Zomm, LLC v. Apple Inc.

391 F. Supp. 3d 946
CourtDistrict Court, N.D. California
DecidedJune 17, 2019
DocketCase No. 18-cv-04969-HSG
StatusPublished
Cited by16 cases

This text of 391 F. Supp. 3d 946 (Zomm, LLC v. Apple Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zomm, LLC v. Apple Inc., 391 F. Supp. 3d 946 (N.D. Cal. 2019).

Opinion

Undermining Zomm's breach-of-contract claim is that the amended complaint alleges that Apple began to exploit Zomm's confidential information in December 2011. FAC ¶ 25 ("Beginning in December 2011 and continuing through November 2016 ...."). December 2011 however, was after both the Wireless Leash Plus's release and the '895 Patent's publication. See FAC ¶ 20 (noting the Wireless Leash Plus's November 2011 release), '895 Patent (noting a March 10, 2011 prior publication date). And under the terms of the confidentiality agreement, information either reverse engineerable from the Wireless Leash Plus product or contained in the '895 Patent no longer constituted confidential information. See Confidentiality Agreement § 1 (providing that "Confidential Information shall not include information that (a) is now or subsequently becomes generally available to the public through no fault or breach on the part of [Apple] ... [or] (c) is independently developed by [Apple] without the use of any Confidential Information").2

*953Because the amended complaint fails to allege exploited confidential information-the only alleged breach of the confidentiality agreement in the amended complaint-dismissal of Zomm's breach-of-contract claim is warranted. At the hearing on this motion, however, Zomm stated that it could add specificity in a further amended complaint to detail pre-December 2011 conduct. The Court thus finds that leave to amend is warranted.

C. CLUC Claim

The amended complaint alleges that Apple engaged in common-law unfair competition. FAC ¶¶ 94-98. Specifically, it alleges that "Apple misappropriated and is using Zomm's intellectual property and technology" related to the Wireless Leash and Wireless Leash Plus "for Apple's own benefit." Id. at 96-97. Zomm additionally states that "Apple baited Zomm into signing the Confidentiality Agreement to obtain access to Zomm's confidential information, despite having no intention of abiding by its terms." Id. at 97.

Apple moves to dismiss on a number of grounds: (1) Zomm does not allege any "passing off"; (2) Zomm's claim is preempted under federal patent law, superseded by California's Uniform Trade Secrets Act ("CUTSA"), and otherwise fails to state a claim; and (3) the allegation that Apple "baited" Zomm into signing the agreement "sounds in promissory fraud" and fails Rule 9(b)'s pleading requirements. The Court need not address Zomm's "passing off" argument because dismissal is warranted on other grounds.

Although Zomm does not identify what "intellectual property and technology" Apple purportedly misappropriated, the Court finds that the only fair reading of the amended complaint is that the underlying intellectual property and/or technology is either patentable or subject to trade secrecy. But to the extent Zomm's CLUC claim is based on alleged infringement of the '895 Patent, the claim is preempted by federal patent law. See Medina v. Microsoft Corp. , No. C 14-0143 RS, 2014 WL 2194825, at *3 (N.D. Cal. May 23, 2014) ("To the extent Medina's UCL claim proceeds under the 'unlawful' prong of the statute due to defendants' alleged patent infringement, it is preempted."); see also 35 U.S.C. § 271 (providing that federal patent infringement applies to "whoever without authority makes, uses, offers to sell, or sells any patented invention").

Taking away any alleged patent infringement, the Court turns to whether Zomm's CLUC claim is identical to a claim under, and thus superseded by, CUTSA.

1. CUTSA

CUTSA permits civil recovery of "actual loss" or other injury caused by the misappropriation of trade secrets. See Cal. Civ. Code § 3426.3. It defines "misappropriation" as the improper acquisition, or non-consensual disclosure or use of another's trade secret. Id. § 3426.1(b). "Trade secret" is defined as information that derives "independent economic value" from its confidentiality and "[i]s the subject of efforts that are reasonable under the circumstances to maintain its secrecy." Id. § 3426.1(d).

CUTSA includes a savings clause that "preempt[s] claims based on the same nucleus of facts as trade secret misappropriation." K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, Inc. , 171 Cal.App.4th 939, 90 Cal. Rptr. 3d 247, 264 (2009) ; see also Cal. Civ. Code § 3426.7(b). The savings clause does not preempt "contractual remedies" and civil remedies "that are not based upon misappropriation of a trade secret."

*954Silvaco Data Sys. v. Intel Corp. , 184 Cal.App.4th 210, 109 Cal. Rptr. 3d 27, 48 (2010), disapproved on other grounds by Kwikset Corp. v. Superior Court , 51 Cal.4th 310, 120 Cal.Rptr.3d 741, 246 P.3d 877 (2011).

Following the nucleus of facts test, numerous courts have held that CUTSA supersedes other state-law claims where the wrongdoing alleged is the misappropriation of trade secret information. See, e.g. , SunPower Corp. v. SolarCity Corp. , No. 12-cv-00694-LHK, 2012 WL 6160472, at *13 (N.D. Cal. Dec. 11, 2012) (dismissing CLUC claims as preempted by CUTSA where "while stated in various ways, each [claim] alleges in essence that Defendants [misappropriated] ... proprietary information"); K.C. Multimedia, Inc. , 90 Cal.

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Bluebook (online)
391 F. Supp. 3d 946, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zomm-llc-v-apple-inc-cand-2019.