219 F. Supp. 3d 984
N.D. Cal.2017Background
- Plaintiffs BladeRoom Group Ltd. (BRG) and Bripco (UK) Ltd. developed a proprietary pre-fabricated data-center system called "BladeRoom," keeping some techniques as trade secrets and using NDAs, restricted access, and physical/computer security.
- BRG (licensee) and Bripco (legal owner) met with Facebook and Emerson under NDAs in 2011–2012, providing confidential technical presentations, site tours, and in-depth workshops.
- Plaintiffs allege Facebook misrepresented the purpose of some meetings, disclosed and/or shared BRG confidential information with Emerson and third parties, then adopted and publicly disclosed similar modular data-center designs (including via the Open Compute Project).
- Plaintiffs sued in 2015 asserting CUTSA (trade-secret misappropriation), Lanham Act § 43(a) (false designation/reverse passing off), UCL (unlawful/unfair), and breach of contract; Facebook moved to dismiss under Rule 12(b)(6).
- The court denied dismissal of the CUTSA, UCL, and breach claims (finding pleadings plausible on ownership/possession, secrecy, and damages), but dismissed the Lanham Act claim with leave to amend (holding plaintiffs failed to plead a protected "origin of goods/services" commercial use under Dastar and related authority).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Standing/ownership to sue under CUTSA (BRG a licensee) | BRG may sue as licensee/possessor of trade secrets; BRG had confidentiality obligations and possession | Facebook: only the owner (Bripco) may bring CUTSA claim; licensee lacks ownership | Court: BRG may proceed; possession/license coupled with confidentiality suffices for CUTSA standing |
| 2) Adequacy of damages pleading (Bripco) | Bripco alleges loss to its licensing market from disclosure | Facebook: Bripco fails to allege how it was damaged (too conclusory or absent) | Court: Allegation that Facebook damaged Bripco’s licensing market is sufficient at pleading stage |
| 3) Secrecy/reasonable efforts under CUTSA (disclosure to third parties at Prineville meeting) | Plaintiffs: disclosures were induced/misrepresented by Facebook; Plaintiffs used NDAs and limited access—efforts were reasonable | Facebook: disclosure to third-party architects/contractors destroyed secrecy; no reasonable efforts | Court: Viewed in plaintiffs’ favor, allegations plausibly show reasonable efforts and that disclosure was induced by misrepresentation—not resolved on motion to dismiss |
| 4) Particularity of misappropriation allegations | Plaintiffs: SAC gives factual timeline and fair notice of what was misappropriated and when | Facebook: Plaintiffs must identify each trade secret and specific misappropriation mechanism | Court: Rule 8 does not require that level of detail at pleading stage; allegations give fair notice—CUTSA claim survives |
| 5) Lanham Act §43(a) reverse-passing-off claim | Plaintiffs: Facebook falsely claimed origin/credit for RDDC design and related services | Facebook: Lanham Act does not protect ideas; plaintiffs fail to plead commercial use/competing services | Court: Dismissed Lanham Act claim with leave to amend — plaintiffs failed to allege protected origin of tangible goods or commercial offering of competing services |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard—plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard—well-pleaded facts vs. legal conclusions)
- Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (Lanham Act does not protect authorship of ideas/communications separate from origin of tangible goods)
- Bosley Medical Institute v. Kremer, 403 F.3d 672 (Lanham Act requires commercial transaction/consumer confusion—protects mistaken purchasing decisions)
- DTM Research, L.L.C. v. AT&T Corp., 245 F.3d 327 (possession/license can support trade-secret standing; secrecy, not fee title, is core)