together in combination. In Judge Grewal’s order, the Court noted that 11 United States District Court Northern District of California 9 VIA had not yet explained how this combination of features was “unique and secret.” Dkt. No. 12 157. The Court is persuaded that VIA’s second amended trade disclosure and the supporting 13 expert declaration have made a sufficient showing with respect to these power efficiency features. 14 The declaration describes the extensive design and evaluation process for creating component 15 arrangements that are “not generally known to those of skill in the industry or the public.” Gomez 16 Decl. at ¶¶ 18-22.3 These descriptions identify the power efficiency combination trade secret with 17 sufficient particularity. The Court permits discovery to go forward on the schematics described in the power 18 19 efficiency section of the second amended trade secret disclosure. As for the other schematics that 20 VIA alleges as individual trade secrets, the Court will permit discovery on 24 additional analog 21 schematics selected by VIA. In combination with the digital designs (discussed below) and the 22 power efficiency combination trade secret, this number of schematics creates a reasonably 23 proportional scope of discovery. As stated above, VIA must disclose all of these schematics to 24 ASMedia in full. Turning next to the digital designs, the Court must address whether Judge Grewal’s orders 25 26 27 28 3 This showing of uniqueness and secrecy, however, is insufficient to identify other combination trade secrets alleged by VIA with reasonable particularity where the combinations themselves have not been sufficiently described. See Perlan Therapeutics, 178 Cal. App. 4th at 1350. 6 1 permitted VIA to include digital designs in its second amended trade secret disclosure. 2 In permitting VIA to amend its disclosure, Judge Grewal stated that “courts have often 3 allowed parties to amend their trade secret disclosures to overcome their insufficiencies. VIA 4 deserves that chance, too.” Dkt. No. 157, at p. 3. 5 Judge Grewal did not limit the insufficiencies that could be corrected to analog schematics 6 only. Instead, the Court reads his order to allow VIA the chance to amend any disclosures that 7 were insufficient. Thus, if VIA insufficiently described its digital designs in its first amended 8 trade secret disclosure, the Court is persuaded that Judge Grewal’s order permitted VIA to amend 9 its disclosure to include more particularized information about its digital designs. 10 VIA’s first amended trade secret disclosure describes, albeit with insufficient particularity, United States District Court Northern District of California 11 its digital designs. The disclosure states, “VIA’s digital designs . . . also constitute protectable 12 trade secrets,” and, “VIA believes that ASM[edia] has also copied its digital designs.” Dkt. No. 13 122-5. Though this disclosure is not sufficiently particular to permit discovery on the digital 14 designs, it is sufficiently “insufficient” to allow amendment under Judge Grewal’s order. 15 The Court is not persuaded by ASMedia’s argument that VIA should be barred from 16 adding digital designs to its amended disclosure because it did not request leave to include those 17 designs in its amendments. In the relevant section of its motion for leave to amend, VIA requested 18 “leave to amend the Disclosure to include a written index of all the documents that were 19 misappropriated by Defendants in a form such as the index attached . . . .” Dkt. No. 148. This 20 statement proposes a method by which VIA would amend its trade secret disclosure (i.e., it would 21 add an index “in a form such as the index attached”). The proposal is open-ended and not limited 22 to the documents included in the referenced index. 23 24 25 26 VIA was thus not prohibited from including digital designs in its second amended disclosure. Conclusion The Court orders VIA to limit the scope of its relevant requested discovery to 24 analog 27 schematics of its choice, in addition to those schematics included in the power efficiency 28 combination trade secret, and instructs VIA to disclose these schematics to ASMedia. The Court 7 1 orders ASMedia to produce its schematics corresponding to the schematics, not just the titles, 2 disclosed by VIA pursuant to this order. Finally, ASMedia shall also produce documents 3 responsive to the digital designs identified in VIA’s second amended trade secret disclosure. 4 Discovery in this case was originally scheduled to close in June 2016, and the close of fact 5 discovery has been rescheduled to November 18, 2016. In light of this upcoming deadline, the 6 Court instructs VIA to make its disclosures pursuant to this order by October 22, 2016. ASMedia 7 shall produce its responsive documents by November 7, 2016. 8 9 IT IS SO ORDERED. Dated: 10/12/2016 10 United States District Court Northern District of California 11 HOWARD R. LLOYD United States Magistrate Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8

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