Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_15-cv-01370/USCOURTS-cand-5_15-cv-01370-29/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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Case No.: 5:15-cv-01370-EJD

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR 

SUMMARY JUDGMENT

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

BLADEROOM GROUP LIMITED, et al.,

Plaintiffs,

v.

FACEBOOK, INC., et al.,

Defendants.

Case No. 5:15-cv-01370-EJD 

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANTS’

MOTION FOR SUMMARY JUDGMENT

Re: Dkt. No. 370

I. INTRODUCTION

Plaintiffs BladeRoom Group Limited and Bripco (UK) Limited (collectively, 

“BladeRoom”) assert claims for trade secret misappropriation, breach of contract, and violation of 

the Unfair Competition Law (“UCL”), California Business and Professions Code § 17200 et seq., 

against Defendant Facebook, Inc. (“Facebook”) and Defendants Emerson Electric Co., Emerson 

Network Power Solutions, Inc. and Liebert Corporation (collectively, “Emerson”). Presently 

before the court is Emerson’s Motion for Summary Judgment. Dkt. No. 370. Plaintiffs oppose 

the motion. 

Federal jurisdiction arises pursuant to 28 U.S.C. §§ 1331 and 1332. The outcome of this 

motion largely tracks that of Facebook’s companion summary judgment motion, which the court 

has addressed in a separate order filed this same date. Emerson’s Motion for Summary Judgment

will be granted in part and denied in part for the reasons that follow. 

II. LEGAL STANDARD

A motion for summary judgment or partial summary judgment should be granted if “there 

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is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of 

law.” Fed. R. Civ. P. 56(a); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000).

The moving party bears the initial burden of informing the court of the basis for the motion 

and identifying the portions of the pleadings, depositions, answers to interrogatories, admissions, 

or affidavits that demonstrate the absence of a triable issue of material fact. Celotex Corp. v. 

Catrett, 477 U.S. 317, 323 (1986). If the issue is one on which the nonmoving party must bear the 

burden of proof at trial, the moving party need only point out an absence of evidence supporting 

the claim; it does not need to disprove its opponent’s claim. Id. at 325.

If the moving party meets the initial burden, the burden then shifts to the non-moving party 

to go beyond the pleadings and designate specific materials in the record to show that there is a 

genuinely disputed fact. Fed. R. Civ. P. 56(c); Celotex Corp., 477 U.S. at 324. A “genuine issue” 

for trial exists if the non-moving party presents evidence from which a reasonable jury, viewing 

the evidence in the light most favorable to that party, could resolve the material issue in his or her 

favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).

The court must draw all reasonable inferences in favor of the party against whom summary 

judgment is sought. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). 

However, the mere suggestion that facts are in controversy, as well as conclusory or speculative 

testimony in affidavits and moving papers, is not sufficient to defeat summary judgment. Id. 

(“When the moving party has carried its burden under Rule 56(c), its opponent must do more than

simply show that there is some metaphysical doubt as to the material facts.”); Thornhill Publ’g Co. 

v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Instead, the non-moving party must come 

forward with admissible evidence to satisfy the burden. Fed. R. Civ. P. 56(c).

“If the nonmoving party fails to produce enough evidence to create a genuine issue of 

material fact, the moving party wins the motion for summary judgment.” Nissan Fire & Marine 

Ins. Co. v. Fritz Cos., Inc., 210 F.3d 1099, 1103 (9th Cir. 2000). “But if the nonmoving party 

produces enough evidence to create a genuine issue of material fact, the nonmoving party defeats 

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the motion.” Id.

III. DISCUSSION

A. Misappropriation of Trade Secrets

Like Facebook, Emerson challenges BladeRoom’s trade secret misappropriation claim in 

two primary ways. First, Emerson argues that BladeRoom has not established that its asserted 

combination trade secrets qualify for legal protection. Second, Emerson argues the evidence does 

not show that Emerson used any of BladeRoom’s trade secrets. Neither argument prevails. 

i. Element 1: Identification of Trade Secrets

The general authority governing a claim for trade secret misappropriation claim under the

California Uniform Trade Secrets Act (“CUTSA”) is detailed in the order on Facebook’s summary 

judgment motion and is not repeated here. However, some concepts are worth restating because 

they apply with equal force to this motion. 

On the subject of disclosure, CUTSA requires the trade secret plaintiff to “‘describe the 

subject matter of the trade secret with sufficient particularity to separate it from matters of general 

knowledge in the trade or of special knowledge of those persons . . . skilled in the trade.’” Imax 

Corp. v. Cinema Techs., Inc., 152 F.3d 1161, 1164-65 (9th Cir. 1998) (quoting Universal 

Analytics v. MacNeal-Schwendler Corp., 707 F. Supp. 1170, 1177 (C.D. Cal. 1989)) (“Imax”). 

The plaintiff need not “define every minute detail of its claimed trade secret at the outset of the 

litigation,” but “must make some showing that is reasonable, i.e., fair, proper, just and rational[,] 

under all of the circumstances.” Advanced Modular Sputtering, Inc. v. Super. Ct., 132 Cal. App. 

4th 826, 835-36 (2005). “The degree of ‘particularity’ that is ‘reasonable’ will differ, depending 

on the alleged trade secrets at issue in each case.” Id. at 836. 

As to subject matter, “[n]ovelty, in the patent law sense, is not required for a trade secret.” 

Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 476 (1974). Instead, “secrecy, in the context of 

trade secrets, thus implies at least minimal novelty.” Id.

Emerson’s argument regarding the combination trade secrets - which seems to internally 

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shift between a challenge to the sufficiency of their disclosure in this litigation and to the novelty 

of their subject matter - fails under these guidelines. To begin, the significance of the purported 

inability of BladeRoom’s witnesses to identify at deposition how the combination trade secrets 

constitute a unique, unified process is difficult to understand. To the extent Emerson cites these 

instances as evidence the combination trade secrets were not fully and adequately disclosed during 

discovery under Imax, the court disagrees for reasons fully explained in the order addressing 

Facebook’s summary judgment motion. Furthermore, it is not clear why Emerson requested that 

BladeRoom’s witnesses identify a unique, unified process for any of the combination trade secrets

in any event. Emerson was already in possession of BladeRoom’s disclosures when it took the 

depositions, and it is no mystery that BladeRoom’s individual trade secrets, of which the 

combination trade secrets are comprised, each claim certain construction aspects of a distinct 

methodology for building a modular data center. 

To the extent the deposition testimony is cited in support of a novelty challenge to the 

combination trade secrets, it is misplaced. The court has explained, also in the order on 

Facebook’s motion, why the general notion of novelty applicable in patent infringement cases 

does not translate into claims for trade secret misappropriation. Trade secrets do not derive value 

from their novelty, and such a requirement is conspicuously absent from CUTSA’s definition of 

what constitutes a trade secret. Cal. Civ. Code § 3426.1(d). Rather, the value of a trade secret 

arises from its secrecy and the ability to control whether, how and to whom it is disclosed. See

DVD Copy Control Assn., Inc. v. Bunner, 31 Cal. 4th 864, 880-81 (2003). Accordingly, any 

definition of novelty beyond the measures taken to keep the combination trade secrets confidential 

is not mandated by CUTSA. 

Indeed, the cases cited by Emerson do not impose any general requirement that trade 

secrets be novel. Instead, those cases support the notion emphasized here: that confidentiality is 

key. Emerson relies on Computer Care v. Service Systems Enterprises, Inc., 982 F.2d 1063 (7th 

Cir. 1992), a case in which the Seventh Circuit held that the plaintiff’s vehicle maintenance 

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reminder system did not qualify for trade secret protection under Illinois law, either in individual 

parts or in combination, because it was not shown to be any different from other systems available 

in the market. The main problem for the plaintiff, as the Seventh Circuit made clear in several 

places of the opinion, was not a lack of novelty but a lack of secrecy. To that end, the term 

“novel” is used in Computer Care to emphasize the obviousness - and thereby lack of secrecy - of 

the plaintiff’s claimed technology and the commonality between the trade secrets and the practices 

of others in the same industry.1 

Emerson also cites Computer Care to support this statement: “[c]ombination trade secrets 

can include information in the public domain, but the combination itself must be a unified process 

that is unique and novel.” Computer Care, however, does not appear to recognize novelty as a 

requirement for trade secrets composed of publicly-known elements; Emerson seems to have 

added that requirement out of interpretive license. But even if a novelty requirement was implied 

in Computer Care, its addition to the rule simply would not win the day at this stage. Whether or 

not the individual components of BladeRoom’s combination trade secrets were publicly disclosed 

is a disputed material fact that cannot be resolved on summary judgment. Unless a jury finds in 

Emerson’s favor on the issue of public disclosure, any rule requiring that combination trade 

secrets be unique when composed of publicly-disclosed elements does not apply.

Secrecy was similarly fundamental to the district court’s decision in Big Vision Private 

Ltd. v. E.I. DuPont Nemours & Co., 1 F. Supp. 3d 224 (S.D.N.Y. 2014), though that case is 

distinguishable. In Big Vision, the court determined the plaintiff altogether failed to explain how 

its claimed combination trade secret was either confidential or unique. In the passage duplicated 

in Emerson’s motion, the district court emphasized that the plaintiff failed to show the uniqueness 

of its combination trade secret because it had failed to sufficiently describe the publicly-disclosed

 

1

“Novel” is used in connection with two main points in the Computer Care opinion, first to point 

out that “Computer Care’s use of adjustable service cycles is not a novel idea developed by 

Computer Care, but simply a response to its customers’ requests,” and second to emphasize that 

“the idea of saving money by not continuing to send letters to customers who have failed to 

respond in the past is hardly novel.” 982 F.2d at 1073-74. 

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components. Those circumstances do not present here, despite persistent attempts to question the 

sufficiency of BladeRoom’s disclosures after they were determined adequate by a magistrate 

judge. 

In sum, Emerson is not entitled to summary judgment on the trade secret misappropriation 

claim due to insufficient disclosure of the combination trade secrets. Nor is it entitled to summary 

judgment for lack of novelty. 

ii. Element 2: Acquisition, Disclosure, or Use of Trade Secrets 

As the court explained in connection with Facebook’s motion, three types of conduct can 

constitute trade secret misappropriation under CUTSA: improper acquisition, improper disclosure 

and improper use. Cal. Civ. Code § 3426.1(b); Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 

210, 222 (2010) (“Under CUTSA, misappropriation of a trade secret may be achieved through 

three types of conduct: ‘[a]cquisition,’ ‘[d]isclosure,’ or ‘[u]se.’”). Each type can be proven by 

circumstantial evidence. See UniRAM Tech., Inc. v. Taiwan Semiconductor Mfg. Co., 617 F. 

Supp. 2d 938, 944 (N.D. Cal. 2007). 

a. Acquisition 

A reasonable jury could find that Emerson improperly acquired BladeRoom’s trade secrets 

through misrepresentation. In addition to the evidence recited in the order on Facebook’s motion, 

Emerson’s Jack Pouchet testified 

 Mar Decl., at 

Ex. 100, 119:13-17, 124:16-125:17, 142:22-143:25, 152:7-12. Though Emerson invites the court 

to parse and weigh Pouchet’s testimony and find it insufficient to prove that Emerson was in fact 

, the invitation must be declined. See Anderson, 

477 U.S. at 255, 106 S.Ct. 2505 (“Credibility determinations, the weighing of the evidence, and 

the drawing of legitimate inferences from the facts are jury functions, not those of a judge, 

whether he is ruling on a motion for summary judgment or for a directed verdict.”). It is enough 

that the statements provide an evidentiary basis for the jury to infer Emerson’s intentions. The 

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bounds of Pouchet’s knowledge and his reasons for making the statements can be explored at trial. 

Furthermore, a reasonable jury could infer from the presentation dated December 7, 2011, 

that Emerson was motivated to obtain knowledge related to alternative cooling methods because 

Emerson 

 Mar Decl., at Ex. 89. And a reasonable jury could infer that Emerson received a 

significant amount of in-depth, technical information about the Armature technology after its 

meeting with BladeRoom in the United Kingdom in June, 2012. Id. at Exs. 26, 94, 102. 

b. Disclosure 

Emerson’s non-disclosure agreement with BladeRoom governs how the parties must treat 

confidential information in much the same way as the agreement between BladeRoom and 

Facebook. Fisher Decl., at Ex. 1. In pertinent part, Emerson’s agreement permits the use of 

confidential information only for the purpose of evaluating a possible acquisition of BladeRoom, 

and requires Emerson to “treat and safeguard” BladeRoom’s confidential information as its own. 

Id. The agreement precludes the disclosure of confidential information without written consent, 

except that Emerson may disclose information to particular categories of insiders who need to 

know the information to evaluate an acquisition. Id. The agreement also precludes the disclosure 

of any information relating to existence or content of any negotiations. Id. 

The court reiterates that a violation of CUTSA may occur when trade secrets are disclosed 

in violation of a contractual duty to maintain confidentiality. See Cal. Civ. Code § 

3426.1(b)(2)(B)(ii); see also Restatement (Third) of Unfair Competition § 41 cmt. b (1995); see 

also Convolve, Inc. v. Compaq Comput. Corp., 527 Fed. App’x 910, 925 (Fed. Cir. 2013) 

(observing that under CUTSA, circumstances giving rise to a duty to maintain the secrecy of trade 

secrets are dictated by the terms of a non-disclosure agreement). And here, the record provides 

sufficient evidentiary support for a reasonable jury to find that Emerson violated CUTSA by 

improperly disclosing BladeRoom’s confidential information subsequent to the meeting in the 

United Kingdom in June, 2012. Indeed, the same evidence that renders this form of 

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misappropriation genuinely disputed as to Facebook makes it an equally genuine dispute as to 

Emerson, since BladeRoom’s agreements with both companies limited their respective use of 

trade secrets solely to internal business evaluations. A reasonable jury could infer from the record 

that Emerson at least discussed BladeRoom’s confidential information with Facebook.

Emerson’s contrary position based on alleged public disclosures by BladeRoom is

ineffective for this motion because it is not supported by undisputed evidence. As revealed by the 

deposition testimony of Nick Vaney and Defendants’ joint expert, Phil Isaak, whether or not 

BladeRoom’s information lost trade secret protection because it was publicly disclosed in patent 

applications, on its website, or in other presentations is a materially disputed fact that cannot be 

resolved by the court on summary judgment. Moreover, it appears that a portion of the evidence 

Emerson relies on to show loss of confidentiality involves public disclosures made subsequent to 

the time period at issue in this case, and may be irrelevant for that reason.

c. Use

The court has explained in connection with Facebook’s summary judgment motion why 

the type of infringement analysis traditionally utilized in patent cases is unsuited to analyzing 

whether trade secrets have been misappropriated through use. Infringement of a patent occurs 

only when every claim limitation recited in the patent or their equivalents are present in the 

accused device. Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1301 (Fed. Cir. 2011). In 

contrast, proof that trade secrets have been “used” can come in various forms, direct incorporation

being just one possible form. PMC, Inc. v. Kadisha, 78 Cal. App. 4th 1368, 1383 (2000) (holding 

that misappropriation can occur by “[e]mploying the confidential information in manufacturing, 

production, research or development, marketing goods that embody the trade secret, or soliciting 

customers through the use of trade secret information”). Consequently, “an actor is liable for 

using the trade secret with independently created improvements or modifications if the result is 

substantially derived from the trade secret.” Restatement (Third) of Unfair Competition § 40 cmt. 

c (1995). 

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Like Facebook, Emerson asserts it did not use any of BladeRoom’s trade secrets because 

certain aspects of the trade secrets do not manifest in LLA2. And like Facebook, Emerson cannot 

prevail on summary judgment with this argument. The lack of a direct correlation between the 

“claims” of a trade secret and the elements of LLA2 does not prevent the possibility that a 

reasonable jury could find that Emerson substantially derived its technology for modular data 

centers from that of BladeRoom. Accordingly, Emerson’s motion will be denied as to trade secret 

misappropriation through use. 

B. Breach of Contract

Emerson argues BladeRoom cannot prove that it breached the non-disclosure agreement, 

relying primarily on its arguments against the claim for trade secret misappropriation. But as has 

been explained above and in conjunction with Facebook’s summary judgment motion, the 

evidence when construed in BladeRoom’s favor could support a finding of breach. Emerson’s 

motion will therefore be denied as to the breach of contract claim. 

C. UCL

The UCL broadly prohibits business practices that are unlawful, unfair, or fraudulent (Cal. 

Bus. & Prof. Code § 17200; Kwikset v. Super. Ct., 51 Cal. 4th 310, 320 (2011)), and 

BladeRoom’s UCL claim arises only under the UCL’s unlawful and unfair “prongs.” Emerson 

argues it is entitled to summary judgment, no matter the prong, because it is preempted by 

CUTSA. The court agrees in part. 

“‘[G]eneral and comprehensive legislation, where course of conduct, parties, things 

affected, limitations and exceptions are minutely described, indicates a legislative intent that the 

statute should totally supersede and replace the common law dealing with the subject matter.’” 

I.E. Assocs. v. Safeco Title Ins. Co., 39 Cal. 3d 281, 285 (1985). In California, CUTSA is a body 

of general and comprehensive legislation that preempts both common law trade secret 

misappropriation claims and alternative civil remedies based on trade secret misappropriation. 

K.C. Multimedia, Inc. v. Bank of America Tech. & Operations, Inc., 171 Cal. App. 4th 939, 954 

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(2009). Its eleven provisions set forth “the definition of ‘misappropriation’ and ‘trade secret,’ 

injunctive relief for actual or threatened misappropriation, damages, attorney fees, methods for 

preserving the secrecy of trade secrets, the limitations period, the effect of the title on other 

statutes or remedies, statutory construction, severability, the application of title to acts occurring 

prior to the statutory date, and the application of official proceedings privilege to disclosure of 

trade secret information.” Id. 

A claim is preempted by CUTSA if it is based on the “same nucleus of facts” as the 

misappropriation of trade secrets claim for relief. Id. (quoting Digital Envoy, Inc. v. Google, Inc., 

370 F. Supp. 2d 1025, 1035 (N.D. Cal. 2005)). But CUTSA does not preempt claims deriving 

from “(1) contractual remedies, whether or not based upon misappropriation of a trade secret, (2) 

other civil remedies that are not based upon misappropriation of a trade secret, or (3) criminal 

remedies, whether or not based upon misappropriation of a trade secret.” Cal. Civ.Code § 

3426.7(b). Thus, “preemption is not triggered where the facts in an independent claim are similar 

to, but distinct from, those underlying the misappropriation claim.” Gabriel Techs. Corp. v. 

Qualcomm Inc., No. 08cv1992-MMA(POR), 2009 WL 3326631, at * (S.D. Cal. Sept. 3, 2009). 

Here, the two prongs of BladeRoom’s UCL claim against Emerson must be analyzed 

separately because, while similar, there is an important difference. Echoing the definition of 

“misappropriation” provided in Civil Code § 3426.1(b), BladeRoom alleges in the operative 

Second Amended Complaint that Emerson violated the unlawful prong of the UCL by wrongfully 

disclosing and using its confidential information. Dkt. No. 106, at ¶ 152. That said, the claim is 

indistinguishable from BladeRoom’s trade secret misappropriation claims because it must be 

proven with the same “nucleus of facts.” It is preempted by CUTSA for that reason.

Allegations of trade secret misappropriation also provide a factual context for the claim 

under the unfair prong, but BladeRoom goes further than merely citing conduct falling within the 

statutory definition of trade secret misappropriation. It alleges that because of the 

misappropriation, Emerson can unfairly compete with BladeRoom in the market for modular data 

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center design and construction. Id. at ¶ 154. BladeRoom also alleges that Emerson falsely claims 

to have collaborated in creating its own competing design and method. Id. The gravamen of this 

claim is therefore rooted in what Emerson has done and can do as a result of the unlawful 

disclosure and use of BladeRoom’s confidential information, and not on the same conduct 

underlying the misappropriation claim. The court therefore finds the claim under the UCL’s 

unfair prong is not preempted. 

In short, Emerson is entitled to summary judgment only on the unlawful prong of the UCL 

claim but nothing else. 

IV. ORDER 

Based on the foregoing, Emerson’s Motion for Summary Judgment (Dkt. No. 370) is 

GRANTED IN PART and DENIED IN PART. 

The motion is granted as to the BladeRoom’s UCL claim against Emerson under the 

unlawful prong. The motion is denied in all other aspects. 

IT IS SO ORDERED. 

Dated: January 2, 2018 

__ _________________________________ 

EDWARD J. DAVILA 

United States District Judge 

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