Cisco Systems, Inc. v. Dexon Computer, Inc.

District Court, N.D. California·Decided September 14, 2023·No. 3:20-cv-04926·Unknown

Opinion

1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 CISCO SYSTEMS, INC., et al., Case No. 20-cv-04926-CRB

9 Plaintiffs,

ORDER RE: ADMINISTRATIVE 10 v. MOTIONS TO FILE UNDER SEAL

11 DEXON COMPUTER, INC., et al., 12 Defendants.

13 Plaintiff Cisco Systems, Inc. (“Cisco”) and Defendant Dexon Computer, Inc. 14 (“Dexon”) have filed many, many administrative motions to seal portions of the parties’ 15 confidential or highly confidential material. This Order addresses the motions to seal that 16 relate to Cisco’s Motion for a Preliminary Injunction (dkt. 202) and Cisco’s Motion for 17 Leave to File a Second Amended Complaint (dkt. 205).1 As more particularly set forth 18 herein, the Court evaluates and resolves each of the parties’ sealing requests in these 19 various motions. 20 I. LEGAL STANDARD 21 A. Good Cause vs. Compelling Reason 22 We must first decide the standard for sealing that applies to Cisco’s motions and the 23 documents underlying them. Courts in the Ninth Circuit apply two standards to determine 24 whether to allow a document supporting a motion to remain under seal: the “compelling 25 reasons” standard, Kamakana, 447 F.3d at 1178, or the “good cause” exception, see 26 27 1 Phillips ex rel. Estates of Byrd v. Gen. Motors Corp., 307 F.3d 1206, 1213–14 (9th Cir. 2 2002). Where a motion is “dispositive,” or “more than tangentially related to the merits of 3 a case,” the “compelling reasons” standard applies. Where the motion is “non-dispositive,” 4 or “unrelated, or only tangentially related, to the cause of action,” the “good cause” 5 standard applies. Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1098–1102 6 (9th Cir. 2016). 7 Dexon contends that, because a preliminary injunction motion is non-dispositive, 8 the Phillips “good cause” standard shall apply, but this argument misunderstands Ninth 9 Circuit precedent on this issue. In Center for Auto Safety, the Ninth Circuit decided 10 precisely the question to be resolved here: What standard should be applied to a 11 preliminary injunction motion which, while not strictly dispositive, was clearly relevant to 12 the merits of the case. 809 F.3d at 1102. The Court concluded that the “compelling 13 reasons” standard should apply because the motion was “more than tangentially related to 14 the merits,” in part because the relief the movant was seeking—“that Chrysler notify its 15 customers that there was a part in their vehicle which could require replacement and be 16 dangerous if it failed”—was one of the aspects of the ultimate relief plaintiffs sought in the 17 action as a whole. Id at 1102. So too here. In its prayer for relief in its complaint, Cisco 18 seeks to enjoin Dexon from selling counterfeit Cisco products; in its motion for a 19 preliminary injunction, Cisco seeks to enjoin Dexon from selling counterfeit Cisco 20 products. It would be difficult to find a motion that is more relevant to the merits than this 21 one. 22 Therefore, any documents put forth in support of that motion—though produced 23 pursuant to a protective order in the Texas Litigation—must meet the more stringent 24 “compelling reasons” standard to remain under seal.2 25 26 2 This standard also applies to any request to seal a portion of a complaint. See In re NVIDIA Corp. Derivative Litig., 2008 WL 1859067, at *3 (N.D. Cal. Apr. 23, 2008) (“[A] request to seal 27 all or part of a complaint must clearly meet the ‘compelling reasons’ standard and not the ‘good cause’ standard. While a complaint is not, per se, the actual pleading by which a suit may be B. Applying the “Compelling Reasons” Standard 1 In considering motions to seal, courts recognize “a strong presumption in favor of 2 access is the starting point.” Kamakana, 447 F.3d at 1178 (cleaned up). A request to seal 3 may be supported by compelling reasons if the documents or portions of documents at 4 issue are “sources of business information that might harm a litigant’s competitive 5 standing.” Ctr. for Auto Safety, 809 F.3d at 1097; see also Nixon, 435 U.S. at 598. “The 6 mere fact that the production of records may lead to a litigant's embarrassment, 7 incrimination, or exposure to further litigation will not, without more, compel the court to 8 seal its records.” Kamakana, 447 F.3d at 1179. Confidential business information in the 9 form of “license agreements, financial terms, details of confidential licensing negotiations, 10 and business strategies” can be “compelling reasons” to prevent competitors from 11 leveraging this information to harm the designating parties in future negotiations. See 12 Exeltis USA Inc. v. First Databank, Inc., No. 17-cv-04810-HSG, 2020 WL 2838812, at *1 13 (N.D. Cal. 2020) (citation omitted); In re Qualcomm Litig., No. 3:17-cv-0108-GPC-MDD, 14 2017 WL 5176922, at *2 (S.D. Cal. 2017). 15 If publicly disclosing that information would harm a designating party’s 16 competitive standing and divulge terms of confidential contracts or contract negotiations, 17 compelling reasons may exist to seal that information. See FTC v. Qualcomm Inc., No. 17- 18 cv-00220-LHK, 2019 WL 95922, at *3 (N.D. Cal. Jan. 3, 2019). However, the fact that 19 documents are subject to a protective order, or labeled as confidential under a protective 20 order, is not a compelling reason justifying continued sealing of the document if attached 21 to a dispositive motion. Foltz, 331 F.3d at 1136; see also Est. of Nunez by & through 22 Nunez v. Cnty. of San Diego, 386 F. Supp. 3d 1334 (S.D. Cal. 2019) (“[A] party does not 23 satisfy the compelling reasons standard to justify sealing documents merely by labeling 24 them as ‘CONFIDENTIAL.’”). 25 II. DISCUSSION 26 Under the compelling reasons standard, this Court proceeds to balance the interests 27 of the public in access to judicial records against the parties’ interest in sealing those 1 records. Ctr. for Auto Safety, 809 F.3d at 1092. We find that the designating parties have 2 satisfied the compelling reasons standard for some sealing requests but failed for others. 3 As described below, the Court denies the requests in whole or in part where either 4 Cisco or Dexon did not meet its burden to show that the at-issue portion could reveal 5 competitively damaging information sufficient to outweigh the public’s presumption of 6 public access to judicial records. Kamakana, 447 F.3d at 1178–79; Epic Games, Inc., 2021 7 WL 1925460, at *1, 4. For example, the Court denies several requests where the 8 designated material contains nothing more than conclusory allegations with no business 9 information. Where the requests are overbroad, the Court orders the parties to tailor the 10 redactions to the competitively damaging information and unseal the rest. 11 A. Cisco’s Second Amended Complaint (Dkt. 245) 12 Cisco filed an administrative motion to seal confidential Dexon material in its 13 second amended complaint. Dkt. 244. Dexon seeks sealing of fifty-two of those 14 statements.3 Dkt. 252. The Court’s rulings on these requests are as follows: Portions of Materials Designating Reasons Proffered Ruling 15 Requested to be Sealed Party for Sealing 16 Portions of ¶ 33 Dexon Proprietary Business GRANTED. 17 Record, containing sales information 18 Portions of ¶ 35 Dexon Proprietary Business DENIED. Dexon did Record, containing not meet its burden of 19 supplier information showing competitive 20 harm. 21 Portions of ¶ 37 Dexon Confidential Client GRANTED only as Communications consistent with the 22 redactions proposed 23 in Dkt. 208 at 2, lines 24 23–28. Entirety of ¶ 38 Dexon Confidential Client GRANTED only as 25 Communications consistent with the 26

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Cisco Systems, Inc. v. Dexon Computer, Inc., (N.D. Cal. 2023).

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