Case Name: Richtek USA, Inc., et al. vs. uPI Semiconductor Corporation, et al.
Case No.: 2011-1-CV-192991

This is a trade secrets misappropriation case. Plaintiffs Richtek USA, Inc. and Richtek Technology Corporation move to seal Exhibit 2 to the Declaration of Charles Chalmers filed on June 3, 2013 by defendant Ming Chen in opposition to plaintiffs’ motion to stay. Defendants uPI Semiconductor Corporation, James Chang, and YP Huang (collectively, the “uPI Defendants”) oppose plaintiffs’ motion.

Exhibit 2 contains portions of Richtek Technology’s supplemental responses to Chen’s special interrogatories, in which Chen a description of the trade secrets he allegedly misappropriated. The entire exhibit was lodged under seal by Chen because Richtek Technology had designated it under the protective order in this action. On September 25, 2013, the Court (Hon. Kleinberg) denied plaintiffs’ motion to seal the entire exhibit without prejudice, and granted an extension of their time to file a renewed motion to seal. On October 15, 2013, plaintiffs filed the instant motion, requesting that the Court seal only those portions of the interrogatory responses that identify contact persons at plaintiffs’ various customers and their contact information, a compilation which plaintiffs contend is their trade secret.

I. Legal Standard

“The court may order that a record be filed under seal only if it expressly finds facts that establish: (1) There exists an overriding interest that overcomes the right of public access to the record; (2) The overriding interest supports sealing the record; (3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) The proposed sealing is narrowly tailored; and (5) No less restrictive means exist to achieve the overriding interest.” (Cal. Rules of Court, rule 2.550(d).) “Courts have found that, under appropriate circumstances, various statutory privileges, trade secrets, and privacy interests, when properly asserted and not waived, may constitute overriding interests.” (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 298 fn. 3.) Where some material within a document warrants sealing, but other material does not, the document should be edited or redacted if possible, to accommodate both the moving party’s overriding interest and the strong presumption in favor of public access. (Cal. Rules of Court, rule 2.550(d)(4), (5).) In such a case, the moving party should take a line-by-line approach to the information in the document, rather than framing the issue to the court on an all-or-nothing basis. (Providian, supra, 96 Cal.App.4th at p. 309.)
II. Analysis

In support of their motion, plaintiffs submit a declaration by James Liu, Richtek USA’s CEO. Mr. Liu asserts that the customer contact lists at issue were developed and refined over the course of many years by Richtek’s employees, and while the identity of some of Richtek’s customers may be publicly known, the names of its individual contacts within those companies are not. (Decl. of James Liu ISO Mot., ¶¶ 2-3.) The contact lists provide independent economic value to Richtek because they identify proven buyers in the DC-DC power controller market in which Richtek and the defendants compete. (Id., ¶ 4.) Richtek restricts access to its customer contact lists and other trade secrets only to employees who need to know them; upon joining the company, employees are required to sign an Acceptance Agreement including non-disclosure obligations preventing them from disclosing Richtek’s trade secrets. (Id., ¶¶ 6-7.) Public disclosure of this information would destroy its economic value to Richtek, as any competitor could directly contact the individuals identified without having to first develop a business relationship with the customer. (Id., ¶ 8.)

Based on Mr. Liu’s declaration, plaintiffs establish at least a colorable claim that the contact list is entitled to trade secret protection. (See Civ. Code § 3426.1, subd. (d) [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”].) Plaintiffs’ overriding interest in maintaining the secrecy of this information while their claim is resolved on the merits through this litigation overrides the right of public access to the contact list, which is less significant here since the nature of the information is clearly described in public filings and revealing the specific customer contacts would not aid the public’s understanding of the papers filed in connection with the motion to seal. Plaintiffs’ interest will be prejudiced if the contact list is not sealed, the proposed sealing is now narrowly tailored to the contact list only, and no less restrictive means exists to protect plaintiffs’ interest.

Without submitting any evidence supporting these assertions, the uPI Defendants contend that the contact list “is nothing more than a list of individuals who worked at some time in the past for certain well-known companies. The names of these persons and their positions and companies are readily ascertainable through public sources, such as online professional directories such as LinkedIn.” Also without factual support, they contend that since the lists at issue are now years old, “it is likely that many of the listed individuals have changed companies or positions and are no longer Richtek customer contacts.” Consequently, they contend that the lists cannot have any present economic value. Given that the uPI Defendants provide no factual support for their arguments, these arguments must fail.

The uPI Defendants correctly note that customer information is frequently not protectable as a trade secret in California; however, this determination is a fact-specific one that is not appropriately conducted on a motion to seal in anything but a clear case. (See Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1521-1522 [while courts are reluctant to protect lists of customer information that is readily ascertainable through public sources, “where the employer has expended time and effort identifying customers with particular needs or characteristics,” the information will be protected as a trade secret]; Cypress Semiconductor Corporation v. Maxim Integrated Products, Inc. (2015) 236 Cal.App.4th 243, 255 [recognizing potential problems with filing a “colorable trade secret” in the public record before it is finally adjudged not to be a trade secret].) The Court’s finding that plaintiffs have shown an overriding interest justifying the sealing of their contact list while the parties litigate whether it constitutes a trade secret does not resolve that ultimate issue; the parties are free to submit new evidence and argument on the merits of this issue at the appropriate juncture.

In light of the above, plaintiffs’ motion to seal is GRANTED.