Leadfactors, LLC v. Cisco Systems, Inc.		CASE NO. 113CV247926
DATE: 25 April 2014	TIME: 9:00	LINE NUMBER: 24

This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 19 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose. Any party opposing the tentative ruling must call Department 19 at 408.808.6856 and the opposing party no later than 4:00 PM Thursday 24 April 2014.  Please specify the issue to be contested when calling the Court and counsel.

On 25 April 2014, the motion of defendant Cisco Systems, Inc. for a protective order staying discovery until the Plaintiff submits an amended trade secret disclosure in accordance with Code of Civil Procedure section 2019.210 was argued and submitted. Plaintiff Leadfactors, LLC filed a formal opposition to the motion.

All parties are reminded that all papers must comply with California Rules of Court, rule 3.1110(f).[1]

Statement of Facts

This misappropriation of trade secrets case arises from a dispute over the use of a type of networking software used by business entities that allows employees to “tag” or “bookmark” documents or webpages and then share that information with other employees or persons within the company. According to the allegations of the operative Third Amended Complaint (“TAC”), Puneet Gupta (a software engineer) formed ConnectBeam, Inc. (“ConnectBeam”) in December of 2005. ConnectBeam was based in Mountain View, California, and provided social enterprise software. As part of its initial funding, ConnectBeam entered into a loan agreement with Square 1 Bank, which included a blanket lien on all of ConnectBeam’s intellectual property.

In late 2007, representatives of ConnectBeam and Cisco Systems, Inc. (“Cisco”) entered into discussions concerning ConnectBeam’s products. As part of these discussions, the parties executed a nondisclosure agreement. Throughout 2008, representatives of ConnectBeam communicated with representatives of Cisco on several occasions during which ConnectBeam allegedly disclosed certain proprietary information. ConnectBeam’s discussions with Cisco ended in mid-2009. At the same time, ConnectBeam found itself in a state of financial distress and ultimately dissolved in January 2010. As a result of defaulting on its loan agreements with Square 1 Bank, the bank acquired rights to ConnectBeam’s intellectual property.

In April 2010, Mr. Gupta formed Leadfactors, LLC (“Leadfactors” or “Plaintiff”). Leadfactors was formed in an effort to continue the work that Mr. Gupta started with ConnectBeam and, in furtherance of that effort, Leadfactors acquired all of ConnectBeam’s intellectual property back from Square 1 Bank.

According to the TAC, in June of 2010, Mr. Gupta attended a conference in Boston, Massachusetts. At the conference, Cisco demonstrated its “Quad” product. According to Leadfactors, the Quad product contains critical product features that were derived from proprietary information disclosed to Cisco by ConnectBeam sometime between late 2007 and mid-2009.

Based upon the above allegations, Leadfactors filed a complaint against Cisco for misappropriation of trade secrets on 13 June 2013. Leadfactors filed a separate complaint against Cisco for the breach of the non-disclosure agreement on 9 July 2013 (Case No. 1-13-CV-249261). On 12 November 2013, the Court (Judge McKenney) consolidated the two cases, with the action for misappropriation of trade secrets identified as the lead case.

Discovery Dispute

Plaintiff served its initial trade secret disclosure on 27 January 2014. It served written discovery requests shortly thereafter, including form interrogatories, special interrogatories, and requests for production of documents.

Cisco objected to this discovery on the ground that Plaintiff’s trade secret disclosure failed to fairly put Cisco on notice of the trade secrets allegedly misappropriated and therefore does not meet the “reasonable particularity” requirement contained in Code of Civil Procedure section 2019.210.

Counsel for Cisco sent a letter to Plaintiff’s counsel on 12 February 2014, outlining perceived deficiencies in the trade secret disclosure. Specifically, Cisco’s counsel claimed, among other things, that Cisco was unable to discern the scope of some of the trade secrets described in the disclosure. On 17 February 2014, counsel for the parties spoke via telephone regarding the issues raised in Cisco’s counsel’s letter.

On 18 February 2014, as a result of counsels’ meet and confer efforts, Plaintiff served Cisco with an amended trade secret disclosure.

On 23 February 2014, counsel for Cisco sent another letter to counsel for Plaintiff, indicating that Cisco continued to regard the disclosure as deficient.

On 24 February 2014, Plaintiff’s counsel responded to Cisco’s counsel’s letter, indicating that Plaintiff disagreed with Cisco’s position regarding the amended trade secret disclosure and that the disagreement was too fundamental to resolve without court intervention.

On 3 April 2014, after counsel for Cisco agreed with Plaintiff’s counsel that court intervention was necessary to resolve the parties’ dispute, Cisco filed the motion presently before the Court, asking the Court to issue a protective order staying discovery until Plaintiff submits a reasonably particularized trade secret disclosure in compliance with Code of Civil Procedure section 2019.210.[2] Plaintiff filed its opposition on 14 April 2014.[3] Cisco filed its reply on 18 April 2014.

Discussion

Cisco seeks a protective order under which it need not respond to the discovery requests propounded by Plaintiff until 30 days after Plaintiff has submitted a code-compliant disclosure of the alleged trade secrets at issue in its complaint.[4] According to Cisco, Plaintiff’s amended trade secret disclosure does not comply with the requirements of Code of Civil Procedure section 2019.210 and, under that section, Plaintiff cannot commence discovery until it has submitted a code-compliant disclosure. More specifically, Cisco contends that Plaintiff has not identified the trade secrets at issue with reasonable particularity as required by the statute.

               A.           Statutory Basis for Motion and Burden

Code of Civil Procedure section 2019.210 provides that, “[i]n any action alleging the misappropriation of a trade secret . . . , before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code.” (Code Civ. Proc. [“CCP”], § 2019.210, emphasis added.)

Civil Code section 3426.5 provides that, “[i]n an action under this title [the Uniform Trade Secrets Act], a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings, holding in-camera hearings, sealing the records of the action, and ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval.” (Civ. Code, § 3426.5, emphasis added.)

On a showing of good cause, the Court may enter a protective order relating to the sequence and timing of discovery, (see CCP, § 2019.020, subd. (b)), which is essentially the relief Cisco seeks in this case. Ordinarily, the burden is on the moving party to establish good cause for the protective order. (See Emerson Elec. Co. v. Sup. Ct. (1997) 16 Cal.4th 1101, 1110.) Although the parties do not discuss which party carries the burden in this case, it makes sense that the moving party would retain the burden of persuasion. Code of Civil Procedure section 2019.210 requires plaintiffs in trade secrets cases to submit a trade secret disclosure before commencing discovery, but it does not require the plaintiff to seek prior approval from the court to propound discovery once the requisite trade disclosure has been made. In other words, the plaintiff may propound discovery as soon as it submits the trade secret disclosure without court intervention. Accordingly, it makes sense that a defendant opposing discovery based upon an allegedly deficient trade secret disclosure would bear the burden of demonstrating that the disclosure is in fact deficient on a motion for a protective order.

               B.           Reasonable Particularity

As indicated above, Code of Civil Procedure section 2019.210 requires plaintiffs claiming misappropriation of trade secrets to identify the trade secrets at issue “with reasonable particularity” before commencing discovery. The statute does not define “reasonable particularity.”

Three opinions issued by the California Court of Appeal, however, provide an in-depth analysis of the reasonable particularity requirement: (1) Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826 (“Advanced Modular”); (2) Brescia v. Angelin (2009) 172 Cal.App.4th 133; and (3) Perlan Therapeutics, Inc. v. Superior Court (2009) 178 Cal.App.4th 1333 (“Perlan”). The holdings in those cases guide the Court’s analysis and each case is discussed below.

                              1.            Advanced Modular

In Advanced Modular, the plaintiff sued its former employees—and the company the employees formed to compete with the plaintiff—for misappropriation of trade secrets. (Advanced Modular, supra, 132 Cal.App.4th at pp. 830-831.) The trade secrets at issue involved “sputtering”—the process of depositing a thin film of material onto a silicon wafer or other substrate. (Id., at p. 830.) The plaintiff manufactured sputtering equipment, and claimed that the defendants misappropriated eight trade secrets in manufacturing their own sputtering machine. (Id., at pp. 831.) The defendants contended that the plaintiff’s trade secret designations were inadequate under section 2019.210, and moved for a protective order barring discovery. (Id.) In connection with the motion for a protective order, the defendants produced expert witness declarations to show that the alleged trade secrets were “too vaguely described to distinguish them from information that is already known in the industry” and the plaintiff produced its own expert declarations indicating “that the trade secrets [were] adequately described.” (Id.) The trial court granted the motion for a protective order, finding that the trade secrets were not reasonably particularized, and the plaintiff filed a writ petition seeking relief from the trial court’s order. (Id., at p. 832.)

On appeal, the court in Advanced Modular began its analysis by noting that section 2019.210 serves four interrelated purposes: first, it promotes well-investigated claims and dissuades the filing of meritless trade secret complaints; second, it prevents plaintiffs from using the discovery process as a means to obtain the defendant’s trade secrets; third, the rule assists the court in framing the appropriate scope of discovery and in determining whether a plaintiff’s discovery requests fall within that scope; and fourth, it enables defendants to form complete and well-reasoned defenses. (Id., at pp. 833-834.) Construing section 2019.210, the court observed that “[t]he letter and spirit [of the provision] require the plaintiff, subject to an appropriate protective order, to identify or designate the trade secrets at issue with ‘sufficient particularity’ to limit the permissible scope of discovery by distinguishing the trade secrets ‘from matters of general knowledge in the trade or of special knowledge of those persons . . . skilled in the trade.’” (Id., at p. 835, emphasis added.) The court made clear that, although a trade secret disclosure is not a pleading, it functions like one because it limits the scope of discovery. (Id.) Based upon this comparison to a pleading, the court stressed that trade secret designations should be liberally construed in favor of the trade secret claimant, and that doubts about its adequacy should be resolved in favor of permitting discovery to go forward. (Id., at pp. 835, 836-837.)

Speaking to the level of particularity required, the court indicated that the standard is flexible, stating:

“Reasonable particularity” mandated by section 2019.210 does not mean that the party alleging misappropriation has to define every minute detail of its claimed trade secret at the outset of the litigation. Nor does it require a discovery referee or trial court to conduct a miniature trial on the merits of a misappropriation claim before discovery may commence. Rather, it means that the plaintiff must make some showing that is reasonable, i.e., fair, proper, just and rational [citation], under all of the circumstances to identify its alleged trade secret in a manner that will allow the trial court to control the scope of subsequent discovery, protect all parties’ proprietary information, and allow them a fair opportunity to prepare and present their best case or defense at a trial on the merits.  (Id., at pp. 835-836.)

The court went on to say that “[t]he degree of ‘particularity’ that is ‘reasonable’ will differ, depending on the alleged trade secrets at issue in each case.” (Id., at p. 836.) Where the trade secrets “consist of incremental variations on, or advances in the state of the art in a highly specialized technical field, a more exacting level of particularity may be required to distinguish the alleged trade secrets from matters already known to persons skilled in that field” but not necessarily readily apparent to the trial judge charged with controlling the scope of discovery. (Id.) Where the field at issue is highly specialized or technical, the court indicated that “[n]othing in section 2019.210 precludes the trial court from considering relevant evidence, including expert witness declarations, on the adequacy of a designation to describe the alleged trade secrets and distinguish them from prior art.” (Id.) The court stressed, however, that “at this very preliminary stage of the litigation, the proponent of the alleged trade secret is not required, on pain of dismissal, to describe it with the greatest degree of particularity possible, or to reach such an exacting level of specificity that even its opponents are forced to agree the designation is adequate.” (Id.)

Based upon the above principles, the court in Advanced Modular held that the trial court erred in granting the motion for a protective order. In reaching this conclusion, the court noted that the plaintiff had identified eight trade secrets, described how it believed the combination of the features of the trade secrets distinguish them from the prior art, and submitted expert declarations in support of its claim that the disclosures were reasonably particularized. (Id., at p. 836.) The court stated that, “[w]here, as here, credible experts declare that they are capable of understanding the designation and of distinguishing the alleged trade secrets from information already known to persons in the field, the designation should, as a general rule, be considered adequate to permit discovery to commence.” (Id.) The court concluded with the statement that “[o]ur discovery statutes are designed to ascertain the truth, not suppress it [and] [a]ny doubt about discovery is to be resolved in favor of disclosure.” (Id., at pp. 836-837.)

                              2.            Brescia

Four years after the decision in Advanced Modular, the court of appeal took up the issue once again in Brescia v. Angelin (2009) 172 Cal.App.4th 133. In that case, the cross-complainant, Brescia, alleged that the cross-defendants had misappropriated trade secrets related to the formula and manufacturing process for a high protein, low carbohydrate pudding. (Id., at p. 138-139.) In response to Brescia serving discovery on the cross-defendants, the cross-defendants moved for a protective order, arguing that Brescia’s trade secret disclosure was not reasonably particularized. (Id., at p. 139.) The trial court granted the motion and, the next day, Brescia filed a notice of compliance and amended trade secret disclosure. (Id., at p. 140.) The amended disclosure referenced 305 pages of previously disclosed, nonconfidential documents. The cross-defendants once again moved for a protective order, which the court granted. The trial court ruled that Brescia’s trade secret description was inadequate because, by citing to voluminous documents, it obscured rather than refined the disclosure. (Id.) The trial court invited Brescia to “succinctly and with particularity lay out the trade secrets without surplusage.” (Id.) In response, Brescia filed under seal an amended trade secret designation. The amended disclosure set forth the specific ingredients that constituted the pudding formula and a detailed description of the manufacturing process. (Id., at pp. 140-141.)

Relying upon the statements in Advanced Modular, the trial court found the precise disclosure of the formula and the manufacturing process to be insufficient because the disclosure “was silent on the question whether his alleged trade secrets were known to skilled persons in the filed.” (Id., at p. 142.) Brescia appealed the trial court’s order rejecting his third attempt at compliance with section 2019.210.

On appeal, the court in Brescia was primarily concerned with whether Advanced Modular stood for the proposition that every trade secret disclosure must explain how the alleged trade secrets differ from the information available in the public domain. (Id., at p. 147.) The court rejected this proposition, stating that “[t]he court [in Advanced Modular] was not creating a requirement for all cases, divorced from the particularity requirement itself, of explaining how the trade secret differs from prior art.” (Id.) Explaining its holding, the court stated as follows:

[W]hether a trade secret designation adequately distinguishes the allegedly protected information from the general knowledge of skilled persons in the filed is a function of the particularity of the designation—that is, a function of whether the stated details themselves are sufficient, given the nature of the alleged secret and the technology in which it arises, to permit the defendant to ascertain whether and in what way the information is distinguished from matters already known, and to permit the court to fashion appropriate discovery.  (Id., at p. 143.)

More importantly for the purposes of the matter presently before this Court, the court in Brescia set forth the following rule: “Absent a showing that the details alone, without further explanation, are inadequate to permit the defendant to discern the boundaries of the trade secret so as to prepare available defenses, or to permit the court to understand the identification so as to craft discovery, the trade secret claimant need not particularize how the alleged secret differs from matters already known to skilled persons in the field.” (Id.)

Ultimately, the court held that, given the nature of the trade secrets at issue, Brescia was not required to explain how the alleged trade secrets differed from the information available in the public domain. However, the court emphasized that, “when the nature of the alleged trade secret or the technical field in which it arises makes a detailed description alone inadequate to permit the defendant to learn the limits of the secret and develop defenses or to permit the court to understand the secret and fashion discovery, the court may require an explanation of how the alleged trade secret differs from matters known to skilled persons in the field as necessary to satisfy those needs.” (Id., at p. 150.)

                              3.            Perlan

The decision in Perlan came in response to the decisions in Advanced Modular and Brescia, both of which ruled that the trial court had taken an overly strict view of section 2019.210. In response to these cases, the court in Perlan stated that “[w]e publish this opinion to emphasize that trial courts still have broad discretion under section 2019.210.” (Perlan, supra, 178 Cal.App.4th at p. 1337.)

In Perlan, the plaintiff alleged that its former employees had misappropriated trade secrets related to a daily nasal spray for the prevention and treatment of the common cold. (Id.) The plaintiff’s trade secret disclosure began with a full page of text consisting of a “preliminary statement” and “general objections” “similar in appearance to the boilerplate reservations of right and objections often appearing in written discovery responses.” (Id., at p. 1338.) The remainder of the disclosure consisted of four pages of text which, according to the court of appeal, repeated the narrative available in the publicly filed second amended compliant and provided additional technical detail that is nonetheless publicly available. (Id.)

After receiving the plaintiff’s trade secret disclosure, the defendants moved for a protective order prohibiting discovery until the plaintiff complied with its obligation to identify the alleged trade secrets with reasonable particularity. (Id., at pp. 1339-1340.) The trial court granted the motion, concluding that the plaintiff “failed to demonstrate that the purported trade secret(s) is not generally known to the public or to other persons who can obtain economic value from its disclosure or use.” (Id., at p. 1341.) The plaintiff appealed.

The court of appeal concluded that the trial court was justified in finding that the trade secret disclosure was vague and did not meet the standard of reasonable particularity under section 2019.210. (Id., at pp. 1350-1352.) The court recognized that, while trade secret identification does not require “every minute detail” or the “greatest degree of particularity possible[,]” the plaintiff’s trade secret disclosure was insufficient in light of its broad language, surplusage, and voluminous attachments. (Id.)

               C.           Analysis[5]

Plaintiff’s amended trade secret disclosure identifies 32 distinct trade secrets. Cisco contends that 20 of the 32 trade secrets are not reasonably particularized for the purposes of section 2019.210. Cisco’s objections to the trade secrets fall into three categories. First, Cisco objects to a group of the trade secrets that contain introductory sentences which, according to Plaintiff, provide context for the discrete trade secret that follows. Cisco contends that, rather than providing context, the introductory sentences are surplusage and render the trade secrets insufficiently particularized. Second, Cisco objects to certain trade secrets on the basis that, on their face, they do not fall within the substantive statutory definition of trade secrets. Third, Cisco contends that two of the trade secrets are identified only by reference to Cisco documents which, according to Cisco, is improper.

As an initial matter, Plaintiff contends that, since not all of the trade secrets in the disclosure are at issue, Cisco should be ordered to respond to discovery requests with respect to the twelve trade secrets that are not addressed in the motion for a protective order. Cisco argues that Plaintiff may not obtain discovery until all of the trade secrets identified in its trade secret disclosure are reasonably particularized. For the reasons set forth below, Cisco is correct.

One of the principle holdings of the Advanced Modular case is that, “[b]y its own express terms,” section 2019.210 is not cause of action specific. (Advanced Modular, supra, 132 Cal.App.4th at p. 834.) The court based this holding on the fact that section 2019.210 refers to “any action” alleging the misappropriation of a trade secret, as opposed to a specific claim for the misappropriation of a trade secret. (See CCP, § 2019.210.) Based upon the statutory language, the court held that, where “every cause of action is factually dependent on the misappropriation allegation, discovery can commence only after the allegedly misappropriated trade secrets have been identified with reasonable particularity.” (Id.)

Based upon the language of section 2019.210, as well as the holding in Advanced Modular, the Court finds that in cases in which a plaintiff alleges the misappropriation of several trade secrets (all of which are related in subject matter) and only some of those trade secrets are identified with reasonable particularity as required by section 2019.210, the plaintiff may not proceed with discovery until all of the related trade secrets identified in the disclosure statement are reasonably particularized. To hold otherwise would lead to discovery on a piecemeal basis and allow plaintiffs to embark upon fishing expeditions in the arena of trade secrets—and arena which the Legislature has expressly found is subject to greater protections that ordinary discovery. (See Civ. Code, § 3426.5 [“In an action under this title [the Uniform Trade Secrets Act], a court shall preserve the secrecy of an alleged trade secret by reasonable means”]; see also CCP, § 2019.210 [prohibiting discovery until trade secrets are identified with reasonable particularity].)

Accordingly, if any of the trade secrets are found to be insufficiently particularized, the trade secret disclosure as a whole fails to comply with section 2019.210, and Plaintiff would not be entitled to commence with discovery under that section.

1.            Disclosures Containing Contextual Information

Thirteen of Plaintiff’s trade secrets (Nos. 1, 2, 4, 6-11, 17, 26, 18, and 30) begin with an introductory sentence that, according to Plaintiff, provides context for the trade secret. For instance, trade secret No. 4 begins with a preliminary statement that it concerns enterprise software that looks at the history of a bookmark and then recognizes the bookmark’s importance. The preliminary statement is then followed by a sentence starting with the phrase “In particular,” and then sets forth the specifics of the trade secret.

Cisco concedes that the text following the introductory statement—the text following “in particular”—is sufficiently particularized for the purposes of section 2019.210. Cisco argues, however, that the introductory statements create confusion and leave Cisco “guessing as to what the actual trade secret is and what is instead merely background information.” (Mem. of Ps & As in Support of Mot. for Protective Order, p. 5.) Thus, according to Cisco, the introductory statements are surplusage under the holding in Perlan and therefore impermissible. The Court disagrees.

Nothing in section 2019.210 prohibits a plaintiff from providing contextual statements in its trade secret disclosure. Indeed, according to Advanced Modular, contextual statements—including an explanation of how the alleged trade secrets are distinguishable from the prior art—are not only permissible but, depending on whether the trade secrets come from a highly specialized technical field, sometimes required. (Advanced Modular, supra, 132 Cal.App.4th at p. 836.) To be sure, plaintiffs should not include surplusage in their trade secret disclosures. (See Perlan, supra, 178 Cal.App.4th at p. 1350-1352.) But the Court does not see the one-sentence, introductory statements included by Plaintiff to be surplusage. As Cisco points out, Plaintiff does not allege that it invented the tagging and bookmarking of electronic resources. Thus, under Advanced Modular, the inclusion of context is appropriate.

Having reviewed the trade secrets at issue, the Court sees the introductory statements as operating as a funnel—opening the disclosure at a general level where the technology is not claimed to be a trade secret and then narrowing into the “in particular” portion of the statements in which the technology is claimed to be a trade secret. Moreover, the introductory statements in this case are not of the same nature as the information found to be surplusage in Perlan. In Perlan, the plaintiff’s trade secret disclosure began with a full page of text consisting of a “preliminary statement” and “general objections” “similar in appearance to the boilerplate reservations of right and objections often appearing in written discovery responses.” (Perlan, supra, 178 Cal.App.4th at p. 1338.) The court found that the use of such language, and reference to voluminous attachments, was tantamount to hiding the specific nature of the trade secrets in “plain sight.” (Id., at p. 1350.) Here, rather than obscuring the boundaries of the trade secret, the Court sees the introductory statements as defining them.

Thus, to the extent that Cisco is arguing that the inclusion of introductory statements render the trade secrets insufficiently particularized per se, the Court rejects this argument. However, notwithstanding the above discussion, the Court need not make an express determination as to whether the trade secrets with the introductory statements are reasonably particularized because, as outlined below, the Court finds that some of the other trade secrets are not reasonably particularized. Thus, Plaintiff’s trade secret disclosure does not comply with section 2019.210 and Plaintiff is not entitled to commence discovery. However, because Plaintiff will likely attempt to fix the deficiencies outlined in this order and serve another trade secret disclosure, the Court will make a couple of further observations with regard to the trade secrets containing introductory statements in particular and the trade secret disclosure in general.

As the above discussion indicates, the Court is inclined to find the trade secrets containing the introductory statements reasonably particularized.

However, the trade secrets at issue in this case also come from a highly technical field involving computer software.  Neither the trade secret disclosure itself nor the parties’ papers filed in connection with Cisco’s motion for a protective order provide the Court with guidance as to what is and is not prior art in this field. Advanced Modular made clear that, where the trade secrets “consist of incremental variations on, or advances in the state of the art in a highly specialized technical field,” which is the situation in this case, the trade secret disclosure may need “to distinguish the alleged trade secrets from matters already known to persons skilled in that field.” (Advanced Modular, supra, 132 Cal.App.4th at p. 836.) The court also held that the parties may submit expert declarations in support of or in opposition to a protective order seeking to stay discovery under section 2019.210.

The parties should bear in mind that one of the primary purposes of the trade secret disclosure is to assist the trial judge in framing the appropriate scope of discovery and in determining whether a plaintiff’s discovery requests fall within that scope. (See Brescia, supra, 172 Cal.App.4th at p. 149.) In Advanced Modular and in Perlan, the courts relied heavily on expert declarations and that type of information would have assisted the Court in resolving the present matter—particularly with regard to the trade secrets containing the introductory statements. When Plaintiff goes back to the drawing board to re-draft its trade secret disclosures, it should keep in mind that the intended audience of the disclosures includes the Court.

                              2.            Disclosures Claimed to be Outside the Statutory Definition of Trade Secret

Under the Uniform Trade Secrets Act, a trade secret is defined as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Civ. Code, § 3426.1, subd. (d)(1) & (2).)

Cisco contends that five of the trade secrets (Nos. 13, 16, 19, 21, and 27) do not fall within the definition of trade secret under Civil Code section 3426.1 and therefore fail to satisfy section 2019.210 because they are directed at “nonstatutory subject matter.” (Mem. of Ps & As in Support of Mot. for Protective Order, p. 5.) Cisco also contends that, for similar reasons, the five trade secrets at issue are not reasonably particularized.

As an initial matter, Plaintiff argues that, by arguing that the trade secrets do not fall within the statutory definition, Cisco is improperly attempting to litigate the merits of Plaintiff’s claims. On this point, the Court agrees.

Advanced Modular made clear that section 2019.210 “does not create a procedural device to litigate the ultimate merits of the case—that is, to determine as a matter of law on the basis of the evidence presented whether the trade secret actually exists.” (Advanced Modular, supra, 132 Cal.App.4th at p. 836.) At this stage of the litigation, the Court is only concerned with whether Plaintiff has sufficiently identified the trade secrets at issue so that discovery may commence. The question of whether the claimed trade secrets constitute “information, including a formula, pattern, compilation, program, device, method, technique, or process” within the meaning of Civil Code section 3426.1 is not properly before the Court.

Indeed, in Advanced Modular, the party opposing the trade secret designation submitted expert declarations indicating that the claimed trade secrets were generally known to the public and therefore outside the statutory definition. (Advanced Modular, supra, 132 Cal.App.4th at p. 836.) The court stated that, “[w]e have no doubt the experts will continue to disagree on these crucial questions[,] [but] [f]or our purposes, at this prediscovery state of the proceedings, it is appropriate to recognize the existence of this credible dispute, but not necessarily to resolve it.” (Id.)

Because Cisco is asking the Court to rule on the question of whether five of the claimed trade secrets fall within the statutory definition of trade secrets, it is essentially asking the Court to rule on the merits of the case. The question of whether Plaintiff’s claimed trade secrets fall within the statutory definition is premature at this stage in the litigation. The Court therefore rejects this argument.

Cisco also argues that the five trade secrets in this category are not reasonably particularized. On this point, the Court agrees with Cisco.

For example, trade secret No. 13 consists of two sentences. The first sentence asserts a trade secret for “[t]he feasibility of gathering and storing [certain information].” The second sentence states “[f]urther, the feasibility of gathering and storing [certain information].” Cisco contends that “feasibility” is a mental process and therefore outside the statutory definition of a trade secret. As indicated above, that question is premature. Cisco also argues that, “without more particularized information . . . or [how the trade secret is actually implemented], Paragraph 13 fails to identify the alleged trade secret with reasonable particularity.” (Mem. of Ps & As in Support of Mot. for Protective Order, p. 6.)

Aside from the question of whether “feasibility” can be claimed as a trade secret, the Court agrees that the trade secret is not reasonably particularized. As Cisco points out, “feasibility” is defined as “capable of being done.” (Marriam-Webster On-line Dictionary at http://www.merriam-webster.com/dictionary/feasible.) Thus, Plaintiff claims a trade secret over the capability of gathering and storing certain information. The trade secret disclosure, however, does not explain what this capability is or how it is accomplished. Without such information the disclosure does not inform Cisco, or the Court, what is being claimed.

As noted above, one of the core purposes of section 2019.210 is to allow the court to determine the scope of discovery. If this matter was before the Court on a motion to compel discovery as to trade secret No. 13, frankly, the Court would be at a loss to determine whether the information sought is relevant. Relevance is generally determined by the subject matter of a case and, in the trade secret arena, it is determined by reference to the plaintiff’s trade secret disclosure. If the Court is unable to determine what is being claimed, then the Court will necessarily be unable to determine whether information related to that subject is relevant to the subject. Trade secret No. 13, and the other trade secrets in this category, fail this litmus test.

Based upon the above discussion, the Court finds that trade secret Nos. 13, 16, 19, 21, and 27 are not reasonably particularized for the purposes of section 2019.210. Plaintiff is therefore not entitled to commence discovery at this time.

                              3.            Trade Secrets Defined by Reference to Cisco Documents

The final two trade secrets at issue are Nos. 14 and 15. Trade secret No. 14 consists of one sentence and states: “Determining a full feature set for a social bookmarking application for a large organization.”[6] The trade secret then references a Bates-labeled document, i.e., “LF002439-2454.” Trade secret No. 15 is substantially similar—one sentence followed by a reference to a Bates-labeled document.

According to Cisco, “[t]he problem is, the documents Bates-labeled LF002439-2454 and LF0022455-2479 are Cisco documents.” (Mem. of Ps & As in Support of Mot. for Protective Order, p. 7, emphasis in original.) Cisco claims that it drafted the referenced documents and, “as far as Cisco is concerned, every word of each one is original Cisco material.” (Id.)

This argument is not well taken. The Court sees no reason why a plaintiff claiming trade secret misappropriation cannot identify a claimed trade secret through reference to materials generated by the defendant. Here, Plaintiff claims that it supplied Cisco with the claimed information. It is safe to assume that Plaintiff now claims that Cisco reproduced the information in the referenced documents. Referencing the documents is not problematic.

Notwithstanding the above discussion, the Court finds that trade secret Nos. 14 and 15 are not reasonably particularized. The claim relates to software that can make a determination with regard to bookmarking for a large organization. Absent an explanation of how this determination is accomplished in the trade secret disclosure or an expert declaration indicating that the disclosure itself is meaningful to a skilled person within the field, the disclosure fails to inform the Court of what is being claimed.

Consequently, Plaintiff is not entitled to commence discovery until it either removes trade secret Nos. 14 and 15 from its disclosure or submits an amended disclosure describing the trade secrets with sufficient particularity.

Conclusion and Order

Cisco’s motion for a protective order relieving it of the responsibility to respond to Plaintiff’s discovery requests until 30 days after Plaintiff submits an amended trade secret disclosure is GRANTED.