1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 PROOFPOINT, INC., et al., Case No. 19-cv-04238-MMC
8 Plaintiffs, ORDER DENYING PLAINTIFFS' MOTION FOR PRELIMINARY 9 v. INJUNCTION
10 VADE SECURE, INCORPORATED, et al., 11 Defendants.
12 13 Before the Court is plaintiffs Proofpoint, Inc. ("Proofpoint") and Cloudmark LLC's 14 ("Cloudmark") Motion for Preliminary Injunction, filed September 25, 2019. Defendants 15 Vade Secure, Incorporated, Vade Secure SASU (collectively, "Vade"), and Olivier 16 Lemarié ("Lemarié") have filed opposition, to which plaintiffs have replied. Additionally, 17 with leave of court, defendants, on January 17, 2020, filed a sur-reply. Having read and 18 considered the papers filed in support of and in opposition to the motion, the Court rules 19 as follows.1 20 BACKGROUND 21 Plaintiffs allege Cloudmark and Vade are competitors, as each "develops and 22 markets cyber security products." (See Compl. ¶ 7.)2 Plaintiffs also allege Lemarié, who 23 now is employed by Vade, previously worked for Cloudmark as a Vice-President. (See 24 Compl. ¶ 30.) According to plaintiffs, Lemarié, during his employment with Cloudmark, 25
26 1By order filed February 4, 2020, the Court took the matter under submission and vacated the hearing scheduled for February 7, 2020. 27 1 "was involved in many aspects of Cloudmark's technical development" and had 2 "unfettered access to Cloudmark's technical documents and source code." (See Compl. 3 ¶ 31). In November 2016, plaintiffs allege, Lemarié "tendered his formal resignation and 4 left Cloudmark," and, in February 2017, began working as Vade's Chief Technology 5 Officer. (See Compl. ¶¶ 38, 53.) Plaintiffs further allege that Lemarié, without permission 6 from Cloudmark, disclosed Cloudmark's trade secrets to Vade, specifically, propriety 7 information pertaining to Cloudmark's MTA product3 and Trident product,4 and that Vade 8 then used the information in developing new products. (See Compl. ¶¶ 78-79.) 9 Based on said allegations, plaintiffs allege defendants have misappropriated 10 Cloudmark's trade secrets and that Lemarié has a breached a written agreement with 11 Cloudmark, which agreement prohibited him from disclosing Cloudmark's trade secrets. 12 On July 23, 2019, plaintiffs filed the instant action, asserting one federal claim under the 13 Defend Trade Secrets Act and four state law claims for breach of contract. 14 DISCUSSION 15 By the instant motion, plaintiffs seek an order preliminarily enjoining defendants 16 from using Cloudmark's trade secrets and requiring defendants to return to Cloudmark all 17 such information in whatever form it is contained, as well as any materials derived 18 therefrom.5 19 "A preliminary injunction is an extraordinary remedy never awarded as of right." 20 Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). "A plaintiff seeking a 21 preliminary injunction must establish that he is likely to succeed on the merits, that he is 22 likely to suffer irreparable harm in the absence of preliminary relief, that the balance of 23
24 3An "MTA" is a "mail transfer agent." (See Cheng Decl. Ex. 27.) 25 4"Trident" is the name Cloudmark used internally for its "anti-phishing email security solution." (See Compl. ¶ 37.) 26 5To the extent the motion also includes a request for expedited discovery, 27 specifically, to allow plaintiffs to begin discovery prior to the Rule 26(f) conference, such 1 equities tips in his favor, and that an injunction is in the public interest." Id. at 20. As an 2 alternative to showing a likelihood of success on the merits, however, a plaintiff may 3 establish "that serious questions going to the merits [have been] raised," provided such 4 plaintiff also establishes "a balance of hardships that tips sharply toward the plaintiff," a 5 likelihood of irreparable harm, and that the injunction is in the public interest. See 6 Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131, 1135 (9th Cir. 2011) 7 (internal quotation and citation omitted). Here, as set forth below, the Court first 8 considers whether plaintiffs have shown a likelihood of success on the merits of their 9 claims, or, alternatively, that a serious question going to the merits has been raised. 10 To succeed on a claim for misappropriation of trade secrets,6 the plaintiff must, 11 inter alia, offer evidence that "specifically identif[ies] [its] trade secrets" and "show[ ] that 12 they exist." See MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 522 (9th Cir. 13 1993); see also Silvaco Data Systems v. Intel Corp., 184 Cal. App. 4th 210, 221 (2010) 14 (holding "[i]t is critical to [a misappropriation of trade secrets] cause of action – and any 15 defense – that the information claimed to have been misappropriated be clearly 16 identified"), disapproved on other grounds, Kwikset v. Superior Court, 51 Cal. 4th 310, 17 337 (2011). 18 In the instant case, plaintiffs refer to the claimed trade secrets as "source code" for 19 "Cloudmark's MTA and Trident solutions," as well as "schematics, and other business, 20 technical, and financial information." (See Pls.' Mot. at 16:13-15; Pls.' Proposed Order at 21 1:22-24.) With respect to Cloudmark's MTA product, plaintiffs state the "trade secret 22 information describes the [MTA's] advanced functionalities and usability" and "includes 23 unique implementation details, like source code, that enable the Cloudmark MTA to 24 [perform its functions]." (See Pls.' Mot. 15:27-16:3.) With respect to Cloudmark's Trident 25 product, plaintiffs state the "trade secret information includes technical information for 26
27 6As noted, plaintiffs' claims for breach of contract are based on a theory that 1 specific combinations of elements that together form effective techniques for detecting 2 and filtering spear-phishing email attacks." (See id. at 16:6-9.) As discussed below, the 3 Court finds the evidence plaintiffs offer by way of elaboration is not sufficiently specific to 4 make out a prima facie case of trade secret misappropriation and, consequently, is 5 insufficient to satisfy the first requirement for a preliminary injunction. 6 First, although courts recognize source code may constitute a trade secret, see, 7 e.g., Silvaco, 184 Cal. App. 4th at 218 (observing "source code for many if not most 8 commercial software products is a secret"); Asset Marketing Systems, Inc. v. Gagnon, 9 521 F.3d 748, 758 (9th Cir. 2008) (noting "source code may contain protected trade 10 secrets"), a plaintiff, in seeking a preliminary injunction, must submit evidence that 11 "sufficiently identifie[s] its source code secrets," see Citcon USA, LLC v. RiverPay, Inc., 12 2019 WL 2603219, at *2 (N.D. Cal. June 25, 2019). Here, plaintiffs, as noted, assert that 13 the source code for Cloudmark's products includes trade secrets pertaining to 14 "functionality," "usability," and "implementation." (See Pls.' Mot. at 15:27-16:3.) Standing 15 alone, however, such assertions do not suffice to identify the claimed trade secrets, and 16 plaintiffs have not pointed to any document in the record that does so.
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1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 PROOFPOINT, INC., et al., Case No. 19-cv-04238-MMC
8 Plaintiffs, ORDER DENYING PLAINTIFFS' MOTION FOR PRELIMINARY 9 v. INJUNCTION
10 VADE SECURE, INCORPORATED, et al., 11 Defendants.
12 13 Before the Court is plaintiffs Proofpoint, Inc. ("Proofpoint") and Cloudmark LLC's 14 ("Cloudmark") Motion for Preliminary Injunction, filed September 25, 2019. Defendants 15 Vade Secure, Incorporated, Vade Secure SASU (collectively, "Vade"), and Olivier 16 Lemarié ("Lemarié") have filed opposition, to which plaintiffs have replied. Additionally, 17 with leave of court, defendants, on January 17, 2020, filed a sur-reply. Having read and 18 considered the papers filed in support of and in opposition to the motion, the Court rules 19 as follows.1 20 BACKGROUND 21 Plaintiffs allege Cloudmark and Vade are competitors, as each "develops and 22 markets cyber security products." (See Compl. ¶ 7.)2 Plaintiffs also allege Lemarié, who 23 now is employed by Vade, previously worked for Cloudmark as a Vice-President. (See 24 Compl. ¶ 30.) According to plaintiffs, Lemarié, during his employment with Cloudmark, 25
26 1By order filed February 4, 2020, the Court took the matter under submission and vacated the hearing scheduled for February 7, 2020. 27 1 "was involved in many aspects of Cloudmark's technical development" and had 2 "unfettered access to Cloudmark's technical documents and source code." (See Compl. 3 ¶ 31). In November 2016, plaintiffs allege, Lemarié "tendered his formal resignation and 4 left Cloudmark," and, in February 2017, began working as Vade's Chief Technology 5 Officer. (See Compl. ¶¶ 38, 53.) Plaintiffs further allege that Lemarié, without permission 6 from Cloudmark, disclosed Cloudmark's trade secrets to Vade, specifically, propriety 7 information pertaining to Cloudmark's MTA product3 and Trident product,4 and that Vade 8 then used the information in developing new products. (See Compl. ¶¶ 78-79.) 9 Based on said allegations, plaintiffs allege defendants have misappropriated 10 Cloudmark's trade secrets and that Lemarié has a breached a written agreement with 11 Cloudmark, which agreement prohibited him from disclosing Cloudmark's trade secrets. 12 On July 23, 2019, plaintiffs filed the instant action, asserting one federal claim under the 13 Defend Trade Secrets Act and four state law claims for breach of contract. 14 DISCUSSION 15 By the instant motion, plaintiffs seek an order preliminarily enjoining defendants 16 from using Cloudmark's trade secrets and requiring defendants to return to Cloudmark all 17 such information in whatever form it is contained, as well as any materials derived 18 therefrom.5 19 "A preliminary injunction is an extraordinary remedy never awarded as of right." 20 Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). "A plaintiff seeking a 21 preliminary injunction must establish that he is likely to succeed on the merits, that he is 22 likely to suffer irreparable harm in the absence of preliminary relief, that the balance of 23
24 3An "MTA" is a "mail transfer agent." (See Cheng Decl. Ex. 27.) 25 4"Trident" is the name Cloudmark used internally for its "anti-phishing email security solution." (See Compl. ¶ 37.) 26 5To the extent the motion also includes a request for expedited discovery, 27 specifically, to allow plaintiffs to begin discovery prior to the Rule 26(f) conference, such 1 equities tips in his favor, and that an injunction is in the public interest." Id. at 20. As an 2 alternative to showing a likelihood of success on the merits, however, a plaintiff may 3 establish "that serious questions going to the merits [have been] raised," provided such 4 plaintiff also establishes "a balance of hardships that tips sharply toward the plaintiff," a 5 likelihood of irreparable harm, and that the injunction is in the public interest. See 6 Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131, 1135 (9th Cir. 2011) 7 (internal quotation and citation omitted). Here, as set forth below, the Court first 8 considers whether plaintiffs have shown a likelihood of success on the merits of their 9 claims, or, alternatively, that a serious question going to the merits has been raised. 10 To succeed on a claim for misappropriation of trade secrets,6 the plaintiff must, 11 inter alia, offer evidence that "specifically identif[ies] [its] trade secrets" and "show[ ] that 12 they exist." See MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 522 (9th Cir. 13 1993); see also Silvaco Data Systems v. Intel Corp., 184 Cal. App. 4th 210, 221 (2010) 14 (holding "[i]t is critical to [a misappropriation of trade secrets] cause of action – and any 15 defense – that the information claimed to have been misappropriated be clearly 16 identified"), disapproved on other grounds, Kwikset v. Superior Court, 51 Cal. 4th 310, 17 337 (2011). 18 In the instant case, plaintiffs refer to the claimed trade secrets as "source code" for 19 "Cloudmark's MTA and Trident solutions," as well as "schematics, and other business, 20 technical, and financial information." (See Pls.' Mot. at 16:13-15; Pls.' Proposed Order at 21 1:22-24.) With respect to Cloudmark's MTA product, plaintiffs state the "trade secret 22 information describes the [MTA's] advanced functionalities and usability" and "includes 23 unique implementation details, like source code, that enable the Cloudmark MTA to 24 [perform its functions]." (See Pls.' Mot. 15:27-16:3.) With respect to Cloudmark's Trident 25 product, plaintiffs state the "trade secret information includes technical information for 26
27 6As noted, plaintiffs' claims for breach of contract are based on a theory that 1 specific combinations of elements that together form effective techniques for detecting 2 and filtering spear-phishing email attacks." (See id. at 16:6-9.) As discussed below, the 3 Court finds the evidence plaintiffs offer by way of elaboration is not sufficiently specific to 4 make out a prima facie case of trade secret misappropriation and, consequently, is 5 insufficient to satisfy the first requirement for a preliminary injunction. 6 First, although courts recognize source code may constitute a trade secret, see, 7 e.g., Silvaco, 184 Cal. App. 4th at 218 (observing "source code for many if not most 8 commercial software products is a secret"); Asset Marketing Systems, Inc. v. Gagnon, 9 521 F.3d 748, 758 (9th Cir. 2008) (noting "source code may contain protected trade 10 secrets"), a plaintiff, in seeking a preliminary injunction, must submit evidence that 11 "sufficiently identifie[s] its source code secrets," see Citcon USA, LLC v. RiverPay, Inc., 12 2019 WL 2603219, at *2 (N.D. Cal. June 25, 2019). Here, plaintiffs, as noted, assert that 13 the source code for Cloudmark's products includes trade secrets pertaining to 14 "functionality," "usability," and "implementation." (See Pls.' Mot. at 15:27-16:3.) Standing 15 alone, however, such assertions do not suffice to identify the claimed trade secrets, and 16 plaintiffs have not pointed to any document in the record that does so. See Citcon USA, 17 2019 WL 2603219, at *2 (denying motion for preliminary injunction where plaintiff did no 18 more than "describe[ ] a few specific categories of source code"; providing, as example of 19 sufficient disclosure, "a twenty-page identification of ten specific trade secrets" that 20 "described the functionality of each, along with named files from [plaintiff's] code base 21 reflecting the source code specific to each trade secret"); uSens, Inc. v. Chi, 2018 U.S. 22 Dist. LEXIS 175570, at *6-7 (N.D. Cal. October 11, 2008) (finding plaintiff's description of 23 "source code for the SLAM algorithm" as "fundamental to [plaintiff's] augmented and 24 virtual reality products," did "not adequately identif[y]" its trade secrets); see also Integral 25 Development Corp. v. Tolat, 675 Fed. Appx. 700, 703 (9th Cir. 2017) (finding, for 26 purposes of summary judgment, triable issue existed as to whether plaintiff could prove it 27 1 owned trade secrets where plaintiffs "identified specific key aspects of its source code").7 2 Second, although the "architecture" of a product, i.e., "the way in which [its] 3 various components fit together as building blocks in order to form the unique whole," can 4 constitute a trade secret, see Integrated Cash Management Services, Inc. v. Digital 5 Transactions, Inc., 920 F.2d 171, 174 (2nd Cir. 1990) (internal quotation and citation 6 omitted), a plaintiff must offer evidence to support a finding that such architecture is in 7 fact a trade secret, see id. (affirming district court's finding "product's architecture" was 8 trade secret, where record contained "extensive expert testimony" to support such 9 finding). Here, plaintiffs, as noted, assert in their motion that one of Cloudmark's trade 10 secrets consists of "technical information for specific combinations of elements" 11 comprising Cloudmark's Trident product (see Pls.' Mot. at 16:6-9); additionally, in their 12 reply, plaintiffs state Cloudmark's trade secrets "relate to" the "architecture" of 13 Cloudmark's MTA product (see Pls.' Reply at 5:11-12). Plaintiffs have not, however, 14 pointed to evidence identifying the aspects of the claimed combination of elements and 15 architecture that are in fact trade secrets. 16 In sum, as the record presently before the Court does not include evidence that 17 sufficiently identifies the claimed trade secrets, plaintiffs have failed to show a likelihood 18 of success on the merits or that serious questions going to the merits exist. See MAI 19 Systems, 991 F.2d at 522 (vacating injunction where record included "no declaration or 20 deposition testimony which specifically identifie[d] any trade secrets").8 21 7Although, in their complaint and various declarations filed in support of the instant 22 motion, plaintiffs describe a number of MTA and Trident features, plaintiffs do not assert those features are trade secrets and, indeed, have filed in the public docket (see, e.g., 23 Compl. ¶¶ 32, 35, 55; Cheng Decl. Ex. 1 ¶ 7; Cheng Decl. Ex. 2 ¶¶ 96, 98) or distributed to Cloudmark customers (see, e.g., Cheng Reply Decl. Exs. 5-7), the documents in which 24 those features are described. 25 8In light of this finding, the Court does not address herein the additional requirements for a preliminary injunction. See Winter, 555 U.S. 7, 20, 23-24, 26 (2008) 26 (holding plaintiff seeking preliminary injunction must establish all four elements; finding it unnecessary to consider whether plaintiffs established likelihood of success on merits 27 where "the balance of equities and consideration of the overall public interest . . . tip[ped] 1 CONCLUSION 2 For the reasons stated above, plaintiffs’ motion for a preliminary injunction is 3 || hereby DENIED. 4 IT IS SO ORDERED. 5 6 || Dated: February 20, 2020 ; . INE M. CHESNEY 7 United States District Judge 8 9 10 11 12
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