Jobscience, Inc. v. CVPartners, Inc. et al, No. 3:2013cv04519 - Document 68 (N.D. Cal. 2014)

Court Description: ORDER GRANTING MOTION TO STRIKE MISAPPROPRIATION OF TRADE SECRETS CLAIM AND ORDER RE SOURCE-CODE COMPARISON by Judge Alsup re 51 Motion to Strike ; 54 ; 59 ; 62 ; 66 Discovery Letter Brief (whalc1, COURT STAFF) (Filed on 5/1/2014)
Download PDF
Jobscience, Inc. v. CVPartners, Inc. et al Doc. 68 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 9 11 For the Northern District of California United States District Court 10 No. C 13-04519 WHA JOBSCIENCE, INC., REDACTIONS UNDER SEAL Plaintiff, v. 15 16 ORDER GRANTING MOTION TO STRIKE MISAPPROPRIATION OF TRADE SECRETS CLAIM AND ORDER RE SOURCE-CODE COMPARISON CVPARTNERS, INC., a California Corporation; SKIPAN, LLC, a Delaware Limited Liability Company; SKIPAN SAAS, LLC, d.b.a. TALENT ROVER, a Delaware Limited Liability Company; BRANDON METCALF, an individual; KENT GRAY, an individual; and DOES 1–100, Defendants. 12 13 14 / 17 INTRODUCTION 18 In this action involving allegations of copyright infringement and misappropriation of 19 20 trade secrets for recruiting software, defendants move to strike the misappropriation of trade 21 secrets claim and object to plaintiff’s identification of alleged trade secrets. For the reasons 22 stated herein, the motion is GRANTED. 23 STATEMENT 24 Plaintiff Jobscience, Inc. develops and licenses recruiting software. Defendants are 25 individuals and entities alleged to have copied Jobscience’s software application, which was 26 licensed to defendant CVPartners, Inc. Jobscience has obtained copyrights for versions of the 27 code. 28 In September 2013, Jobscience commenced this action. In November 2013, Jobscience filed a first amended complaint alleging thirteen claims for relief. A January 2014 order granted Dockets.Justia.com 1 in part and denied in part defendants’ motion to dismiss. Notably, the misappropriation of trade 2 secrets claim was dismissed because it was preempted by the Copyright Act and the complaint 3 relied on nothing more than a vague reference to “software code, methods and other trade 4 secrets” (Dkt. No. 29). A February 2014 order then (among other things) granted plaintiff’s motion to amend the 5 6 first amended complaint to add a trade-secrets claim. The claim, however, could not cover 7 software code because of the preemption problem. Because defendants raised serious challenges 8 to the existence of trade secrets, Jobscience was ordered to file a detailed description of the 9 alleged misappropriated trade secrets. At oral argument, counsel was warned to “be specific. If it’s not specific, then [Defendants] can bring motions” (Feb. 27, 2014 Hr’g. Tr. 21–22). 11 For the Northern District of California United States District Court 10 A companion order instructed defendants to turn over every version of the allegedly copied 12 source code for a source-code comparison. Plaintiff chose and paid for an expert to analyze the 13 code. 14 Plaintiff then filed a second amended complaint alleging copyright infringement, breach 15 of contract, misappropriation of trade secrets, unfair competition, and constructive fraud 16 (Dkt. No. 45). 17 Three weeks later, plaintiff filed a statement of trade secrets, organized as a three-page 18 narrative with three schematics. Contrary to the instructions in the February 2014 order, plaintiff 19 did not include a numbered list of the precise trade secrets with the specific elements for each 20 trade secret. Instead, Jobscience alleged that it had “ 21 ,” derived “ 22 23 .” The process was “not known to the 24 general public” and Jobscience maintains its secrecy by requiring confidentiality agreements to 25 access its products. Jobscience stated that the process has independent economic value as 26 demonstrated through customers “paying to use it,” but the secrets “are not evident in a reading 27 of [the] code.” Jobscience does not claim that the existence of relational databases or their use of 28 supporting business processes are trade secrets (Dkt. No. 48-4). 2 1 2 3 The instant defense motion seeks to strike plaintiff’s misappropriation of trade secrets claim and objects to plaintiff’s statement of confidential trade secrets. On April 7, Jobscience filed a letter, appending the expert report of Kenneth Amron. 4 Jobscience asked Mr. Amron to “determine whether [defendants’] Talent Rover code base 5 exhibits evidence of code copying.” Of the files Mr. Amron analyzed, he found “strong 6 evidence of copying” (Dkt. No. 54). 7 On April 18, defendants filed a letter identifying deficiencies with Mr. Amron’s report 8 and qualifications. Defendants argued that Mr. Amron failed to perform a proper comparison of 9 source code and argued that the “Court should either strike the copyright claim as a sanction for violating the February 28 Order or require Plaintiff to complete an actual source code 11 For the Northern District of California United States District Court 10 comparison using CodeSuite” (Dkt. No. 62). 12 13 The fact discovery deadline is October 31, 2014. This order follows full briefing and oral argument. ANALYSIS 14 15 1. MOTION TO STRIKE. 16 Even though defendants styled this motion as a “motion to strike,” they essentially move 17 to dismiss the misappropriation of trade secrets claim based on inadequate disclosure in 18 Jobscience’s statement of trade secrets. Section 3426.1(d) of the California Civil Code defines 19 trade secret as: 20 information, including a formula, pattern, compilation, program, device, method, technique, or process, that: 21 22 (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 23 24 25 26 27 28 (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The February 2014 order stated (Dkt. No. 43): Experience has shown that it is easy to allege theft of trade secrets with vagueness, then take discovery into the defendants’ files, and then cleverly specify what ever happens to be there as having been trade secrets stolen from plaintiff. A true trade secret plaintiff ought to be able to identify, up front, and with specificity the particulars of the trade secrets without any discovery. This order 3 1 51 Cal. 4th 310 (2011), is misplaced. In Silvaco, the court found that the design itself could not 2 constitute a trade secret because it was evident to anyone running the program. Other than the 3 source code (preempted here), the design information failed to describe a trade secret. See also 4 Agency Solutions.Com, LLC v. TriZetto Grp., Inc., 819 F. Supp. 2d 1001, 1021 (E.D. Cal. 2011) 5 (Judge Anthony Ishii) (diagram and functional description failed to constitute a trade secret). In defense of its vagueness, Jobscience argues that the Copyright Act does not preempt its 6 7 “ ” because 8 “copyright does not extend to methods and processes” (Opp. 6) (emphasis in original). 9 This misses the point. Just because something is not copyrightable (or patentable), does not make it a trade secret. Some information, like the vague information referenced in Jobscience’s 11 For the Northern District of California United States District Court 10 statement, is simply too well-known in the field to provide the basis for an intellectual-property 12 claim. That Jobscience was unable to capture its “15 years of research and development work 13 leading to the current Jobscience product” in a copyright does not somehow render it a trade 14 secret. 15 Jobscience cites Advanced Modular Sputtering, Inc. v. Superior Court, 16 132 Cal. App. 4th 826, 835–36 (2005), for the proposition that “reasonable particularity” does not 17 mean that the plaintiff needs to “define every minute detail of its claimed trade secret at the outset 18 of the litigation.” But the plaintiff in Advanced Modular Sputtering was able to identify eight 19 alleged trade secrets: 20 21 22 each with several discreet [sic] features that, in combination with one another, formed the alleged trade secrets. It has described how it believes the combination of these features distinguish the alleged trade secrets from the prior art, or matters within the general knowledge of persons in the sputtering industry. 23 Id. at 836. By contrast, Jobscience’s statement is woefully deficient. We cannot tell where the 24 claim ends and the known art begins. We cannot tell what the secret is to achieving the criteria 25 for the recruiting software. 26 In the alternative, Jobscience “requests that the Court allow Jobscience to amend the 27 [trade secret] Statement to provide further detail or cure any deficiencies.” At this point, 28 Jobscience has now had two opportunities to state a claim for the misappropriation of trade 7 1 secrets. Each time, it has failed. No more tries will be allowed, especially now that plaintiff’s 2 counsel have seen the accused source code. The trade secrets claim is DISMISSED. 3 2. 4 Defendants object to the expert report of Kenneth Amron based on inadequate SOURCE-CODE COMPARISON. 5 qualifications, failure to compare at least 668 files of Defendants’ 701 files, and failure to use a 6 source-code comparison program like CodeSuite (Dkt. No. 62). 7 In February 2014, plaintiff was allowed to conduct a source-code comparison. On April 8 7, plaintiff filed a letter, appending the expert report of Kenneth Amron. Plaintiff asked Mr. 9 Amron to “determine whether [defendants’] Talent Rover code base exhibits evidence of code copying.” Mr. Amron stated the “review was requested as an effort to ‘identify evidence of 11 For the Northern District of California United States District Court 10 copying’ . . . . Other comparisons of source code copying were not performed, owing to limited 12 time available for this review.” Mr. Amron reviewed the code using defense counsel’s laptop 13 which was pre-installed with “Beyond Compare” a “file and directory comparison utility” and “a 14 trial version of slickEdit 2013,” a “software project editing tool.” He found that plaintiff’s source 15 code contained 2,072 files and defendant Skipan SAAS LLC’s source code had 701 files. He 16 found 33 identical file names. He then looked at the code within the files with the identical file 17 names and opined that he found “strong evidence of copying.” Rather than isolate any actual 18 copying, Mr. Amron identified similarities in file names (Dkt. No. 54 at ¶¶ 1, 31, 50, 51, 204). 19 Names cannot be copyrighted. Mr. Amron found no passages of copying. He merely 20 concluded “strong evidence of copying,” cherry-picking similar file names. This falls short. 21 There either is or is not identical passages of source code. This kind of comparison is possible 22 and often done. Why hasn’t Mr. Amron done it? 23 On April 18, defendants filed a letter identifying deficiencies with Mr. Amron’s report and 24 qualifications. Defendants appended the declaration of Robert Zeidman, the founder of Zeidman 25 Consulting and the creator of a tool called “CodeSuite,” which includes a function called 26 CodeMatch. The tool “conducts source code comparisons by calculating source code correlation. 27 CodeMatch analyzes each source code file using specific algorithms and finds similarities.” It 28 has been used in “roughly seventy lawsuits” (Zeidman Decl. ¶¶ 1, 5, 6, 7). 8 1 Defendants argue that Mr. Amron has not performed a proper comparison of source code 2 and suggests that the “Court should either strike the copyright claim as a sanction for violating the 3 February 28 Order or require Plaintiff to complete an actual source code comparison using 4 CodeSuite” (Dkt. No. 62). Possibly this will be done eventually, but for now, both sides will be 5 given a chance to retain experts to render expert reports on source-code comparisons. The reports 6 should address the issues raised at the May 1 hearing, including identification of any passages of 7 copied code. Defendants should then bring a summary judgment motion on the 8 copyright-infringement claim. The opposition should append any expert report relied upon. 9 Defendants may then depose plaintiff’s expert on the issue. Both sides should put forth their best case on the copying issue. 11 For the Northern District of California United States District Court 10 CONCLUSION 12 For the reasons stated herein, the motion to strike is GRANTED. The misappropriation of 13 trade secret claim (third claim for relief) is DISMISSED. Leave to amend will not be allowed. 14 The temporary discovery stay is LIFTED. Even though there is no trade secrets claim, redactions 15 have been applied to this order to preserve any appeal of the misappropriation of trade secret 16 claim. 17 18 The copyright-infringement issue will be addressed at summary judgment. All existing deadlines remain in place (Dkt. No. 30). 19 20 IT IS SO ORDERED. 21 22 Dated: May 1, 2014. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 23 24 25 26 27 28 9