Court Opinion

ID: 4643591
Source: CourtListenerOpinion
Date Created: 2020-12-16 18:00:42.581724+00
Date Added: 2024-06-11T08:00:40.762026
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ELI ATTIA; ELI ATTIA ARCHITECT            No. 19-15771
PC,
                Plaintiffs-Appellants,       D.C. No.
                                          5:17-cv-06037-
                  v.                           BLF

GOOGLE LLC; FLUX FACTORY, INC.;
LARRY PAGE; SERGEY BRIN;                    OPINION
SEBASTIAN THRUN; ERIC TELLER,
AKA Astro Teller; MICHELLE
KAUFMANN; JENNIFER CARLILE;
AUGUSTO ROMAN; NICHOLAS CHIM,
             Defendants-Appellees.

      Appeal from the United States District Court
          for the Northern District of California
     Beth Labson Freeman, District Judge, Presiding

       Argued and Submitted September 16, 2020
               San Francisco, California

                Filed December 16, 2020

 Before: J. Clifford Wallace, A. Wallace Tashima, and
            Bridget S. Bade, Circuit Judges.

               Opinion by Judge Wallace
2                       ATTIA V. GOOGLE

                          SUMMARY *

                          Trade Secrets

    The panel affirmed the district court’s dismissal of
claims brought under the Defend Trade Secrets Act of 2016
and the Racketeer Influenced and Corrupt Organizations Act
against Google, LLC, and other defendants by an architect
and his firm.

    The architect first sued Google in 2014 for state law trade
secret and contract claims. After Congress enacted the
DTSA in 2016, he added RICO and DTSA claims. The
panel concluded that the DTSA claim was precluded by
Google’s pre-enactment disclosures in the publication in
2012 of patent applications containing plaintiff’s trade
secrets. The panel held that the misappropriation of a trade
secret prior to the enactment of the DTSA does not preclude
a claim arising from post-enactment misappropriation or
continued use of the same trade secret. Nonetheless,
plaintiff lacked standing to assert a DTSA claim because
Google’s 2012 patent applications placed the information in
the public domain and necessarily extinguished its trade
secret status. The panel rejected plaintiff’s argument that
Google was equitably estopped from pointing to the 2012
publication of its patent applications to defend against
plaintiff’s DTSA claim.

   Affirming the district court’s dismissal of plaintiff’s
RICO and RICO conspiracy claims, the panel held that

    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                      ATTIA V. GOOGLE                        3

plaintiff failed to establish a pattern of racketeering because
he did not identify two sufficiently related predicate acts.

                         COUNSEL

John E. Floyd and Jeffrey W. Chen, Bondurant Mixson &
Elmore LLP, Atlanta, Georgia; Professor G. Robert Blakey
Emeritus, Notre Dame Law School, Paradise Valley,
Arizona; James W. Christian, Christian Smith & Jewell,
Houston, Texas; Eric W. Buether, Beuther Joe & Carpenter
LLC, Dallas, Texas; Jamie L. Dupree, Futterman Dupree
Dodd Croley, San Francisco, California; for Plaintiffs-
Appellants.

Charles Tait Graves (argued), Shelby Pasarell Tsai, and
Joshua A. Baskin, Wilson Sonsini Goodrich & Rosati P.C.,
San Francisco, California; David H. Kramer, Wilson Sonsini
Goodrich & Rosati P.C., Palo Alto, California; for
Defendants-Appellees Google LLC, Larry Page, Sergey
Brin, Sebastian Thrun, and Eric Teller.

Robert Kent (argued) and Karen I. Boyd, Turner Boyd LLP,
Redwood City, California, for Defendants-Appellees Flux
Factory, Inc.; Michelle Kaufmann; Jennifer Carlile; Augusto
Roman; and Nicholas Chim.
4                     ATTIA V. GOOGLE

                          OPINION

WALLACE, Circuit Judge:

    In addition to state law claims, Plaintiffs Eli Attia and his
firm Eli Attia Architect PC (collectively, Attia) asserted
federal claims pursuant to the Defend Trade Secrets Act of
2016 (DTSA) and the Racketeer Influenced and Corrupt
Organizations Act (RICO) against Defendants Google, LLC,
Larry Page, Sergey Brin, Sebastian Thrun, Eric “Astro”
Teller, Michelle Kaufmann, Jennifer Carlile, Augusto
Roman, Nicholas Chim, and Flux Factory, Inc. (collectively,
Google). Attia appeals from the district court’s judgment
dismissing Attia’s Fifth Amended Complaint’s DTSA and
RICO claims and declining to exercise supplemental
jurisdiction over Attia’s state law claims. Attia argues that
Google’s disclosure of certain trade secrets in 2012, prior to
the enactment of the DTSA on May 11, 2016, does not
preclude Attia’s DTSA claim arising from Google’s alleged
post-enactment misappropriation or continued use of trade
secrets. In the alternative, Attia argues that Google is
equitably estopped from invoking its 2012 disclosure to
defend against Attia’s DTSA claim. Additionally, Attia
contends that Attia has sufficiently alleged a pattern of
racketeering activity to support Attia’s RICO claims. We
have jurisdiction pursuant to 8 U.S.C. § 1291. Reviewing
“de novo the district court’s dismissal of a complaint for
failure to state a claim” and “de novo a dismissal without
leave to amend,” Oki Semiconductor Co. v. Wells Fargo
Bank, Nat. Ass’n, 298 F.3d 768, 772 (9th Cir. 2002), we
affirm.

                               I.

    Eli Attia is an architect who developed a new
architecture technology called “Engineered Architecture”
                      ATTIA V. GOOGLE                        5

(EA). In July 2010, Google sought to enter into a partnership
with Attia to develop EA. By September 2010, Google
began working with Attia to develop a program called
“Project Genie” to implement EA. In January 2011, Google
and Attia entered into an Inbound Services Agreement (ISA)
and a Statement of Work Agreement (SOW). Attia disclosed
his EA trade secrets to Google with the understanding that
he would be compensated if the program were successful.

    After Attia executed patent assignments, in 2011 Google
filed patent applications with the U.S Patent and Trademark
Office relating to the EA trade secrets and showed a
prototype of the EA technology to investors. The patents
were published in July and November 2012. Google then
allegedly excluded Attia from the project and used Attia’s
EA technology to create a new venture, which eventually
became Flux Factory.

    Attia sued Google in December 2014 for state law trade
secret and contract claims. In 2016, Congress enacted the
DTSA, which allows plaintiffs to assert a federal claim for
the misappropriation of trade secrets occurring on or after
May 11, 2016. Defend Trade Secrets Act of 2016, Pub. L.
No. 114-153, § 2(e), 130 Stat. 376, 381–82 (2016). With the
enactment of the DTSA, criminal misappropriation of a trade
secret became a predicate act under RICO on May 11, 2016.
See id. § 3(b), 130 Stat. at 382 (“Section 1961(1) of title 18,
United States Code, is amended by inserting ‘sections 1831
and 1832 (relating to economic espionage and theft of trade
secrets),’ before ‘section 1951.’”). In July 2017, Attia
amended his pleading to add RICO claims based on
Google’s alleged trade secret misappropriation. Google
removed the action to federal district court and moved to
dismiss. The district court granted the motion to dismiss the
Fourth Amended Complaint with leave to amend.
6                    ATTIA V. GOOGLE

    In the Fifth Amended Complaint, Attia asserted a new
DTSA claim. Attia also asserted two RICO claims: one
pursuant to 18 U.S.C. § 1962(c), for operation of an
enterprise through racketeering against Google, Inc. and
Flux Factory, Inc.; and the other pursuant to 18 U.S.C.
§ 1962(d) for conspiracy to violate sections 1962(a) and
1962(c) against all the defendants. With respect to the
DTSA and RICO claims, the Fifth Amended Complaint
emphasized that Google’s alleged misappropriation of the
trade secrets and RICO predicate acts occurred after the
DTSA’s enactment. Attia cited two separate actions as
evidence of Google’s pattern of racketeering: the copyright
infringement case, Oracle Am., Inc. v. Google LLC, 886 F.3d
1179, 1187 (Fed. Cir. 2018); and a trade secret
misappropriation case involving VSL Communications,
LTD (VSL).

    The district court dismissed Attia’s federal claims with
prejudice and declined to exercise supplemental jurisdiction
over the state law claims. In dismissing the Fifth Amended
Complaint, the district court found that Attia’s alleged trade
secrets were completely parallel to what Google disclosed in
2012 in the published patent applications. The district court
reasoned that the 2012 publication of Google’s patent
applications extinguished the relevant trade secrets, and it
cited Attia’s acknowledgment of this extinguishment in the
Fifth Amended Complaint. The district court held that Attia
lacks standing to assert DTSA or RICO claims, and stated
that neither a theory of estoppel nor continued use could
convert the 2012 publication of Google’s patent applications
into a DTSA violation or a RICO predicate act. The district
court also rejected Attia’s alternative argument that Google
is equitably estopped from pointing to the 2012 patent
publications and reasoned that “it would be inequitable to
                      ATTIA V. GOOGLE                        7

allow RICO or the DTSA to apply retroactively contrary to
[c]ongressional intent.”

                              II.

    We first consider whether Google’s pre-enactment
disclosures preclude Attia’s DTSA claim. On this point,
there are two related issues. We must determine whether, as
a matter of law, the pre-enactment disclosure of a trade
secret forecloses the possibility of a DTSA claim arising
from the continued use of the trade secret after enactment.
While several district courts in this circuit have considered
the issue, see, e.g., AlterG, Inc. v. Boost Treadmills LLC,
388 F. Supp. 3d 1133 (N.D. Cal. 2019); Avago Techs. U.S.
Inc. v. Nanoprecision Prod., Inc., No. 16-CV-03737-JCS,
2017 WL 412524 (N.D. Cal. Jan. 31, 2017), it is one of first
impression for this court. We then will consider whether,
even if the statute provides for a continued use theory of
liability, the publication in 2012 of Google’s patent
applications containing Attia’s EA trade secrets nevertheless
prevents Attia from asserting the DTSA claim.

                              A.

    Congress enacted the DTSA on May 11, 2016. Defend
Trade Secrets Act of 2016 § 2 (codified as amended at
18 U.S.C. § 1831 et seq.). The statute creates a private right
of action for “any misappropriation of a trade secret . . . for
which any act occurs on or after the date of the enactment of
[the] Act.” Id. at 381–82. The DTSA defines a “trade
secret” as information that “the owner thereof has taken
reasonable measures to keep . . . secret” and that “derives
independent economic value, actual or potential, from not
being generally known to . . . another person who can obtain
economic value from the disclosure or use of the
information.” 18 U.S.C. § 1839(3). The statute provides the
8                    ATTIA V. GOOGLE

following three definitions of “misappropriation”: (1) the
“acquisition of a trade secret of another by a person who
knows or has reason to know that the trade secret was
acquired by improper means;” (2) the disclosure of a trade
secret without the owner’s consent; and (3) the use of a trade
secret without the owner’s consent. Id. §§ 1839(5)(A),
(5)(B).

    With respect to misappropriations occurring both before
and after the statute’s enactment, the language of the DTSA
is distinct from other trade secret statutes. For example, the
Uniform Trade Secrets Act (UTSA) is a model statute that
sets out a private claim for the misappropriation of trade
secrets. Many states have adopted the UTSA to draft their
own trade secrets statutes. United States v. Chung, 659 F.3d
815, 825 & n.7 (9th Cir. 2011). The UTSA contains an anti-
continued use provision, stating that “[w]ith respect to a
continuing misappropriation that began prior to the effective
date,” it “does not apply to the continuing misappropriation
that occurs after the effective date.” Unif. Trade Secrets Act
§ 11 (Unif. Law Comm’n 1985). Unlike the UTSA, the
DTSA does not contain an anti-continued use provision.
This omission suggests that the DTSA is not limited to
misappropriation that only began after enactment of the
DTSA. At least one district court in this circuit has
highlighted the DTSA’s omission of such a provision to
determine that the statute applies to the continued use of a
trade secret where the misappropriation began prior to
enactment so long as acts of misappropriation continue to
occur post-enactment. See Cave Consulting Grp., Inc. v.
Truven Health Analytics Inc., No. 15-CV-02177-SI, 2017
WL 1436044, at *4–5 (N.D. Cal. Apr. 24, 2017). While the
DTSA states that “a continuing misappropriation constitutes
a single claim of misappropriation,” it does so only in the
context of the limitations period for claims pursuant to the
                     ATTIA V. GOOGLE                       9

DTSA. 18 U.S.C. § 1836(d). The parties do not dispute
whether Attia’s DTSA claim is time-barred, and the period
of limitations provision is not relevant to whether the DTSA
allows for claims of continued use.

    “As in any case of statutory construction, our analysis
begins with the language of the statute. To aid our inquiry,
we rely on our established rules of statutory construction.”
United States v. LKAV, 712 F.3d 436, 440 (9th Cir. 2013)
(citation omitted). “We also look to similar provisions
within the statute as a whole and the language of related or
similar statutes to aid in interpretation.” Id. Here, the
legislative history of the DTSA shows that Congress was
expressly aware of the UTSA and its structure. Congress
acknowledged that “[w]hile 48 states have adopted
variations of the UTSA, the state laws vary in a number of
ways and contain built-in limitations that make them not
wholly effective in a national and global economy.” H.R.
Rep. No. 114-529, at 198 (2016), reprinted in 2016
U.S.C.C.A.N. 195, 198. In contrast, Congress stated that the
DTSA would serve as a “needed update to Federal law” and
“provide a single, national standard for trade secret
misappropriation with clear rules and predictability for
everyone involved.” Id. at 200. Congress was aware of the
role and limitations of the UTSA as model legislation for the
states, and it recognized the DTSA and the UTSA as similar.
This is critical for purposes of our statutory interpretation
analysis. Congress’s omission in the DTSA of an anti-
continued use provision is, therefore, significant. If
Congress had intended to preclude claims arising from post-
enactment continued use that began prior to enactment, it
could have done so by incorporating the language in section
11 of the UTSA into the DTSA. That it did not include such
a provision in the DTSA evinces congressional intent for the
statute to apply also to post-enactment misappropriation that
10                   ATTIA V. GOOGLE

began prior to enactment. Accordingly, we hold that the
misappropriation of a trade secret prior to the enactment of
the DTSA does not preclude a claim arising from post-
enactment misappropriation or continued use of the same
trade secret.

                             B.

    We now turn to the second key issue of whether the
nature of Google’s 2012 disclosures prevents Attia from
asserting a DTSA claim. In 2011, with Attia’s permission
and knowledge that the patents would be available to the
public upon publication, Google filed patent applications
relating to EA. The patent applications were published in
2012. Attia also alleges that Google separately disclosed
trade secrets relating to EA to investors in 2012.

    We hold that Attia lacks standing to assert a claim
pursuant to the DTSA because Google’s 2012 patent
applications relating to EA extinguished the information’s
trade secret status. When we evaluate whether disclosure of
information destroyed its trade secret status—i.e., its
“independent economic value” from being kept secret, 18
U.S.C. § 1839(3), we “most often consider the degree to
which the secret information confers a competitive
advantage on its owner,” Chung, 659 F.3d at 826. “[T]he
analysis is fact-intensive and will vary from case to case.”
Id. However, it appears to us to be well-settled that
publication of information in a patent application eliminates
any trade secrecy. See Ultimax Cement Mfg. Co. v. CTS
Cement Mfg. Co., 587 F.3d 1339, 1355–56 (Fed. Cir. 2009)
(holding that the district court properly granted summary
judgment disposing of plaintiffs’ trade secret claims under
California law because plaintiffs could not prove the
existence of a trade secret where its trade secret had been
“disclosed in a patent,” making it “generally known to the
                       ATTIA V. GOOGLE                         11

public”); see also Stutz Motor Car of Am., Inc. v. Reebok
Int’l, Ltd., 909 F. Supp. 1353, 1359 (C.D. Cal. 1995), citing
Rototron Corp. v. Lake Shore Burial Vault Co., 712 F.2d
1214, 1215 (7th Cir. 1983) (“It is well established that the
disclosure of a trade secret in a patent places the information
comprising the secret into the public domain. Once the
information is in the public domain and the element of
secrecy is gone, the trade secret is extinguished. . . .”), aff’d,
113 F.3d 1258 (Fed. Cir. 1997). Attia admits that
publication of the EA information in Google’s patents
extinguished Attia’s trade secrets.

    District courts in this circuit have similarly determined
that, within the context of the DTSA, “a plaintiff has a viable
trade secret claim that would protect his proprietary
unpatented technology only if he reveals implementation
details and techniques beyond what was disclosed in his
patent.” AlterG, 388 F. Supp. 3d at 1146, quoting Aqua-
Lung Am., Inc. v. Am. Underwater Prod., Inc., 709 F. Supp.
2d 773, 788 (N.D. Cal. 2010). Attia has not done so here
and admits that its alleged trade secrets were completely
parallel to what was disclosed in Google’s published patent
applications.

    Thus, disclosure of a trade secret in a patent application
extinguishes the information’s trade secret status. This is
consistent with our holding regarding the continued use
theory of liability pursuant to the DTSA because the plain
text of the DTSA requires the existence of a trade secret to
establish a claim. 18 U.S.C. § 1836(b)(1). Therefore,
disclosure of a trade secret prior to the DTSA’s enactment
does not preclude a misappropriation claim arising after
enactment, to the extent that the pre-enactment disclosure
was not a patent publication. Accordingly, while a fact-
intensive analysis might be warranted to determine if
12                   ATTIA V. GOOGLE

Google’s 2012 disclosure to investors destroyed trade
secrecy, the 2012 publication of Google’s patent
applications placed the information in the public domain and
necessarily extinguished its trade secret status. Attia lacks
standing to assert a DTSA claim relating to the patented
information. The district court properly dismissed Attia’s
DTSA claim.

                             C.

    In the alternative, Attia argues that Google is equitably
estopped from pointing to the 2012 publication of its patent
applications to defend against Attia’s DTSA claim. Attia
cites out-of-circuit cases for the proposition that “a
wrongdoer who has made an unlawful disclosure of
another’s trade secrets cannot assert that publication to
escape the protection of trade secret law.”            Syntex
Ophthalmics, Inc. v. Tsuetaki, 701 F.2d 677, 683 (7th Cir.
1983). However, in Syntex, the court recognized that “the
holder of the trade secret did not make an election to obtain
a patent.” Id. Here, the Fifth Amended Complaint states that
“Mr. Attia did not believe that this conduct by Google
[Google’s 2012 filing of patent applications] was wrongful,
because he conditionally authorized Google to use his trade
secrets and other proprietary information to develop Project
Genie, but on the condition that Google compensate him for
such use as provided in the SOW.”

    Syntex is neither binding on this court nor applicable
given Attia and Google’s agreement. Attia cites no authority
to suggest that, in the context of the DTSA, a party is
estopped from pointing to its pre-enactment disclosure in a
patent application to defend against a misappropriation
claim arising from post-enactment continued use.
Moreover, even if Google were estopped from doing so, it is
                      ATTIA V. GOOGLE                       13

not clear that we could ignore the trade secrets’ nonexistence
after the DTSA’s enactment or any time after 2012.

                             III.

    Lastly, we address Attia’s RICO and RICO conspiracy
claims. In order to assert a RICO claim pursuant to 18
U.S.C. § 1962(c), a plaintiff must allege a pattern of
racketeering activity by showing “that the racketeering
predicates are related, and that they amount to or pose a
threat of continued criminal activity.” H.J. Inc. v.
Northwestern Bell Tel. Co., 492 U.S. 229, 239 (1989). “A
pattern is defined as ‘at least two acts of racketeering
activity’ within ten years of each other.” Howard v. Am.
Online, Inc., 208 F.3d 741, 749 (9th Cir. 2000), quoting
18 U.S.C. § 1961(5).

    Attia argues that “the Google Defendants’ modus
operandi [or] repeated method of commission is to induce
inventors to reveal their proprietary information through
NDAs [non-disclosure agreements] then wrongfully use or
publish the proprietary information to the exclusion of the
inventors.” Attia cites two separate actions as evidence of
this pattern of racketeering: (1) Oracle Am., Inc., 886 F.3d
at 1187; and (2) a case involving VSL. We agree with the
district court’s reasoning that neither case is sufficiently
related to this one. As the district court explained, Attia’s
allegations with respect to Oracle do not present a similar
modus operandi and only describe failed license
negotiations, without mention of an NDA. The district court
also determined that, with respect to the second case, “the
allegations relating to VSL are similar to those here,” but the
alleged conduct is not sufficiently related because it does not
“embrace criminal acts that have the same or similar
purposes, results, participants, victims, or methods of
commission, or otherwise are interrelated by distinguishing
14                    ATTIA V. GOOGLE

characteristics and are not isolated events.” Attia fails to
establish a pattern of racketeering because he has not
identified two sufficiently related predicate acts.

    We also agree with the district court that, “even if
Plaintiffs’ allegations were sufficient to establish a pattern of
racketeering against Google LLC, they do not allege that
either of these [actions] involved any of the Defendants
except Google LLC—such that no pattern is established as
to the individual Defendants or Flux Factory.” The district
court properly dismissed Attia’s RICO and RICO conspiracy
claims.

     AFFIRMED.