Nanometrics, Incorporated v. Optical Solutions, Inc.

District Court, N.D. California·Decided June 21, 2023·No. 5:18-cv-00417·Unknown

Opinion

NANOMETRICS, INCORPORATED, et Lead Case No. 18-cv-00417-BLF al., Case No. 18-cv-03276-BLF Plaintiffs, ORDER GRANTING IN PART AND v. ADMINISTRATIVE MOTIONS TO SEAL EXHIBITS TO DEFENDANT OPTICAL SOLUTIONS, INC., et al., NANOMETRICS, INC.’S MOTION FOR SUMMARY JUDGMENT AND Defendants. PLAINTIFF OPTICAL SOLUTIONS, OPTICAL SOLUTIONS INC.’S OPPOSITION TO MOTION INCORPORATED, FOR SUMMARY JUDGMENT Plaintiff, [Re: ECF Nos. 138, 140, 142] v. NANOMETRICS INCORPORATED, Defendant.

Before the Court are (1) Defendant Nanometrics, Inc.’s (“Nanometrics”) administrative motion to file under seal exhibits in support of its motion for summary judgment, ECF No. 138; (2) Plaintiff Optical Solutions, Inc.’s (“Optical”) administrative motion to consider whether to seal exhibits in support of its opposition to Nanometrics’s motion for summary judgment, ECF No. 140; and (3) Nanometrics’s response to Optical’s administrative motion to consider whether to seal exhibits, ECF No. 142.1 Having reviewed the parties’ submissions and applicable sealing law, the Court GRANTS IN PART and DENIES IN PART the administrative motions. 1 Although Nanometrics is the plaintiff and Optical the defendant in the lead case of this consolidated action, the Court refers to Optical as the plaintiff and Nanometrics the defendant in I. LEGAL STANDARD “Historically, courts have recognized a ‘general right to inspect and copy public records and documents, including judicial records and documents.’” Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 597 & n.7 (1978)). Accordingly, when considering a sealing request, “a ‘strong presumption in favor of access’ is the starting point.” Id. (quoting Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). Parties seeking to seal judicial records relating to motions that are “more than tangentially related to the underlying cause of action,” Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1099 (9th Cir. 2016), bear the burden of overcoming the presumption with “compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure.” Kamakana, 447 F.3d at 1178–79 (internal quotation marks and citation omitted). Compelling reasons justifying the sealing of court records generally exist “when such ‘court files might . . . become a vehicle for improper purposes,’” Kamakana, 447 F.3d at 1179 (quoting Nixon, 435 U.S. at 598), such as: “to gratify private spite, promote public scandal, circulate libelous statements,” id.; to “release trade secrets,” id.; or “as sources of business information that might harm a litigant's competitive standing,” Ctr. for Auto Safety, 809 F.3d at 1097 (quoting Nixon, 435 U.S. at 598–99). On the other hand, “[t]he mere fact that the production of records may lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court to seal its records.” Kamakana, 447 F.3d at 1179. “Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning” will not suffice. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (citation omitted). And although a protective order sealing the documents during discovery may reflect a court’s previous determination that good cause—a lower threshold than that required for finding a compelling reason to seal—exists to keep the documents sealed, see Kamakana, 447 F.3d at 1179– 80, but a blanket protective order that allows the parties to designate confidential documents does not provide sufficient judicial scrutiny to determine whether each particular document should remain sealed. See Civ. L.R. 79-5(d)(1)(A) (“Reference to a stipulation or protective order that allows a party to designate certain documents as confidential is not sufficient to establish that a document, or portions thereof, are sealable.”). In addition, the Local Rules of this Court require that all requests to seal be “narrowly tailored to seek sealing only of sealable material.” Civ. L.R. 79-5(a). That is, the sealing motion must include “a specific statement of the applicable legal standard and the reasons for keeping a document under seal, including an explanation of: (i) the legitimate private or public interests that warrant sealing; (ii) the injury that will result if sealing is denied; and (iii) why a less restrictive alternative to sealing is not sufficient.” Id. at 79-5(c)(1). The Court has reviewed the sealing motions. The basis of the parties’ requests is that the information has been designated by Nanometrics as either “Highly Confidential – Attorneys’ Eyes Only” or “Confidential” pursuant to the parties’ protective order. ECF No. 138 at 3; ECF No. 140 at 2; ECF No. 142 at 3. Nanometrics seeks to seal information related to its “research and development, technical designs, and performance testing of its tools and their components.” ECF No. 138-1 ¶ 4; ECF No. 142-1 ¶ 4. The documents at issue contain “valuable and sensitive trade secret information,” including technical documentation and internal communications regarding the performance of tools that Nanometrics asserts are not publicly disclosed or are only disclosed to external entities subject to nondisclosure agreements, and in some instances are not disseminated outside of key personnel within Nanometrics. See id. Nanometrics contends that the public disclosure of this information could reveal to competitors information about its research and development, and related strategic business decisions. ECF No. 138 at 4; ECF No. 142 at 3–4. The Court finds that Nanometrics has established compelling reasons to seal information that would reveal its research and development, technical designs, performance testing, and business strategies. See, e.g., In re Elec. Arts, 298 F. App’x. 568, 569 (9th Cir. 2008) (finding compelling reasons for sealing “business information that might harm a litigant’s competitive strategy”); In re Google Location Hist. Litig., No. 5:18-cv-05062-EJD, 514 F. Supp. 3d 1147, 1162 (N.D. Cal. Jan. 25, 2021) (“Compelling reasons may exist to seal ‘trade secrets, marketing information, internal reports[.]’”) (citation omitted); Simpson Strong-Tie Co. Inc. v. MiTek Inc., No. 20-cv-06957-VKD, 2023 WL 350401, at *2–3 (N.D. Cal. Jan. 20, 2023) (granting sealing request of “confidential business development and internal business strategy documents and intellectual property of MiTek, including internal MiTek research and development information”). However, the Court finds that several of the sealing requests are not narrowly tailored, and grants in part and denies in part those requests. The Court's rulings on the sealing requests are set forth in the table below: Public ECF No. / Document to be Result Reasoning (Sealed ECF No.) Sealed 139-2 / (138-2) Ex. 44 to Smith GRANTED. The portions of the document that Declaration in Support Nanometrics seeks to seal contain of Nanometrics’s confidential analyses of the Motion for Summary performance of a product and a Judgment third-party’s optical lens. See ECF (Highlighted portions) No. 138-1 ¶ 4. Public disclosure of this information could cause competitive harm to Nanometrics by giving competitors insight into Nanometrics’s research and development, including proprietary features. See id. ¶¶ 5–6. 139-2 / (138-3) Ex. 46 to Smith GRANTED Nanometrics states that it seeks to Declaration in Support IN PART seal “technical documentation” in of Nanometrics’s AND Exhibit 46. ECF No. 138-1 ¶ 4. Motion for Summary

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Nanometrics, Incorporated v. Optical Solutions, Inc., (N.D. Cal. 2023).

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