HKM Enterprises, Inc D/B/A Adaptive Launch Solutions v. Parsons Government Services, Inc., a Nevada Corporation and Parsons Corporation, a Delaware Corporation

• Court: District Court, C.D. California
• Decided: March 24, 2026
• Docket: 2:23-cv-10592
• Status: Unknown

Opinion

1 O 2

7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9

10 Case No.: 2:23-cv-10592-MEMF-PD HKM ENTERPRISES, INC D/B/A ADAPTIVE

11 LAUNCH SOLUTIONS, ORDER DENYING MOTION TO DISMISS 12 Plaintiff, [DKT. NO. 65] AND GRANTING REQUEST FOR JUDICIAL NOTICE [DKT. NO. 66] 13 v.

15 PARSONS GOVERNMENT SERVICES, INC., A NEVADA CORPORATION AND 16 PARSONS CORPORATION, AND DELAWARE CORPORATION, 17 Defendants. 18 19 20 21 Before the Court are the Motion to Dismiss and Request for Judicial Notice filed by 22 Defendants Parsons Government Services, Inc. and Parsons Corporation, Dkt. Nos. 65 (“Motion”), 23 66 (“RJN”). The Court finds this matter appropriate for resolution without oral argument. See Fed. 24 R. Civ. P. 78(b); C.D. Cal. L.R. 7-15. For the reasons stated herein, the Court DENIES the Motion to 25 Dismiss. 26 / / / 27 / / / 28 / / / 1 2 3 I. Background 4 The Court has already discussed the background of this case at length in its Order Granting in 5 Part Motions to Dismiss. See Dkt. No. 41 (“First MTD Order”). The Court will discuss only the 6 procedural background in this Order.1 7 A. Procedural History 8 Plaintiff HKM Enterprises Inc. d/b/a Adaptive Launch Solutions (“ALS”) filed suit in this 9 Court on December 18, 2023. See Dkt. No. 1 (“Complaint”). ALS brought seven causes of action 10 against Parsons Government Services, Inc. (“Parsons Government”) and Parsons Corporation 11 (“Parsons”; together with Parsons Government, “Defendants”): (1) breach of contract; (2) 12 anticipatory breach of contract; (3) fraudulent inducement; (4) breach of the covenant of good faith 13 and fair dealing; (5) violation of California Business and Professions Code Section 17200 (Unfair 14 Competition Law or “UCL”); (6) declaratory relief as to the meaning of the IDIQ Contract; and (7) 15 preliminary injunctive relief. See generally id. 16 Defendants each filed a motion to dismiss on February 8, 2024. Dkt. Nos. 24, 25. The Court 17 granted in part and denied in part the motions to dismiss. First MTD Order. The Court granted ALS 18 leave to file an amended complaint. Id. at 22. 19 On September 9, 2024, ALS filed the First Amended Complaint. Dkt. No. 42 (“1AC”). The 20 1AC alleges nine causes of action, some of which are new: (1) breach of contract; (2) breach of 21 implied joint venture/partnership agreement, (3) fraud; (4) breach of the covenant of good faith; (5) 22 violation of the UCL; (6) declaratory relief; (7) misappropriation of trade secrets in violation of the 23 California Uniform Trade Secrets Act; (8) misappropriation of trade secrets in violation of the 24 Defend Trade Secrets Act; and (9) unjust enrichment. See generally 1AC. 25 26 27 1 This Order states facts taken from the allegations in Plaintiff HKM Enterprises Inc.’s Second Amended Complaint, Dkt. No. 63 (“2AC”), unless otherwise indicated. For the purposes of this Order, the Court treats the factual allegations 28 in the 2AC as true, but at this stage of the litigation, the Court makes no finding on the truth of these allegations, and is 1 On October 23, 2024, Defendants filed a motion to dismiss the 1AC. Dkt. No. 46. The 2 Motion includes a request for judicial notice. Dkt. No. 46-2. The Motion was fully briefed. Dkt. Nos. 3 47, 48. On February 25, 2025, the Court issued an Order Granting in Part Defendants’ Motion to 4 Dismiss the 1AC with leave to amend. Dkt. No. 51 (“Second MTD Order”). The Second MTD Order 5 also granted Defendants’ October 23, 2024 Request for Judicial Notice. Id. 6 On March 13, 2025, the Court Ordered ALS to file a trade secret information statement and 7 file an amended complaint. On April 28, 2025, ALS filed a Second Amended Complaint. Dkt. No. 8 63 (“2AC”). The 2AC alleged five causes of action: : (1) breach of contract; (2) fraud; (3) breach of 9 the implied covenant of good faith and fair dealing; (4) misappropriation of trade secrets in violation 10 of the California Uniform Trade Secrets Act; and (5) misappropriation of trade secrets in violation of 11 the Defend Trade Secrets Act. See generally 2AC. 12 On May 12, 2025, Defendants filed the instant Motion. Motion. On June 23, 2025, ALS filed 13 an Opposition to the Motion. Dkt. No. 72 (“Opposition”). On July 3, 2025, Defendants filed a Reply 14 in Support of their Motion. Dkt. No. 75 (“Reply”). 15 REQUEST FOR JUDICIAL NOTICE [DKT. NO. 66] 16 I. Applicable Law 17 “[A] court may judicially notice a fact that is not subject to reasonable dispute because it: 18 (1) is generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and 19 readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 20 201(b). While “undisputed matters of public record” are judicially noticeable, a court may not take 21 notice of disputed facts in public records. Lee, 250 F.3d at 689; see also MGIC Indem. Corp. v. 22 Weisman, 803 F.2d 500, 504 (9th Cir. 1986). 23 Courts in this district have routinely granted requests for judicial notice as to the U.S. 24 Copyright Office’s Public Records Catalogue. See, e.g., Evans v. NBCUniversal Media, LLC, No. 25 CV 21-0984-CBM-PD(x), 2021 WL 4513624, at *2 (C.D. Cal. July 23, 2021) (granting judicial 26 notice of the presence of movie title in USCO Public Catalogue); Fisher v. Nissel, No. CV 21-5839- 27 CBM-(KSx), 2022 WL 16961479, at *3–4 (C.D. Cal. Aug. 15, 2022) (granting judicial notice as to 28 multiple printouts from the USCO’s Public Records Catalogue). 1 II. Discussion 2 In support of the Motion, Defendants request the Court judicially notice four documents. See 3 RJN. Plaintiff has not filed an opposition to the request. The documents are listed below (with 4 descriptions based on Defendants’ descriptions of the documents): 5 1. Exhibit A – A true and correct copy of United States Patent No. 8,608,114, dated 6 December 17, 2013, which is publicly available through the United States Patent and 7 Trademark Office’s (“USPTO”) Patent Public Search Basic, available at 8 https://ppubs.uspto.gov/pubwebapp/static/pages/ppubsbasic.html; 9 2. Exhibit B – A true and correct copy of United States Patent No. 7,036,773, dated May 2, 10 2006, which is publicly available through the USPTO Patent Public Search Basic, 11 available at https://ppubs.uspto.gov/pubwebapp/static/pages/ppubsbasic.html; 12 3. Exhibit C – A true and correct copy of Guidance for the Contractor Performance 13 Assessment Reporting System (CPARS), July 2024, which is publicly available at 14 https://www.cpars.gov/cparsweb/assets/documents/CPARS-Guidance.pdf; and 15 4. Exhibit D – a true and correct copy of the Trade Secret Identification Document, and 16 accompanying exhibits, filed by ALS in this action, Dkt. No. 60. 17 See generally RJN. 18 Exhibits A-D are public records or filings in this case, where their existence and contents (i.e., the 19 fact that this document exists and that it contains the words it contains) cannot reasonably be 20 disputed, and thus the Court will take judicial notice. Accordingly, the Court GRANTS Defendants’ 21 Request for Judicial Notice as to all documents, Exhibits A-D. 22 23 MOTION TO DISMISS [DKT. NO. 65] 24 I. Applicable Law 25 Federal Rule of Civil Procedure 12(b)(6) allows an attack on the pleadings for “failure to state a 26 claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss, a 27 complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 28 plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 1 Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads 2 factual content that allows the court to draw the reasonable inference that the defendant is liable for 3 the misconduct alleged.” Id. 4 The determination of whether a complaint satisfies the plausibility standard is a “context-specific 5 task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 6 679. Generally, a court must accept the factual allegations in the pleadings as true and view them in 7 the light most favorable to the plaintiff. Park v. Thompson, 851 F.3d 910, 918 (9th Cir. 2017); Lee v. 8 City of L.A., 250 F.3d 668, 679 (9th Cir. 2001). But a court is “not bound to accept as true a legal 9 conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 10 555). 11 As a general rule, leave to amend a dismissed complaint should be freely granted unless it is 12 clear the complaint could not be saved by any amendment. See Fed. R. Civ. P. 15(a); Manzarek v. St. 13 Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). 14 II. Discussion 15 As discussed in further detail below, the Court DENIES the Motion. ALS has adequately 16 pleaded all of its claims. 17 A. ALS Has Adequately Pleaded Its Claim for Breach of Contract (First Cause of Action). 18 19 ALS alleges the following two purported breach of contract claims: (1) misuse of ALS’s 20 intellectual property beyond the scope of the licensing agreement, 2AC ¶ 119; and (2) disclosure of 21 confidential material in breach of the confidentiality provision of the IDIQ Contract, id. ¶ 122. The 22 Court evaluates each alleged breach and finds that ALS has sufficiently alleged a breach of contract 23 claim. 24 i. ALS Has Adequately Pleaded Its Claim for Breach of Contract (First Cause of Action) Based on Defendants’ Misuse of Its Intellectual Property Beyond 25 the Scope of the Licensing Provision. 26 In the Second MTD Order, the Court found that ALS had not adequately pleaded harm for its 27 breach of contract claim based on Defendants’ misuse of ALS’s intellectual property. Second MTD 28 1 Order at 8. Specifically, the Court held that ALS failed to allege under what theory its request for 2 recovery is premised, or how it was harmed by Defendants’ alleged misuse. Id. In the Second MTD 3 Order, this Court also held that ALS does not need to allege the existence of trade secrets to assert a 4 claim for breach of contract under the IDIQ Contract’s licensing provision. Id. 5 The elements of a breach of contract claim are: (1) the existence of a contract; (2) Plaintiffs’ 6 performance of the contract; (3) defendant’s material breach of the contract; and (4) damages to 7 plaintiff resulting from the breach. Abdelhamid v. Fire Ins. Exch., 106 Cal. Rptr. 3d 26, 32 (Cal. Ct. 8 App. 2010). 9 Defendants argue that the 2AC does not demonstrate that Defendants’ use of ALS’s 10 intellectual property went beyond the scope of the IDIQ Contract, stating that their conduct was 11 expressly permitted by the contract. Motion at 6-7; Reply at 2-3. Even if the Court found 12 Defendants’ use was excessive, Defendants posit that ALS has again failed to properly allege 13 damages. Id. at 7-8. 14 ALS asserts that any use of its intellectual property was limited to the fulfillment of the 15 LMSI contract and that it has adequately pleaded reliance damages. Opposition at 6-8. 16 First, as held in the Second MTD Order, ALS sufficiently alleged a contract: the licensing 17 provision of the IDIQ Contract. Second MTD Order at 9. Second, ALS has alleged its compliance 18 with the terms and conditions of the IDIQ Contract. 2AC ¶ 125. Third, the Court finds that ALS has 19 sufficiently alleged Defendants’ breach. Section H.8 states: “[ALS] grants to [Defendants] an 20 irrevocable, perpetual . . . license to use, execute, reproduce, display, perform, and prepare derivative 21 works . . . for the purpose of executing the LMSI prime contract.” Dkt. No. 63-1 (“Ex. A”) at 21 22 (emphasis added). Section C sets forth ALS and Defendants as the personnel to the IDIQ contract. 23 Id. at 8. When read together, the IDIQ Contract provides Defendants with an irrevocable and 24 perpetual license to utilize ALS’s intellectual property in collaboration with ALS with respect to the 25 LMSI program. Opposition at 6. By alleging that Defendants used ALS’s intellectual property after 26 the IDIQ contract ceased, ALS sufficiently pleads Defendants’ material breach. 2AC ¶¶ 119-21. 27 And ALS has now adequately pleaded harm. In the 2AC, ALS claims that it suffered the loss 28 of business opportunities, the loss of sales, and the loss of reputation approximately amounting to 1 over $33,000,000. Id. ¶¶ 122-26. In doing so, ALS addressed the Court’s prior concerns regarding 2 recovery theories. Second MTD Order at 9. Although absent from the 2AC is any allegation or 3 discussion substantiating or explaining the amount sought, this is not required at the pleading stage, 4 as the Court acknowledges that ALS, through discovery, could plausibly present evidence pertaining 5 to its lost business damages. Opposition at 9; 2AC ¶ 122. ALS claims business opportunity losses, 6 stating that Defendants obtained “at least two” additional contracts by improperly using ALS’s 7 intellectual property. 2AC ¶¶ 120-22. ALS also alleges a “$4,600,000 and $16,800,000” loss related 8 to PCM sale, id. ¶ 123, as well as reputational harm due to consumer confusion over the ownership 9 of ALS’s intellectual property, id. ¶ 124. 10 Each alleged amount is not speculative simply because ALS has failed to point to which 11 contracts were lost or how ALS arrived at the amounts.2 Motion at 8-9. This is distinguishable from 12 Vestar Dev. II, LLC v. Gen. Dynamics Corp., 249 F.3d 958, 962 (9th Cir. 2001), where the Ninth 13 Circuit found that the plaintiff’s allegation for damages of $48,000,000 “too speculative” at the 14 pleading stage because the claim was for breach of an agreement to negotiate in which case the 15 damages are predicated on an unknown hypothetical outcome. Certainly, however, certain categories 16 of damages are prohibited: Section H.7 of the IDIQ Contract explicitly prohibits the recovery of 17 consequential damages, including lost profits. Ex. A at 21; see also Postal Instant Press, Inc. v. 18 Sealy, 51 Cal. Rptr. 3d 365, 368-69 (Cal. Ct. App. 1996); and California courts have held that 19 reputational harm is “not recoverable in an action for breach of contract,” which bars the requests for 20 reputational and goodwill damages. 2AC ¶ 124; Motion at 11; Reply at 4; Frangipani v. Boecker, 75 21 Cal. Rptr. 4d 407, 410-11 (Cal. Ct. App. 1998); Fletcher v. W. Nat’l Life Ins. Co., 89 Cal. Rptr. 78, 22 92 (Cal. 1970)..3 23 24 2 The Court acknowledges that ALS, through discovery, could potentially present evidence pertaining to its lost business damages. Opposition at 9; 2AC ¶ 122. But the Court is not inclined to permit ALS to proceed through the pleading stage 25 based on unsubstantiated allegations of lost contracts. 3 ALS also seeks reliance damages, injunctive relief, and nominal damages and claims that these allegations are 26 “sufficient to state a claim for breach of contract.” Opposition at 8; 2AC at Prayer for Relief. The 2AC does not plead reliance damages in connection with its breach of contract claim. 2AC ¶¶ 117-26. Injunctive relief is improper where 27 there is an adequate legal remedy—the monetary damages sought by ALS. Indep. Training & Apprenticeship Program v. Cal. Dep’t of Indus. Rels., 730 F.3d 1024, 1032 (9th Cir. 2013); Reply at 6. Nominal damages are not pled in the 28 1 For these reasons, the Motion is DENIED as to the breach of contract cause of action with 2 respect to misuse of intellectual property. 3 ii. ALS Has Adequately Pleaded a Claim for Breach of Contract (First Cause of Action) Based on Defendants’ Breach of the Confidentiality Provision. 4 5 In its Second MTD Order, the Court similarly determined that ALS did not adequately allege 6 harm as its claimed damage amount was speculative. Second MTD Order at 10. 7 The 2AC, like the 1AC, alleges that Defendants breached the confidentiality provision of the 8 IDIQ Contract. 2AC ¶ 122. 9 The damages asserted under this breach of contract claim are identical to the breach of 10 contract claim based on Defendants’ misuse of its intellectual property beyond the scope of the 11 licensing provision. As addressed above, therefore, the Court finds that ALS has adequately pleaded 12 its claim for a number of categories of damages. The Motion is therefore DENIED as to this claim. 13 B. ALS Has Adequately Pleaded Its Claim for Fraud (Second Cause of Action). 14 The Court previously found that ALS adequately alleged its claim for fraudulent inducement 15 based on Defendants’ pre-IDIQ Contract conduct.4 Second MTD Order at 13-14 (relying on 16 Waterman’s December 27, 2018, email, predating the final negotiations for the IDIQ Contract). 17 Defendants seek clarification on the scope of ALS’s fraud claim, requesting that the claim 18 “be limited to pre-IDIQ conduct and pre-IDIQ damages” pursuant the Court’s Second MTD Order. 19 Motion at 10-11; Reply at 6-7. ALS cites to the Court’s Second MTD Order, arguing that it has 20 properly pled a fraudulent inducement claim. Opposition at 11-13. 21 The 2AC reasserts its claims that Defendants fraudulently induced ALS to enter the IDIQ 22 Contract by guaranteeing a 30% workshare. See 2AC ¶¶ 128-35. For the fraud claim, the 2AC 23 24

25 Complaint and cannot suffice to survive a motion to dismiss a breach of contract claim. Reply at 6; Aguilera v. Pirelli Armstrong Tire Corp., 223 F.3d 1010, 1015 (9th Cir. 2000). 26 4 Fraud and fraudulent inducement, which ALS raised in the 1AC, 1AC, share the same elements. See Engalla v. 27 Permanente Med. Grp., Inc., 15 Cal.4th 951, 974 (1997) (“The elements of fraud . . . are: (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e. to 28 induce reliance; (d) justifiable reliance; and (e) resulting damage.”) (internal quotation marks omitted); MTD Order at 18 1 asserts that “conservative estimates” of damages “could be as high as $33 million related to lost 2 business and work.” Id. ¶ 135. 3 As the Court further explained in the Second MTD Order, “the reasonableness of ALS’s 4 reliance is a question of fact. See City Sols. v. Clear Channel Communs., Inc., 365 F.3d 835, 840–41 5 (9th Cir. 2004) (“Except in the rare case where the undisputed facts leave no room for a reasonable 6 difference of opinion, the question of whether a plaintiff’s reliance is reasonable is a question of 7 fact.”). Second MTD Order at 13-14. Defendants misinterpret the Court’s ruling, attempting to 8 suggest that ALS’s asserted damages are limited to conduct prior to the IDIQ Contract execution. 9 Reply at 7. ALS’s pleaded damages, which the Court previously determined were sufficient, Second 10 MTD Order at 14, are identical in the 1AC and 2AC. 1AC ¶ 138-39; 2AC ¶¶ 133-34. In the 2AC, 11 ALS has further detailed its alleged reliance damages by adding dollar amount estimates in 12 connection with its consistent pleadings. 2AC ¶ 135; Opposition at 7-8. 13 Thus, the Court does not find reason to limit ALS’s alleged damages. The Motion is 14 DENIED as to the cause of action for fraud. 15 C. ALS Has Adequately Pleaded Its Claim for Breach of the Implied Covenant of Good Faith and Fair Dealing (Third Cause of Action). 16 17 In its Second MTD Order, the Court found that ALS did not sufficiently plead harm from 18 Defendants’ advertisement and offer for sale of ALS’s intellectual property. Second MTD Order at 19 15. 20 In the 1AC, ALS had based this claim on the following grounds: (1) failure to provide ALS 21 30% of the workshare; (2) advertisement and offer for sale ALS’s intellectual property to third 22 parties; and (3) refusal to complete Past Performance Evaluation Forms for the ALS to obtain a 23 General Services Administration (“GSA”) Oasis Plus Award. 1AC ¶ 144. The 2AC reasserts the 24 second and third grounds and adds the following basis: Defendants exceeded the scope of the limited 25 license granted by ALS. 2AC ¶ 139; Motion at 12. 26 For a claim for breach of the implied covenant of good faith and fair dealing, the following 27 must be alleged: (1) the parties entered into a contract; (2) plaintiff did all, or substantially all of the 28 significant things that the contract required (or was excused from performance); (3) defendant acted 1 in such a way that prevented plaintiff from receiving the benefit under the contract; (4) defendant did 2 not act fairly and in good faith; and (5) plaintiff was harmed. Jud. Council of Cal. Civ. Jury 3 Instructions (“CACI”) No. 325 (Breach of Implied Covenant of Good Faith and Fair Dealing— 4 Essential factual Elements). “If the allegations do not go beyond the statement of a mere contract 5 breach and, relying on the same alleged acts, simply seek the same damages or other relief already 6 claimed in a companion contract cause of action, they may be disregarded as superfluous as no 7 additional claim is actually stated.” Careau & Co. v. Sec. Pac. Bus. Credit, Inc., 272 Cal. Rptr. 387, 8 400 (Cal. Ct. App. 1990). 9 As to the alleged refusal to complete evaluation forms, Defendants have demonstrated that 10 they were not contractually obligated to complete evaluation forms. Motion at 13; Reply at 7-8. 48 11 C.F.R. § 42.1502(a) requires performance evaluations be “entered into CPARS,” a Government 12 reporting tool. And an “Assessing Official,” how “must be a Government employee” is responsible 13 “for preparing, reviewing, signing, and processing the evaluations” pursuant to the CPARS 14 Guidance, which has been judicially noticed. GUIDANCE FOR THE CONTRACTOR PERFORMANCE 15 ASSESSMENT REPORTING SYSTEM (CPARS) § 3.5.4 (July 2024), 16 https://www.cpars.gov/cparsweb/assets/documents/CPARS-Guidance.pdf). Because Defendants are 17 not Assessing Officials, they were not obligated to complete performance evaluations or had the 18 ability to access CPARS.5 Motion at 13, Reply at 7-8. Accordingly, the Court finds that this basis for 19 this claim fails. Dismissal shall be without leave to amend, as the Court finds that this claim cannot 20 be saved by an amendment due to the unambiguous language in Sections 42.1502 and 3.5.4. See 21 Manzarek, 519 F.3d at 1031 (“Dismissal without leave to amend is improper unless it is clear . . . 22 that the complaint could not be saved by any amendment.”). 23 24

25 5 ALS relies on 48 C.F.R. § 42.1502(d) which states: “For single-agency task-order and delivery-order contracts, the contracting officer may require performance evaluations for each order.” Opposition at 15. Pursuant to the IDIQ 26 Contract, the “Contracting Officer” shall refer to Defendants. Ex. A at 33; Reply at 8. Therefore, Defendants were not required to complete evaluation forms on this basis. 27 Additionally, the Court determines that ALS’s argument that Defendants failed to complete performance evaluations that 28 are required by the General Services Administration similarly fails as there is no obligation under the IDIQ Contract or 1 As to the alleged failure to obtain ALS’s permission to advertise and market ALS’s 2 intellectual property to third-parties, the Court previously determined that ALS’s adequately pleaded 3 its claim, aside from damages. Second MTD Order at 11-14. 4 As to ALS’ new ground— Defendants exceeded the scope of the limited license granted by 5 ALS—the Court finds ALS sufficiently pleaded elements one through four for a claim for breach of 6 implied covenant of good faith and fair dealing. Motion at 12; Opposition at 14. The 2AC alleges 7 that Defendants’ “misuse of ALS’s Trade Secrets and Patents” exceeded the IDIQ Contract and also 8 that Defendants advertised and offered the sale of ALS’s intellectual property to third parties outside 9 the scope of the LMSI Contract. 2AC ¶ 139; Careau & Co., 272 Cal. Rptr. at 400. As the Court 10 found, Defendants’ use of ALS’s intellectual property was limited to the fulfillment of the LMSI 11 Contract. Ex. A at 21. 12 The Court also concludes that Plaintiff has now adequately pleaded how ALS was harmed. 13 The 2AC ALS states that Defendants’ misuse resulted in damages to ALS’s “reputation and 14 goodwill as well as its loss of business from the PCM . . . and potential contracts with the 15 government in an amount estimated to greatly exceed $33,000,000.” 2AC ¶ 140. The damages 16 allegations largely reassert those made in association with ALS’s breach of contract claims, and the 17 Court therefore finds them sufficient. 18 For these reasons, the Motion is DENIED as to breach of implied covenant of good faith and 19 fair dealing with respect to misuse of intellectual property and failure to obtain ALS’s permission to 20 advertise and market ALS’s intellectual property to third parties. 21 D. ALS Has Sufficiently Alleged a Claim for Misappropriation of Trade Secrets California Uniform Trade Secrets Act (Fourth Cause of Action). 22 23 In its Second MTD Order, the Court found that ALS did not sufficiently allege the existence 24 of its trade secrets and stated that “further specificity is needed to determine which of ALS’s alleged 25 trade secrets meet the definition of a trade secret.” Second MTD Order at 19-20. 26 To prevail under the California Uniform Trade Secrets Act (“CUTSA”), the following must 27 be shown: (1) the plaintiff owned a trade secret, (2) the defendants acquired, disclosed, or used the 28 plaintiffs’ trade secret through improper means, and (3) the defendant’s actions damaged the 1 plaintiff. Sargent Fletcher, Inc. v. Able Corp., 3 Cal. Rptr. 3d 279, 283 (Cal. Ct. App. 2003) (citing 2 Cal. Civ. Code § 3426.1). In turn, a trade secret is information that “(1) [d]erives independent 3 economic value, actual or potential, from not being generally known to the public or to other persons 4 who can obtain economic value from its disclosure or use, and (2) [i]s the subject of efforts that are 5 reasonable under the circumstances to maintain its secrecy.” Cal. Civ. Code § 3426.1(d). In other 6 words, a trade secret “is valuable because it is unknown to others.” DVD Copy Control Ass’n. v. 7 Bunner, 10 Cal. Rptr. 3d 185, 192 (Cal. Ct. App. 2004). 8 Under the DTSA, a trade secret is similarly defined as 9 all forms and types of financial, business, scientific, technical, economic, or 10 engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, 11 or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing 12 if— 13 (A) the owner thereof has taken reasonable measures to keep such information 14 secret; and 15 (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through 16 proper means by, another person who can obtain economic value from the disclosure or use of the information; 17 18 18 U.S.C. § 1839(3). “Confidentiality provisions constitute reasonable steps to maintain secrecy.” 19 InteliClear, LLC v. ETC Glob. Holdings, Inc., 978 F.3d 653, 660 (9th Cir. 2020). 20 In response to the Court’s Second MTD Order and Order to file a trade secret information 21 statement (“TSIS”), see Second MTD Order at 20; Dkt. No. 54 at 1, ALS filed its TSIS, Dkt. No. 60, 22 which describes each alleged trade secret. 23 ALS has sufficiently alleged a claim under CUTSA. 24 First, ALS has sufficiently alleged that it owns the trade secrets. Defendants discuss how (1) 25 ALS continues to fail to distinguish its trade secrets from its patents by commingling asserting the 26 misuse of trade secrets and patents within the same allegations and (2) ALS merely states the trade 27 28 1 secrets are “technical” without describing the particular technique, process, or method.6 Motion at 2 16-19; Reply at 9-10. Contrary to Defendants’ assertions, the TSIS, in detail, explicitly provides a 3 summary, background, description as to the economic value, and efforts to maintain the trade 4 secret’s secrecy as to each alleged trade secret. See generally Dkt. No. 60-1; Opposition at 20-22. 5 The TSIS is accompanied by corresponding exhibits, including specifications as to each alleged 6 trade secret. Id. The discussion contained in the TSIS as well as the specifications provide beyond 7 vague descriptions as to each alleged trade secret. As such, for purposes Rule 12(b)(6), the Court 8 holds that Defendants adequately alleged the existence and ownership of trade secrets. Sargent 9 Fletcher, 3 Cal. Rptr. 3d at 283. 10 Second, ALS specifically claims that Defendants published material related to ALS’s 11 intellectual property for their own benefit without ALS’s permission, sufficiently alleging that 12 Defendants acquired, disclosed, and used ALS’s trade secrets by improper means. Sargent Fletcher, 13 3 Cal. Rptr. 3d at 283; 2AC ¶¶ 151, 153-55. 14 Third, ALS has sufficiently pleaded that Defendants’ alleged misuse of ALS’s trade secrets 15 caused harm. Although the Court finds that ALS’s estimates of $33,000,000 to be speculative and 16 unaccompanied by any alleged calculated basis, the Court concludes that the continued improper use 17 of ALS’s intellectual property constitutes adequate harm at this pleading stage. 2AC ¶¶ 157-58; 18 Sargent Fletcher, 3 Cal. Rptr. 3d at 283. 19 Accordingly, the Court finds that ALS has adequately pleaded its claim for misappropriation 20 of trade secrets under CUTSA. 21 E. ALS Has Sufficiently Alleged a Claim for Misappropriation of Trade Secrets Under 22 the Defend Trade Secrets Act (Fifth Cause of Action). 23 The Court finds that the analysis for ALS’s claim for misappropriation under the CUTSA 24 applies to its analysis under the DTSA. See InteliClear, LLC, 978 F.3d at 657 (observing that 25

26 6 Defendants further suggest that some of the “forms of alleged intellectual property purportedly identified by ALS 27 require a public disclosure.” Motion at 17. Although this may be true, whether ALS’s intellectual property requires public disclosure is a “factual issue which is proper for discovery” and will not bar ALS from proceeding past the motion 28 to dismiss pleading stage. InteliClear,, 978 F.3d at 662 (“The issue of whether all of the plaintiffs’ alleged trade secrets | | “{cJourts have analyzed [the federal FTSA and the state CUTSA] claims together because the 2 | elements are substantially similar”). 3 Accordingly, Court finds that ALS has adequately pleaded its claim for misappropriation of 4 | trade secrets under the Defend Trade Secrets Act. 5 /// 6 IH. Conclusion 7 For the reasons stated herein, the Court ORDERS as follows: 8 1. The RJN is GRANTED; 9 2. The Motion is DENIED; and 10 3. The Court will issue an Order Setting Scheduling Conference forthwith. 11 12 IT IS SO ORDERED. Uf 14 Dated: March 24, 2026 15 MAAME EWUSI-MENSAH FRIMPONG 16 United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28