Court Opinion

ID: 6340999
Source: CourtListenerOpinion
Date Created: 2022-05-16 14:00:35.419391+00
Date Added: 2024-06-11T09:19:51.645715
License: Public Domain

Case: 21-1839   Document: 76     Page: 1   Filed: 05/16/2022

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

             CARL ZEISS MEDITEC, INC.,
                  Plaintiff-Appellee

                            v.

    TOPCON MEDICAL SYSTEMS, INC., TOPCON
     HEALTHCARE SOLUTIONS, INC., TOBIAS
                  KURZKE,
             Defendants-Appellants

  GREG HOFFMEYER, GENEVIEVE FAY, KATALIN
    SPENCER, TERRY KEITH BROCK, CHARLES
   GUIBORD, JR., JOSEPH CICCANESI, MICHAEL
                     CHEN,
                    Defendants
              ______________________

                       2021-1839
                 ______________________

    Appeal from the United States District Court for the
 Northern District of California in No. 4:19-cv-04162-SBA,
 Judge Saundra Brown Armstrong.
                 ______________________

                 Decided: May 16, 2022
                 ______________________
Case: 21-1839     Document: 76       Page: 2    Filed: 05/16/2022

 2   CARL ZEISS MEDITEC, INC.   v. TOPCON MEDICAL SYSTEMS, INC.

     JEREMY T. ELMAN, Allen & Overy LLP, Palo Alto, CA,
 argued for plaintiff-appellee Carl Zeiss Meditec, Inc. Also
 represented by BIJAL V. VAKIL.

    STEVEN CARLSON, Robins Kaplan LLP, Redwood City,
 CA, argued for defendants-appellants Topcon Medical Sys-
 tems, Inc., Topcon Healthcare Solutions, Inc. Also repre-
 sented by KEVIN PASQUINELLI.

     GEORGE MILLER, Shustak Reynolds & Partners PC,
 San Diego, CA, argued for defendant-appellant Tobias Kur-
 zke. Also represented by KATHERINE BOWLES.
                  ______________________

     Before HUGHES, LINN, and STOLL, Circuit Judges.
 LINN, Circuit Judge
     In this interlocutory appeal, Topcon Medical Systems,
 Inc. (“Topcon”) seeks vacatur of a preliminary injunction
 granted by the United States District Court for the North-
 ern District of California in a case involving the alleged
 misappropriation of trade secrets of Carl Zeiss Meditec,
 Inc. (“CZMI”). Topcon asserts that paragraph 2 of the in-
 junction fails to satisfy Federal Rule of Civil Procedure
 65(d) because it does not provide sufficient specificity of
 what it prohibits. Because paragraph 2 is ambiguous as to
 whether and to what extent it enjoins the continued use of
 Topcon’s Harmony platform and DICOM decoder, we va-
 cate that part of the preliminary injunction and remand to
 the district court for clarification of the scope of the conduct
 intended to be prohibited.
     Topcon argues that paragraph 2 of the injunction is an
 impermissibly vague “obey the law” injunction, which does
 not describe the specific acts prohibited. Topcon further
 argues that the broad prohibition against using “any CZMI
 confidential, proprietary, or trade secret information, in-
 cluding any files obtained from the Hard Drive or during
Case: 21-1839    Document: 76        Page: 3   Filed: 05/16/2022

 CARL ZEISS MEDITEC, INC.   v. TOPCON MEDICAL SYSTEMS, INC.   3

 the course of Former Defendants’ employment with CZMI,”
 Order Granting Pl.’s Renewed Mot. for Preliminary Injunc-
 tion at 23, Carl Zeiss Meditec, Inc. v. Topcon Med. Sys.,
 Inc., Case No. 19-4161 SBA (N.D. Cal. March 1, 2021), ECF
 No. 311 (“Preliminary Injunction Order”), does not identify
 any particular trade secrets or describe what acts are pro-
 hibited. Topcon also argues that paragraph 2 here is es-
 sentially like the injunctions disallowed in Roton Barrier,
 Inc. v. Stanley Works, 79 F.3d 1112, 1121–22 (Fed. Cir.
 1996) and Union Pacific Railroad Co. v. Mower, 219 F.3d
 1069, 1072, 1077 (9th Cir. 2000) and contends specifically
 that the injunction is ambiguous as to whether it applies to
 Topcon’s Harmony platform and DICOM decoder or only
 the Glaucoma Module. Topcon further contends that these
 ambiguities are exacerbated by the district court’s misun-
 derstanding of evidence from the Elman Declaration and
 Kurzke deposition discussing the OCT project and the dis-
 trict court’s use of that evidence to draw conclusions about
 the misappropriation of trade secrets related to the HFA
 project.
     CZMI responds that it sought an injunction with re-
 spect to both HFA and OCT data and that the district court
 granted the injunction without exception. Thus, CZMI,
 contends that the use of both OCT and HFA data was
 properly enjoined, and that the district court’s discussion
 of the Elman Declaration and Kurzke’s related deposition
 testimony concerning OTC data supports reading the in-
 junction to extend to Harmony due to its use of OTC data.
 CZMI thus argues that the injunction was broad rather
 than ambiguous and distinguishes Topcon’s cited cases.
     We review the propriety of a preliminary injunction un-
 der the law of the regional circuit, in this case the Ninth
 Circuit. Mikohn Gaming Corp. v. Acres Gaming, Inc., 165
 F.3d 891, 894 (Fed. Cir. 1998). The Ninth Circuit reviews
 whether a preliminary injunction satisfies Rule 65(d) due
 to vagueness de novo. Premier Commc’ns Network, Inc. v.
 Fuentes, 880 F.2d 1096, 1100 (9th Cir. 1989).
Case: 21-1839     Document: 76       Page: 4   Filed: 05/16/2022

 4   CARL ZEISS MEDITEC, INC.   v. TOPCON MEDICAL SYSTEMS, INC.

     Rule 65(d) requires that an injunction “describe in rea-
 sonable detail—and not by referring to the complaint or
 other document—the act or acts restrained or required.”
     The Rule was designed to prevent uncertainty and
     confusion on the part of those faced with injunctive
     orders, and to avoid the possible founding of a con-
     tempt citation on a decree too vague to be under-
     stood. Since an injunctive order prohibits conduct
     under threat of judicial punishment, basic fairness
     requires that those enjoined receive explicit notice
     of precisely what conduct is outlawed.
 Schmidt v. Lessard, 414 U.S. 473, 476 (1974).
     We agree with Topcon that the district court’s injunc-
 tion fails to provide the kind of notice required by Fed. R.
 Civ. P. 65(d) as to whether and to what extent Topcon’s
 continued use of its Harmony platform and DICOM de-
 coder is outlawed. At the outset, we note that the district
 court’s opinion expressly says that “CZMI now limits the
 proposed injunction to Glaucoma Module specifically.” Pre-
 liminary Injunction Order at 7 n.6. CZMI inexplicably does
 not address this footnote in its briefing. Moreover, the in-
 junction order heavily focuses on the improper acquisition,
 disclosure, and use of the confidential HFA reports, rather
 than any confidential information associated with OTC
 data. The acquisition theory wholly revolves around Kur-
 zke’s hard drive, and the use/disclosure theory also heavily
 focuses on the “145 HFA reports” Kurzke kept on the hard
 drive and delivered to Calcey for the purpose of testing the
 Glaucoma Module.
     There is no evidence cited by either the district court or
 CZMI that the hard drive contained any confidential OCT
 information. While there is some mention that the hard
 drive contained OCT data of Kurzke’s own eyes, there is no
 discussion by the district court that that information was
 confidential.
Case: 21-1839     Document: 76       Page: 5   Filed: 05/16/2022

 CARL ZEISS MEDITEC, INC.   v. TOPCON MEDICAL SYSTEMS, INC.   5

     CZMI’s contention that paragraph 2 properly captures
 all 70 trade secrets it asserted against Topcon because it
 made the argument to the district court and because the
 district court did not qualify its injunction is not sufficient
 to remove the ambiguity in the scope of the injunction.
 First, the district court did not address whether all that
 information was confidential, or whether it was acquired,
 used, or disclosed improperly. Second, as Topcon convinc-
 ingly argues, the scope of the asserted trade secrets cap-
 tured under CZMI’s argument is staggering, including
 unspecified software architecture, unnamed user inter-
 faces, generically noted research, and other information
 simply identified as trade secrets. The district court did
 not engage an analysis of the likelihood of success on these
 many and varied alleged trade secrets. Finally, Rule 65(d)
 expressly requires that the injunction order itself must “de-
 scribe in reasonable detail—and not by referring to the com-
 plaint or other document—the act or acts restrained or
 required.” (emphasis added). 1
     CZMI argues that paragraph 2 should properly be in-
 terpreted to extend to OCT data because Kurzke enlisted a
 third party to license image export software from CZMI.
 This argument falls short for a number of reasons. First,
 this theory was not discussed or adopted by the district
 court. Second, there is no holding by the district court that
 CZMI was likely to succeed in showing that the image

 1   We recognize that the Ninth Circuit “has not taken a
 rigid approach” to Rule 65(d)’s no-incorporation require-
 ment and has allowed, for example, attachment of a confi-
 dential appendix as part of the injunction. Davis v. City
 and County of San Francisco, 890 F.2d 143, 1450 (9th Cir.
 1989); see also Reno Air Racing Ass’n, Inc. v. McCord, 452
 F.3d 1126, 1132–33 (9th Cir. 2006) (explaining the Ninth
 Circuit “permit[s] incorporation by reference in certain lim-
 ited scenarios”).
Case: 21-1839     Document: 76       Page: 6   Filed: 05/16/2022

 6   CARL ZEISS MEDITEC, INC.   v. TOPCON MEDICAL SYSTEMS, INC.

 export software or the license thereof was confidential or
 improperly obtained.
     We agree with Topcon that paragraph 2 of the injunc-
 tion does not comport with the standards demanded by Un-
 ion Pacific. See 219 F.3d at 1077 (quoting Granny Goose
 Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 444
 (1974)) (“[O]ne basic principle built into Rule 65 is that
 those against whom an injunction is issued should receive
 fair and precisely drawn notice of what the injunction ac-
 tually prohibits.”). CZMI argues that Union Pacific is in-
 apposite because it was addressing privilege, and that
 paragraph 2 here “defines the CZMI information protected
 by Clause Two.” We disagree. First, CZMI’s briefing can-
 not define the scope of the injunction, where paragraph 2
 itself does not identify the specific acts prohibited. Second,
 Union Pacific addressed the scope of the injunction with
 respect to privilege and confidentiality and its holding was
 generally about the specificity required by Rule 65(d).
 CZMI identifies no reason why the specificity required in
 identifying the prohibited acts would be different with re-
 spect to confidentiality and privilege under Rule 65(d).
     Roton, while applying Illinois law, also supports Top-
 con. CZMI attempts to distinguish that case, arguing that
 paragraph 2 here, in identifying the contents of the hard
 drive, is more specific than the injunction in Roton. But
 CZMI does not identify anything confidential on the hard
 drive that implicates OCT data, and the prohibition
 against the use of data on the hard drive does not provide
 sufficient specificity to save the remainder of the injunction
 from ambiguity.
     Because we conclude that paragraph 2 fails to satisfy
 Fed. R. Civ. P. 65(d), CZMI’s contention that the Ninth Cir-
 cuit does not prohibit “obey the law” injunctions is inappo-
 site.
     Finally, we agree with Topcon that the district court’s
 reference to evidence from Elman Declaration Exhibit 3
Case: 21-1839     Document: 76        Page: 7   Filed: 05/16/2022

 CARL ZEISS MEDITEC, INC.   v. TOPCON MEDICAL SYSTEMS, INC.   7

 and Elman Declaration Exhibit 4, which relate solely to
 OCT data, to reach conclusions as to HFA data, exacer-
 bates the ambiguity of the injunction and in no way sup-
 ports extending the injunction to cover the Harmony
 platform or the DICOM decoder.
                               ***
     For the foregoing reasons, paragraph 2 of the prelimi-
 nary injunction is vacated and the injunction is remanded
 to the district court to clarify the scope of the injunction as
 to whether and to what extent it enjoins the continued use
 of Topcon’s Harmony platform and DICOM decoder.
         VACATED-IN-PART AND REMANDED
                              COSTS

 Each party shall bear its own costs.