Lamont v. Conner et al, No. 5:2018cv04327 - Document 130 (N.D. Cal. 2019)

Court Description: ORDER GRANTING 117 GV Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint WITHOUT Leave to Amend. Signed by Judge Edward J. Davila on 5/14/2019. (ejdlc2S, COURT STAFF) (Filed on 5/14/2019)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 P. STEPHEN LAMONT, Case No. 5:18-cv-04327-EJD Plaintiff, 9 ORDER GRANTING GV DEFENDANTS’ MOTION TO DISMISS v. 10 11 DAVID KRANE, et al., Re: Dkt. No. 117 United States District Court Northern District of California Defendants. 12 13 Presently before the Court is Defendants’ motion to dismiss Plaintiff’s Second Amended 14 Complaint (“SAC”) filed by Defendants David Krane and Google Ventures (“GV Defendants”). 15 Dkt. No. 117 (“Mot.”). Pro se Plaintiff P. Stephen Lamont (“Plaintiff”) seeks nearly one billion 16 dollars in compensatory and punitive damages against original GV Defendants and two newly 17 added Defendants: Alphabet, Inc. and Google, LLC (collectively “Defendants”). SAC. 18 Plaintiff asserts that Defendants have violated the Defend Trade Secrets Act, 18 U.S.C. 19 § 1836, and 18 U.S.C. § 1961 (defining 18 U.S.C. Ch. 96—Racketeer Influenced and Corrupt 20 Organizations). Defendants Alphabet and Google have not been served with this action nor have 21 they otherwise responded. Because Plaintiff has failed to address the deficiencies previously 22 outlined by the Court (Dkt. No. 100), Plaintiff still lacks a sufficiently plead claim under the 23 Defend Trade Secrets Act. Plaintiff also states no facts in support of his newly-added 24 Racketeering claim. For the reasons below, GV Defendants’ motion to dismiss is GRANTED. 25 This Court has subject matter jurisdiction under 28 U.S.C. § 1331 (federal question). All 26 parties are located in California and within this district. This matter is suitable for decision 27 without oral argument. Civ. L.R. 7-1(b). 28 Case No.: 5:18-cv-04327-EJD ORDER GRANTING GV DEFENDANTS’ MOTION TO DISMISS 1 I. 1 BACKGROUND1 As stated in his original Complaint, Plaintiff is Chairman and Chief Executive Officer of 2 iviewit Holdings, Inc., d/b/a Arumai Technologies, Inc. Dkt. No. 1 (“Compl.”). As the alleged 3 4 “only true inventor and designer” of “four innovative software product designs” including “Proprietary Streaming Video Protocol, Cloud Based Transcoding and Streaming System for 5 Media Companies, OTT Platform with Social Media Layers for OEMs, and Multiscreen OTT 6 7 Video Stack for Operators,” Plaintiff claims that he “owns all rights, title, and interest” of the “compromised assets.” Compl. ¶¶ 42, 53, 60. Plaintiff asserts he has been caused to suffer more 8 than $35 million in exposure of these software designs. SAC at 16. 9 Plaintiff asserts in his Complaint, but omits from his SAC, that in October of 2016, Kevin 10 Conner, Plaintiff’s CPA, met with David Krane at the Rosewood on Sand Hill Road. Compl. at 7. 11 United States District Court Northern District of California Plaintiff alleges that at that meeting, Mr. Conner gave Mr. Krane Plaintiff’s business plan that 12 included his entire patent prosecution strategy that was marked proprietary and confidential. 13 Compl. ¶ 16.2 Plaintiff alleges that at that meeting, his patent and product ideas were disclosed 14 without a signed non-disclosure agreement. Dkt. No. 60-1 ¶ 22. Mr. Conner and Mr. Krane both 15 denied the meeting ever took place. Plaintiff alleges that because “Google Inc. had made a move 16 to artificially intelligent solutions in its Cloud platform and that Google invested $4.5M on 17 artificial intelligence research in Montreal” shortly thereafter, GV’s move to artificial intelligence 18 was based on Plaintiff’s trade secrets unlawfully acquired from the meeting at the Rosewood. 19 Compl. ¶ 21. 20 On the initial motion to dismiss, the Court found that Plaintiff failed to plead his claim 21 with sufficient particularity and failed to connect the alleged trade secret with Google Inc.’s 22 involvement with artificial intelligence and gave Plaintiff leave to amend his Complaint. Plaintiff 23 filed an Amended Complaint on March 31, 2019 (Dkt. No. 106) and a Second Amended 24 25 26 27 28 The background is a summary of the allegations in the Complaint (Dkt. No. 1) and Plaintiff’s SAC (Dkt. No. 116) that are relevant to GV Defendant’s motion to dismiss. 2 Further factual background is provided in this Court’s previous order (Dkt. No. 100). Case No.: 5:18-cv-04327-EJD ORDER GRANTING GV DEFENDANTS’ MOTION TO DISMISS 2 1 1 Complaint on April 14, 2019 (Dkt. No. 116).3 GV Defendants filed and served its motion to 2 dismiss. Dkt. No. 117. Plaintiff opposed. Dkt. No. 123. GV Defendants replied. Dkt. No. 124. United States District Court Northern District of California 3 II. LEGAL STANDARDS 4 A. 5 Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient Motion to Dismiss 6 specificity to “give the defendant fair notice of what the . . . claim is and the grounds upon which 7 it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). 8 A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim 9 upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “Dismissal under Rule 12(b)(6) is 10 appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support 11 a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th 12 Cir. 2008). Moreover, the factual allegations “must be enough to raise a right to relief above the 13 speculative level” such that a claim “is plausible on its face.” Twombly, 550 U.S. at 555, 570. 14 When deciding whether to grant a motion to dismiss, the court generally “may not consider any 15 material beyond the pleadings.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 16 1555 n.19 (9th Cir. 1990). The court must accept as true all “well-pleaded factual allegations.” 17 Ashcroft v. Iqbal, 556 U.S. 662 (2009). The court must also construe the alleged facts in the light 18 most favorable to the plaintiff. Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1998). 19 “[M]aterial which is properly submitted as part of the complaint may be considered.” Hal Roach 20 Studios, 896 F.2d at 1555 n.19. But “courts are not bound to accept as true a legal conclusion 21 couched as a factual allegation.” Twombly, 550 U.S. at 555. 22 B. 23 Where, as here, the pleading at issue is filed by a plaintiff proceeding pro se, it must be Pro Se Pleadings 24 construed liberally. Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). In doing so, the court 25 “need not give a plaintiff the benefit of every conceivable doubt” but “is required only to draw 26 27 28 The Court considers the SAC as the operative complaint for GV Defendants’ motion to dismiss and for this order. Case No.: 5:18-cv-04327-EJD ORDER GRANTING GV DEFENDANTS’ MOTION TO DISMISS 3 3 1 every reasonable or warranted factual inference in the plaintiff’s favor.” McKinney v. De Bord, 2 507 F.2d 501, 504 (9th Cir. 1974). The court “should use common sense in interpreting the 3 frequently diffuse pleadings of pro se complainants.” Id. But pro se parties must still abide by the 4 rules of the court in which they litigate. Carter v. Commissioner, 784 F.2d 1006, 1008 (9th Cir. 5 1986). A pro se complaint should not be dismissed unless the court finds it “beyond doubt that the 6 plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” 7 Haines v. Kerner, 404 U.S. 519, 521, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972). 8 III. 9 10 United States District Court Northern District of California 11 DISCUSSION A. Plaintiff’s Second Amended Complaint Still Fails to Plead a Sufficient Claim GV Defendants move to dismiss Plaintiff’s misappropriation for trade secret claim because Plaintiff still fails to plead a sufficient claim. Mot. at 9–12. The Court agrees. 12 Congress enacted the Defend Trade Secrets Act in 2016 (the “Act”). See Defend Trade 13 Secrets Act of 2016, Pub. L. No. 114-153, § 2, 130 Stat. 376 (2016) (codified as amended at 18 14 U.S.C. § 1831 et seq.). The Act builds upon the Espionage Act of 1996 and provides exclusive 15 original jurisdiction to the District Courts. Id. § 1836. The Act provides a right of civil action to 16 “[a]n owner of a trade secret” intended for use in commerce “that is misappropriated.” Id. 17 § 1836(b)(1). 18 A “trade secret” is considered “all forms and types of financial, business, scientific, 19 technical, economic, or engineering information, including patterns, plans, compilations, program 20 devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or 21 codes, whether tangible or intangible, and whether or how stored, compiled . . .” Id. § 1839(3). 22 An owner maintains her trade secret if: (1) she takes reasonable measures in keeping it secret, and 23 (2) “the information derives independent economic value, actual or potential, from not being 24 generally known to, and not being readily ascertainable through proper means . . . .” Id. 25 § 1839(3)(A) and (B). “Misappropriation” of a trade secret occurs when: (A) the trade secret is 26 acquired “by a person who knows or has reason to know that the trade secret was acquired by 27 improper means” or (B) “disclosure or use” occurs by a person without “express or implied 28 Case No.: 5:18-cv-04327-EJD ORDER GRANTING GV DEFENDANTS’ MOTION TO DISMISS 4 1 2 1. 3 GV Defendants move to dismiss Plaintiff’s claim because Plaintiff lacks standing under Trade Secret Ownership 4 Defense Trade Secret Act (“DTSA”) as he fails to show ownership. Mot. at 12–13. To state a 5 DTSA claim, a plaintiff must show that he is the owner or licensee of the alleged trade secret. See 6 18 U.S.C. §§ 1836(b)(1), 1839(4) (defining “owner”); uSens, Inc. v. Shi Chi, No. 18-cv-01959- 7 SVK, 2018 U.S. Dist. LEXIS 175570, *8-9 (N.D. Cal. Oct. 11, 2018). 8 United States District Court Northern District of California consent.” Id. § 1839(5)(A) and (B). While, a “plaintiff need not ‘spell out the details of the trade secret,’ Autodesk, Inc. v. 9 Zwcad Software Co., No. 5:14-cv-01409-EJD, 2015 U.S. Dist. LEXIS 63610, at *13 (N.D. Cal. 10 May 13, 2015). Nevertheless, the plaintiff must “describe the subject matter of the trade secret 11 with sufficient particularity to separate it from matters of general knowledge in the trade or of 12 special knowledge of those persons who are skilled in the trade, and to permit the defendant to 13 ascertain at least the boundaries within which the secret lies.” Pellerin v. Honeywell Int’l, Inc., 14 877 F. Supp. 2d 983, 988 (S.D. Cal. 2012) (quoting Diodes, Inc. v. Franzen, 67 Cal. Rptr. 19, 24 15 (Cal. Ct. App. 1968)). Plaintiff has neither provided information in his SAC to show ownership, 16 nor description of the alleged trade secrets with sufficient particularity. 17 Here, the Court previously found that Plaintiff lacked a sufficient description of 18 particularity. Dkt. No. 100 (“Order”). Plaintiff’s SAC repeats much of what was already stated in 19 his original Complaint with some additions. Plaintiff adds that his trade secrets are: “the use of an 20 Expert System” and provides a graph titled “Expert System.” SAC at 10. Even still, Plaintiff fails 21 to provide an explanation as to the numbers and formulas provided or as to what the expert system 22 means. Plaintiff states that his trade secrets are “the use of a Knowledge Base to insert bad 23 choices” and “the use of inference engines to reiterate another choice” but omits any further 24 explanation. Id. Plaintiff contends that his trade secrets are “numerous sundry items” without 25 explanation. Lastly, Plaintiff contends that when these are applied together, “Plaintiff achieves to 26 [sic] goal of solving complex problems” while also “achieving optimal picture quality, lower 27 bandwidth requirements, and lower storage requirements.” SAC at 11. Plaintiff’s descriptions are 28 Case No.: 5:18-cv-04327-EJD ORDER GRANTING GV DEFENDANTS’ MOTION TO DISMISS 5 1 2 Further in his description, Plaintiff alleges that his trade secrets are housed in folders on 3 the secure page of Arumai Technologies accessible only to the Administrator. SAC ¶ 9. And that 4 “[t]o ensure the veracity of Plaintiff’s protection claim, he cannot extend an invite to the Federal 5 defendants, but he is willing to extend an invite to Courtroom Deputy. . . .” SAC ¶ 9. Plaintiff has 6 not remedied the deficiencies in his Complaint with these statements, which are insufficient and 7 lack any showing of ownership. 8 Accordingly, Plaintiff fails to assert ownership of any trade secret. 9 2. 10 United States District Court Northern District of California still broad and unascertainable. Misappropriation To show misappropriation, DTSA requires a showing of one of two categories: (1) 11 wrongful acquisition, or (2) disclosure or use of the trade secret without consent. 18 U.S.C. 12 § 1839(5)(A) and (B). GV Defendants argue that Plaintiff shows neither. The Court agrees. 13 First, Plaintiff still fails to show GV Defendants (1) acquired a trade secret, and (2) if they 14 had, that it was acquired wrongfully. To wrongfully acquire a trade secret, one must obtain a trade 15 secret while having reason to know that it was obtained through “improper means.” Id. 16 § 1839(5)(A) (“misappropriation” means “acquisition of a trade secret by a person who knows or 17 has reason to know that the trade secret was acquired by improper means.”). Such “improper 18 means” can include lying, paying a bribe, or inducing someone to breach their confidentiality 19 agreement. Id. § 1839(6)(A). 20 Here, the Court previously rejected Plaintiff’s theory that GV Defendants acquired 21 Plaintiff’s alleged trade secrets wrongfully because Plaintiff stated in his Complaint and through 22 exhibits that he consented to Mr. Conner sharing Plaintiff’s “business plan” with the GV 23 Defendants before and after the alleged meeting. Plaintiff argues that because a non-disclosure 24 agreement was not signed at the alleged meeting, that Plaintiff therefore did not consent. Dkt. No. 25 123 at 12 (“Reply”). However, Plaintiff’s harm is aimed toward Mr. Conner, no longer a 26 defendant in this case, and how Mr. Conner may have handled Plaintiff’s business plan and non- 27 disclosure agreement. This assertion still does not support a showing that GV Defendants 28 Case No.: 5:18-cv-04327-EJD ORDER GRANTING GV DEFENDANTS’ MOTION TO DISMISS 6 1 obtained any trade secrets through improper means such as inducing Mr. Conner to breach any 2 confidentiality agreement. Even if the Court construed Plaintiff’s statements of wrongful 3 acquisition liberally, Plaintiff’s claim still fails on the element of use. United States District Court Northern District of California 4 Plaintiff’s original statements that GV Defendants put his alleged trade secrets to use are 5 purely speculative and lack any cognizable legal theory. In fact, Plaintiff’s SAC has retracted 6 from claiming any such use and now claims that GV Defendants will use in the future. For 7 example, Plaintiff originally claimed injury from exposure of his patent ideas “to a large, cash 8 rich, competitor [GV] without the benefit of the Mutual Non-Disclosure Agreement.” Compl. at 9 16. Plaintiff then implied that because a month later Google took Plaintiff’s trade secrets from 10 Mr. Conner at the alleged meeting in October, Google “had made a move to artificially intelligent 11 solutions in its Cloud platform and that Google invested $4.5M on artificial intelligence research 12 in Montreal.” Compl. at 6. This inference was not enough to show misappropriation and the 13 Court provided Plaintiff an opportunity to allege more facts to support his theory. Plaintiff has not 14 only failed to add any facts to support his theory in his SAC, he now appears to retract his 15 statement that GV Defendants are using his alleged trade secrets at all. Plaintiff now states in his 16 SAC that “[t]he notion that Google, in either regard, is making use of artificial intelligence at all is 17 questionable.” SAC at 4. Plaintiff further alleges and repeats that “[a]t the final adjudication of 18 the instant action including all appeals” Defendants will conclude and “have already concluded 19 that the best means of performing video search on Google TV is by the use of Plaintiff’s classical 20 form of artificial intelligence.” SAC at 14. Plaintiff states nowhere in his SAC that GV 21 Defendants, or any other defendants in this action, are using his alleged trade secrets. Only that 22 they will in the future. 23 24 Accordingly, in addition to a lack of ownership, Plaintiff fails to state a claim of misappropriation against GV Defendants. 25 B. 26 If the court concludes that the complaint should be dismissed, it must then decide whether Leave to Amend 27 to grant leave to amend. “[A] district court should grant leave to amend even if no request to 28 Case No.: 5:18-cv-04327-EJD ORDER GRANTING GV DEFENDANTS’ MOTION TO DISMISS 7 United States District Court Northern District of California 1 amend the pleading was made, unless it determines that the pleading could not possibly be cured 2 by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (quoting 3 Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). Leave to amend can be properly denied 4 where the amendment of the complaint would cause the opposing party undue prejudice, is sought 5 in bad faith, constitutes an exercise in futility, or creates undue delay. Foman v. Davis, 371 U.S. 6 178, 182 (1962); Janicki Logging Co. v. Mateer, 42 F.3d 561, 566 (9th Cir. 1994). Based on the 7 repetitive nature of Plaintiff’s SAC, his continued failure to describe ownership of any trade 8 secret, and his retracted statements on use, the Court finds that a third amended complaint would 9 constitute an exercise in futility and will cause the opposing party undue prejudice. Thus, Plaintiff 10 will not be given leave to amend. 11 IV. 12 13 14 15 16 17 CONCLUSION AND ORDER For the reasons stated, GV Defendant’s motion to dismiss Plaintiff’s Second Amended Complaint is GRANTED without leave to amend. IT IS SO ORDERED. Dated: May 14, 2019 ______________________________________ EDWARD J. DAVILA United States District Judge 18 19 20 21 22 23 24 25 26 27 28 Case No.: 5:18-cv-04327-EJD ORDER GRANTING GV DEFENDANTS’ MOTION TO DISMISS 8

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