Alta Devices, Inc. v. LG Elecs., Inc.
343 F. Supp. 3d 868
N.D. Cal.2018Background
- Alta Devices developed proprietary thin‑film GaAs solar cell manufacturing technology and shared Confidential Information with LG Electronics under a June 13, 2011 mutual NDA. The NDA limited use to evaluating a potential business relationship and contained a one‑year disclosure period plus a three‑year survivability clause for confidentiality obligations.
- Alta alleges LG used Confidential Information (including deposition, epitaxial lift‑off, substrate reuse, cost analyses, process flows and tool roadmaps) to reverse engineer and develop similar GaAs thin‑film products, and failed to return or fully redact materials when requested.
- Alta brought claims under the Defend Trade Secrets Act (DTSA) and California Uniform Trade Secrets Act (CUTSA), breach of contract (failure to return and unauthorized use), California Unfair Competition Law (UCL), and declaratory relief.
- LG moved to dismiss on multiple grounds: statute of limitations for contract return claim, NDA expiration/ambiguity (cutting off trade‑secret protection), insufficient particularity of trade‑secret allegations, and CUTSA preemption of UCL/declaratory claims.
- The court denied dismissal of the DTSA and CUTSA claims (trade‑secret existence and misappropriation sufficiently alleged and the NDA term ambiguous), dismissed with prejudice the contract claim based on failure to return (accrued June 13, 2012 and time‑barred), denied dismissal of the contract misuse claim (ambiguity as to NDA expiration), granted leave to amend the UCL claim (preempted to extent it duplicates CUTSA), and granted/dismissed parts of the declaratory relief claim consistent with those rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Alta pleaded protectable trade secrets post‑June 13, 2015 (DTSA/CUTSA timeliness) | Alta: NDA and other measures support reasonable secrecy; misappropriation continued and DTSA applies to conduct after enactment | LG: NDA confidentiality expired (Disclosure Period + 3 years ended June 13, 2015), so no trade secrets thereafter; DTSA inapplicable | Court: NDA term ambiguous as to "expiration of this Agreement"; cannot resolve on 12(b)(6); DENIED dismissal on this ground |
| Particularity of trade‑secret allegations | Alta: identified technology categories, Appendix A schedule and factual allegations give boundaries | LG: allegations too broad/vague to ascertain secrets | Court: Allegations and NDA Appendix give sufficient boundaries and factual basis to infer misappropriation; DENIED dismissal |
| Breach of contract — failure to return Confidential Information (statute of limitations) | Alta: discovery rule or continuing violation tolled accrual | LG: Section 6 obligated return at earlier of completion/termination of dealings (June 13, 2012); four‑year limitation expired | Court: Accrual at end of Disclosure Period (June 13, 2012); discovery rule and continuing‑violation doctrine not shown; GRANTED dismissal with prejudice (time‑barred) |
| Breach of contract — unauthorized use / NDA expiration | Alta: misuse occurred after 2015; NDA obligations continue or ambiguous | LG: confidentiality expired June 13, 2015 so no breach for later use | Court: NDA ambiguous on expiration; factual issue not resolvable on motion; DENIED dismissal of misuse claim |
| UCL and declaratory relief preemption/redundancy | Alta: UCL and declaratory claims available; contract remedies preserved | LG: CUTSA preempts UCL/declaratory claims that rest on same trade‑secret nucleus; some contract‑based declaratory relief barred by statute of limitations | Court: UCL claims premised on trade‑secret misappropriation are preempted — UCL dismissed with leave to amend; declaratory claim dismissed to extent it duplicates CUTSA or time‑barred contract return claim, but not dismissed in whole (prospective declaratory/injunctive relief may be useful) |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (application of Twombly plausibility standard)
- Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025 (courts accept factual allegations as true on Rule 12(b)(6))
- Bedrosian v. Tenet Healthcare Corp., 208 F.3d 220 (contract interpretation on motion to dismiss only when unambiguous)
- Lopez v. Smith, 203 F.3d 1122 (leave to amend should be freely given)
- Leadsinger, Inc. v. BMG Music Publ'g, 512 F.3d 522 (standards for denying leave to amend)