BladeRoom Group Limited et al v. Facebook, Inc.

Filing 203

ORDER by Magistrate Judge Howard R. Lloyd re 124 Discovery Dispute Joint Report No. 1. (hrllc2, COURT STAFF) (Filed on 2/28/2017)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION United States District Court Northern District of California 11 BLADEROOM GROUP LIMITED, et al., 12 Case No.5:15-cv-01370-EJD (HRL) Plaintiffs, 13 ORDER RE DISCOVERY DISPUTE JOINT REPORT NO. 1 v. 14 FACEBOOK, INC., et al., 15 Re: Dkt. No. 124 Defendants. 16 17 Plaintiffs sue for alleged misuse of claimed trade secrets concerning designs and 18 methodology for building data centers. Discovery Dispute Joint Report (DDJR) No. 1 presents a 19 dispute as between plaintiffs, on the one hand, and defendant Facebook, Inc. (Facebook) on the 20 other. At issue: whether Facebook’s retained testifying expert, KC Mares, may access and use 21 material that plaintiffs designated “Confidential” or “Highly Confidential-Attorney’s Eyes Only” 22 under the stipulated protective order.1 (Dkt. 54). The matter is deemed suitable for determination 23 without oral argument. Civ. L.R. 7-1(b). Upon consideration of the parties’ respective 24 arguments,2 this court rules as follows: 25 1 26 27 Plaintiffs point out that they have agreed that Facebook’s seven other retained experts may access their confidential information. Facebook says that those seven others are employees of a litigation analytics firm who will not testify. 2 28 This court has not found it necessary to consider plaintiffs’ supplemental exhibits from a press release and from a website. Defendant’s request for leave to file a supplemental response to those In his curriculum vitae, Mares describes himself as the “[e]xecutive leader of global data 1 2 center strategy, development, design, procurement and operations.” (Dkt. 124-1 at 6). He further 3 states that he has “led the design and construction of $5-10 billion of data centers and [has] 4 negotiated and managed data center and network services with nearly every major provider.” 5 (Id.). Mares has a consulting business, MegaWatt Consulting, Inc., in which he advises clients on 6 data center design, operation, site selection, development, and energy efficiency. (Id.). Among 7 the services and experience offered to clients is: “Led the development of various software, 8 renewable energy and technology products and a reviewer of many new technologies used within 9 the data center space . . ..” and “Lead design teams for many complex data center projects, 10 creating innovations and PUEs of less than 1.1.” (Id.).3 United States District Court Northern District of California 11 Plaintiffs previously considered allowing Mares to access their claimed confidential 12 information, provided that he signed a declaration agreeing to refrain from certain activities. 13 Among other things, plaintiffs’ proposed declaration required Mares to agree to the following 14 statements:  15 “I have not designed data centers and have no current plans to design data centers”; and 16  17 “I will not . . . provide designs for data centers during the pendency of the Litigation and for one year following the termination of the Litigation.” 18  19 “I will not . . . .consult on the design or build of an air handling system during the 20 pendency of the Litigation and for one year following the termination of the 21 Litigation.” 22 (Dkt. 124, DDJR 1 at 7; Dkt. 125-2 at 3). Mares had no problem with other aspects of plaintiffs’ 23 proposed declaration (see Dkt. 125-1); and, Facebook contends that any concerns about plaintiffs’ 24 confidential information are sufficiently addressed by portions of the declaration that Mares 25 offered to sign, including that for the duration of this litigation (and for one year after its 26 27 exhibits is denied. 3 28 Although not explained in the present DDJR, this court’s understanding is that “PUE” essentially is a measure of how efficiently a data center uses energy. 2 1 termination), he would recuse himself from decisions involving subcontractor selection/evaluation 2 if plaintiffs were among the bidders; would not provide engineering or architectural services; and 3 would not design or build an air handling system. (Dkt. 125-1 at 3). Defendant argues that this 4 proffered declaration, coupled with the terms of the stipulated protective order, are sufficient to 5 address plaintiffs’ concerns. In plaintiffs’ view, defendant’s proffer is insufficient without the 6 additional assurances re data center design. The deal-breaker was that Mares could not sign off on 7 the above-quoted representations. Facebook says that is because Mares is asked to consult on data 8 center design from time to time. 9 Without their desired declaration, plaintiffs oppose Mares’ access to their confidential information, arguing that his ongoing consulting work in data center design presents an 11 United States District Court Northern District of California 10 unacceptable risk of inadvertent misuse. They fear that Mares, once having had access to their 12 confidential information, will not be able to compartmentalize their claimed trade secrets from 13 other information he obtains and uses in the course of his work. Facebook contends that plaintiffs’ 14 concerns are unfounded. 15 To resolve this dispute, the court balances Facebook’s interest in selecting the experts most 16 beneficial to its case with plaintiffs’ interest in protecting their claimed trade secrets from 17 disclosure to competitors. Symantec Crop. v. Acronis Corp., No. 11-5310 EMC (JSC), 2012 WL 18 3582974 at *3 (N.D. Cal., Aug. 20, 2012). As the parties opposing disclosure, plaintiffs bear the 19 burden of demonstrating that the risk of harm that disclosure to Mares would entail (under any 20 proposed safeguards) outweighs Facebook’s need for Mares’ access to such materials. 21 The primary point of contention is whether Mares is a competitor of plaintiffs. Under the 22 stipulated protective order, an expert cannot be “a past or current employee of a Party or of a 23 Party’s competitor” or “anticipated to become an employee of a Party or of a Party’s competitor.” 24 (Dkt. 54 ¶ 2.7). Facebook contends that Mares is not a “competitor” in any sense of the word 25 because, unlike plaintiffs, Mares does not himself design or build data centers. Rather, he advises 26 clients about them; and, simply consulting on aspects of data center design, says Facebook, does 27 not make Mares a competitor. Here, defendant cites Rheumatology Diagnostics Lab., Inc. v. 28 Aetna, Inc., No. 12-cv-05847-WHO, 2015 WL 1744330 at *11 (N.D. Cal., Apr. 15, 2015) in 3 1 which the court concluded that an expert was not defendant’s competitor where his services were 2 similar, but “not the same thing” as defendant’s (i.e., he helped physicians install and operate 3 clinical laboratories, whereas defendant provided physicians with clinical laboratory services). 4 Mares is not a “competitor” of plaintiffs in any traditional or conventional sense. Even so, 5 this court finds that there is a potential risk of inadvertent disclosure of plaintiffs’ confidential 6 information because the record suggests that a purpose of Mares’ consultancy is to advise, inform, 7 and guide decisions re data center design. See, e.g., Isis Pharmaceuticals, Inc. v. Santaris Pharma 8 A/S Corp., No. 11cv2214-GPC (KSC), 2013 WL 3367575 at *6 (S.D. Cal., July 5, 2013) (finding 9 a risk of inadvertent disclosure where the essence of the proposed expert’s consulting practice was 10 United States District Court Northern District of California 11 “to impact, shape, and inform decisions” re the subject technology). Further, plaintiffs point out that Mares actively consults in the very field at issue. Courts 12 have concluded that a “proposed expert’s ongoing work in the field created a substantial risk of 13 misuse such that he should only be allowed access to the confidential information if he possessed 14 ‘unique expertise.” GPNE Corp. v. Apple, Inc., No. 5:12-cv-02885-LHK (PSG), 2014 WL 15 1027948 at *1-2 (N.D. Cal., Mar. 13, 2014) (denying access to confidential materials by an expert 16 who actively consulted with plaintiff’s competitors and where there was no showing that he had 17 unique qualifications that would make him better suited than any other expert); Symantec Corp., 18 2012 WL 3582974 at *2-3 (denying access to confidential materials where the expert offered 19 consulting and analysis in the very field at issue and there was no showing that the expert had 20 unique knowledge that could not be found in another expert). Cf. Advanced Semiconductor 21 Materials Am. Inc. v. Applied Materials Inc., No. 95-20169, 1996 WL 908654, at *3 (N.D. Cal. 22 Oct. 28, 1996) (allowing access to confidential materials by an expert who had not consulted on 23 the technology at issue for four years). 24 This court wonders whether anyone Facebook might want to use would be able to sign off 25 on the representations plaintiffs desire, namely that the proposed expert has not designed data 26 centers and has no plans to do so. Nevertheless, the court concludes that, on balance, the risk of 27 inadvertent disclosure is not outweighed by prejudice to Facebook. Here, as in GPNE and 28 Symantec Corp., defendant has not identified any unique qualifications or knowledge Mares has 4 1 that make him better suited to serve than any other expert. Cf. Isis Pharmaceuticals, Inc., 2013 2 WL 3367575 at *7-8 (allowing disclosure of confidential information to a proposed expert where 3 the field in question was highly specialized and the pool of available experts was small). 4 5 6 7 Based on the foregoing, plaintiffs’ request for an order precluding Mares’ access to their confidential information is granted. SO ORDERED. Dated: February 28, 2017 8 9 HOWARD R. LLOYD United States Magistrate Judge 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 1 5:15-cv-01370-EJD Notice has been electronically mailed to: 2 Anthony David Giles 3 Elizabeth Lee Stameshkin 4 Erik Christopher Olson 5 Eugene Y. Mar 6,,,, Heidi Lyn Keefe, 7 James Alexander Reese 8 9 10 Jeffrey M. Fisher,,, Julia Frederika Kropp,, United States District Court Northern District of California 11 12 13 Kristine Anne Forderer Mark Frederick Lambert,,, 14 Mark R. Weinstein 15 Matthew David Caplan 16 Melinda Mae Morton,, 17,, 18 Michael Graham Rhodes 19 Robert H. Sloss,, 20 21 Robert Thomas Cahill , Jr 22 Stephanie Powers Skaff,,,, 23 24 25 26 27 28 6

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