Blockchain Innovation, LLC v. Franklin Resources, Inc.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 BLOCKCHAIN INNOVATION, LLC, Case No. 21-cv-08787-TSH

8 Plaintiff, ORDER RE: MOTIONS TO FILE 9 v. UNDER SEAL

10 FRANKLIN RESOURCES, INC., et al., Re: Dkt. Nos. 264-66, 281 11 Defendants.

12 13 I. INTRODUCTION 14 This order addresses four motions to seal pursuant to Civil Local Rule 79-5 that are 15 pending in connection with Plaintiff Blockchain Innovation, LLC’s Motion to Strike Improper 16 Expert Rebuttal Opinions. ECF No. 262. On August 9, 2024, Plaintiff filed a motion to seal (ECF 17 No. 264) and two requests for the Court consider whether to seal certain materials designated as 18 “Highly Confidential – Attorney’s Eyes Only” by Defendants1 (ECF Nos. 265-66). On August 23, 19 2024, Defendants filed a request for the Court to consider whether to seal certain materials 20 designated as “Highly Confidential – Attorney’s Eyes Only” by Plaintiff (ECF No. 281). For the 21 reasons set forth below, the Court GRANTS IN PART and DENIES IN PART the motions. 22 II. LEGAL STANDARD 23 The Ninth Circuit has recognized “good cause” as “the proper standard” to evaluate sealing 24 involving “previously sealed discovery attached to a nondispositive motion.” Pintos v. Pac. 25 Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010) (citing Phillips ex rel. Estates of Byrd v. Gen. 26 Motors Corp., 307 F.3d 1206, 1213 (9th Cir.2002)). Under this standard, “a strong presumption in 27 1 favor of access is the starting point.” Kamakana v. City and Cnty. of Honolulu, 447 F.3d 1172, 2 1178 (9th Cir. 2006) (quotations omitted). The “good cause” standard requires a “particularized 3 showing” that “specific prejudice or harm will result” if the information is disclosed. Phillips ex 4 rel. Estates of Byrd, 307 F.3d at 1210-11 (quotation omitted); see also Fed. R. Civ. P. 26(c). 5 “Broad allegations of harm, unsubstantiated by specific examples of articulated reasoning” will 6 not suffice. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (quotation 7 omitted). 8 Civil Local Rule 79-5 supplements this standard. Where, as here, a filing party (the 9 “Filing Party”) seeks to seal a filed document because that document has been designated as 10 confidential by another party (the “Designating Party”) the Filing Party must file an 11 Administrative Motion to Consider Whether Another Party’s Material Should Be Sealed. Civ. L. 12 R. 79-5(f). This motion must identify each document or portions thereof for which sealing is 13 sought. Id. “Within 7 days of the motion's filing, the Designating Party must file a statement 14 and/or declaration” including “a specific statement of the applicable legal standard and the reasons 15 for keeping a document under seal.” Civ. L. R. 79-5(c)(1), (f). That statement must include (i) the 16 legitimate private or public interests that warrant sealing; (ii) the injury that will result if sealing is 17 denied; and (iii) why a less restrictive alternative to sealing is not sufficient. Civil L. R. 79- 18 5(c)(1). A failure to file a statement or declaration may result in the unsealing of the provisionally 19 sealed document without notice to the Designating Party. Id. 20 A. Plaintiff’s Motions 21 1. Plaintiff’s Motion to Seal 22 In its first motion, Plaintiff moves to seal Exhibits 1, 2, 3, 8, and 11 to the Declaration of 23 Carder W. Brooks, filed in support of its motion to strike, arguing they contain descriptions of its 24 alleged trade secrets and disclosure would “destroy their trade secret nature” and “cause 25 competitive harm.” ECF No. 264. Specifically, Plaintiff moves to seal portions of the expert 26 reports of Dr. Seoyoung Kim (Exhibit 1, highlighted portions on page 28-174); Nigel Jones 27 (Exhibit 2, highlighted portions on pages 158-61 and 260-62); Anthony Tu-Sekine (Exhibit 3, 1 pages 23-85, 89, and 92-96); and Philip Green (Exhibit 11, highlighted portions on pages 63-64). 2 Defendants filed a response arguing Plaintiff’s asserted bases for sealing are unsupported 3 because (1) Plaintiff has not produced any evidence to support its assertion that the alleged trade 4 secrets qualify as legally protectable trade secrets, and (2) that the undisputed evidence in this case 5 establishes that Plaintiff is not an operating entity and has made no use or even attempted use of 6 the alleged trade secrets. ECF No. 268. However, Defendants “recognize that an administration 7 motion to seal is not the appropriate medium for deciding Plaintiff’s claim that the ATS qualify as 8 legally protectable trade secrets. Thus, while reserving all rights to dispute the merits of Plaintiff’s 9 claims, Defendants do not oppose Plaintiff’s Motion.” Id. 10 Courts in this district have routinely sealed documents that contain trade secret information 11 and confidential or proprietary information that may cause competitive harm if disclosed. See 12 Prolifiq Software Inc. v. Veeva Sys. Inc., 2014 WL 2527148, at *3 (N.D. Cal. June 4, 2014) 13 (granting a motion to seal where “the documents contain proprietary and confidential information 14 that include[d]” purported trade secrets); Dugan v. Lloyds TSB Bank, PLC, 2013 WL 1435223, at 15 *2 (N.D. Cal. Apr. 9, 2013) (“There may be ‘good cause’ to seal records that . . . contain trade 16 secrets, contain confidential research, development or commercial information, or if disclosure of 17 the information might harm a litigant’s competitive standing”) (citation omitted). Courts in this 18 district have also sealed documents relating to the technical operation of products, including 19 descriptions of source code. See, e.g., MasterObjects, Inc. v. Amazon.com, Inc., 2022 WL 20 4074653, at *1, (N.D. Cal. Sept. 5, 2022) (granting party’s request to seal “statements describing 21 ‘proprietary and highly confidential software architecture and source code’”); Finjan, Inc. v. 22 Proofpoint, Inc., 2016 WL 7429304, at *2 (N.D. Cal. Feb. 9, 2016) (granting request to seal 23 portions of exhibits containing information about “technical operation of the products”). In 24 addition, the Court has previously sealed materials relating to Plaintiff’s asserted trade secrets, 25 including materials produced by Defendants that Plaintiff contends incorporate its trade secrets. 26 See ECF Nos. 180, 193. Accordingly, the Court finds Plaintiff has made a particularized showing 27 that specific prejudice or harm will result if the information is disclosed and therefore GRANTS 1 2. Plaintiff’s Motions to Consider Whether Another’s Material Should Be Sealed 2 In its second motion, Plaintiff requests the Court consider whether to seal certain materials 3 submitted as exhibits to the Brooks Declaration designated as “Highly Confidential – Attorney’s 4 Eyes Only” by Defendant Roger Bayston. ECF No. 265. Bayston designated the following 5 documents: Rebuttal Expert Report of Philip Green (Exhibit 11); excerpts from the transcript of 6 the August 2, 2024 deposition of Mr. Green (Exhibit 13); and Expert Report of Michael A. 7 Fahlman (Exhibit 4). Plaintiff also requests the Court consider whether certain portions of its 8 motion to strike should be sealed, as it quotes from and discusses these documents. ECF No. 265, 9 Ex. A. 10 In its third motion, Plaintiff requests the Court consider whether to seal certain materials 11 submitted as exhibits to the Brooks Declaration designated as “Highly Confidential – Attorney’s 12 Eyes Only” by Defendants Franklin Resources, Inc. d/b/a Franklin Templeton, FT FinTech 13 Holdings, LLC, Franklin Templeton Companies, LLC, and Jennifer Johnson. ECF No. 266. 14 These defendants designated the following documents: Expert Report of Dr. Seoyoung Kim 15 (Exhibit 1); Rebuttal Expert Report of Philip Green (Exhibit 11); Transcript of the July 30, 2024 16 deposition of Stephen Melvin (Exhibit 9); Transcript of the August 2, 2024 deposition of Philip 17 Green (Exhibit 13); Expert Report of Dr. Stephen Melvin (Exhibit 8); excerpts from the Expert 18 Report of Nigel Jones (Exhibit 2); excerpts from the Expert Report of Anthony Tu-Sekine (Exhibit 19 3); Expert Report of Michael A. Fahlman (Exhibit 4); and an email chain between Plaintiff’s 20 counsel and Defendants’ counsel, dated from August 6 to August 7, 2024 (Exhibit 17). ECF No. 21 266. Plaintiff also notes that each of Exhibits 1, 2, 3, 8, and 11 contain its confidential 22 information, as discussed in its first motion, ECF No. 264. As with its second motion, Plaintiff 23 also requests the Court consider whether certain portions of its motion to strike should be sealed, 24 as it quotes from and discusses these documents. ECF No. 266, Ex. A. 25 Defendants filed a combined response to these motions, requesting the Court seal portions 26 of Exhibits 2, 4, 8, 11, and 13 because they reveal, among other things, commercially sensitive, 27 proprietary, and technical information of Defendants, and sensitive personal and private 1 these reports also discuss and rely on materials that reveal highly-sensitive, confidential business 2 and technical information belonging to Franklin, including internal business strategy and corporate 3 decisionmaking, as well as internal budgeting and finances. Courts regularly hold that good cause 4 supports sealing such information because disclosing information related to a company’s business 5 strategy and finances can impose harm by allowing competitors to capitalize on a business’s 6 internal business decisions. See Big Run Studios Inc. v. AviaGames Inc., 2024 WL 1364734, at *2 7 (N.D. Cal. Mar. 28, 2024) (good cause to seal “[c]onfidential business information”); Bos. Ret. 8 Sys. v. Uber Techs., Inc., 2023 WL 6132961, at *1 n.2 (N.D. Cal. Sept. 19, 2023) (good cause 9 supports sealing portions of exhibits that reveal “business strategy and corporate decision 10 making”). 11 Defendants also note that portions of Exhibits 2 and 8 reveal Franklin’s confidential, trade 12 secret source code, discuss the structure of the same, and otherwise reveal highly confidential 13 technical information about the operation of Franklin’s products and services. Defendants argue 14 that revealing these confidential technical details about Franklin’s products and services would 15 likely result in significant competitive injury to Franklin, because it could allow Franklin’s 16 competitors to gain an unfair business advantage over Franklin based on confidential and non- 17 public information. In view of the likely competitive harm, courts regularly conclude that good 18 cause supports sealing confidential technical information about a party’s products and services, 19 such as that at issue here. See Finjan, 2016 WL 7429304, at *1 (sealing “information about the 20 technical operation of the [party’s] products”). 21 Finally, Defendants note Dr. Melvin’s report (Ex. 8) and excerpts of Mr. Green’s 22 deposition (Ex. 13) also include personal and confidential information, including their personal 23 residence addresses, email addresses, and phone numbers. Good cause supports sealing such 24 information because the “legitimate interest in ensuring the privacy of personal information 25 outweighs the public’s interest in access to court filings.” Richter v. Oracle Am., Inc., 2023 WL 26 5663217, at *1 (N.D. Cal. Aug. 30, 2023). 27 Accordingly, the Court GRANTS Plaintiff’s motion to seal Exhibits 2, 4, 8, 11, and 13. 1 the redacted version of Plaintiff’s motion, Plaintiff itself states it “does not believe that anything in 2 the Motion itself is confidential,” and that it filed a redacted version “out of an abundance of 3 caution.” ECF No. 265 at 3, n.1; ECF No. 266 at 2, n.1. Accordingly, the Court DENIES 4 Plaintiff’s requests as to the redacted version of its motion to strike. Plaintiff shall file the 5 unredacted motion to strike in the public record no sooner than three days and no later than seven 6 days from the date of this order. 7 As to Exhibit 9 (Dr. Melvin’s deposition excerpts), neither Plaintiff nor Defendants have 8 shown good cause exists to seal this exhibit. Accordingly, the Court DENIES Plaintiff’s requests 9 as to Exhibit 9. Plaintiff shall file Dr. Melvin’s deposition excerpts in the public record no sooner 10 than three days and no later than seven days from the date of this order. 11 As to Exhibits 1 and 3, although Defendants do not request they be sealed, as discussed 12 above, Plaintiff has made a particularized showing that specific prejudice or harm will result if the 13 information in these exhibits is disclosed. Accordingly, the Court GRANTS Plaintiff’s motion as 14 to Exhibits 1 and 3. 15 B. Defendants’ Motion 16 In their motion, Defendants request the Court consider whether excerpts from the expert 17 report of Nigel Jones should be filed under seal because Plaintiff designated this document as 18 “Highly Confidential – Attorney’s Eyes Only.” ECF No. 281. Defendants submitted the excerpts 19 as an exhibit to their opposition to Plaintiff’s motion to strike. Simmons Decl., Ex. A, ECF No. 20 280-1. In its response, Plaintiff requests the Court seal only a portion of Mr. Jones’s report. ECF 21 No. 288. Specifically, Plaintiff requests the Court seal portions of page 4 because they contain 22 descriptions of aspects of Plaintiff’s asserted trade secrets. Plaintiff filed a redacted version of 23 Exhibit A at ECF 288-2 and an unredacted version with the redacted portion of page 4 highlighted 24 in yellow at ECF No. 289. 25 As discussed above, courts in this district have routinely sealed documents that contain 26 trade secret information and confidential or proprietary information that may cause competitive 27 harm if disclosed. See Prolifiq Software Inc., 2014 WL 2527148, at *3; Dugan, 2013 WL 1 secrets). Accordingly, the Court finds Plaintiff has made a particularized showing that specific 2 || prejudice or harm will result if the information is disclosed and therefore GRANTS Defendants’ 3 || motion as to the highlighted portions of Exhibit A. As Plaintiff has already filed the redacted and 4 unredacted versions of Exhibit A, no further action is required. Because Exhibit A to the 5 Simmons Declaration contains the unredacted material (ECF No. 281-2), it shall remain under 6 seal. 7 I. CONCLUSION 8 For the reasons stated above, the Court GRANTS IN PART and DENIES IN PART the 9 || parties’ motions as follows: 10 1) Plaintiff's motion (ECF No. 264) is GRANTED in full. 11 2) Plaintiffs motions (ECF Nos. 265-66) are GRANTED as to Exhibits 1-4, 8, 11, and 12 13. Plaintiff’s motions are DENIED as to Ex. A (motion to strike) and Ex. 9 (Dr. 5 13 Melvin’s deposition excerpts). Plaintiff shall file these exhibits in the public record no 14 sooner than three days and no later than seven days from the date of this order. 3 15 3) Defendants’ motion (ECF No. 281) □□ GRANTED as to the highlighted portions on a 16 page 4 of Mr. Jones’s report and DENIED as to the remainder of the exhibit. As 3 17 Plaintiff has already filed the redacted and unredacted versions of Exhibit A, no further 18 action is required. Because Exhibit A to the Simmons Declaration contains the 19 unredacted material (ECF No. 281-2), it shall remain under seal. 20 IT IS SO ORDERED. 21 22 Dated: October 3, 2024 23 AY \ . Lj THOMAS S. HIXSON United States Magistrate Judge 25 26 27 28