Inteliclear, LLC v. Etc Global Holdings
978 F.3d 653
| 9th Cir. | 2020Background
- InteliClear developed an SQL-based "InteliClear System" (2004–2006) for securities tracking and licensed it to an ETC predecessor under a confidentiality-bearing Software License Agreement.
- ETC terminated the license in 2018, certified removal of the system, then deployed its own clearing software; InteliClear’s architect (Barretto) and a forensic consultant (Capsicum) later reported striking similarities.
- InteliClear sued under the DTSA and CUTSA (and unfair competition); the district court dismissed unfair competition and—one day after discovery opened—granted ETC summary judgment on the trade-secret claims for lack of sufficient particularity, denying InteliClear’s Rule 56(d) request for discovery.
- InteliClear had submitted a sealed Barretto declaration identifying specific database tables, columns, account identifiers, triggers/queries, and methods it claimed as trade secrets; ETC argued those descriptions were vague or visible to end-users.
- The Ninth Circuit held there are triable issues (sufficient particularity and secrecy) and that the district court abused its discretion under Rule 56(d) by ruling before discovery; it reversed summary judgment and allowed discovery to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether InteliClear identified trade secrets with sufficient particularity | Barretto’s sealed declaration names specific tables, columns, identifiers, processes and interrelations | Descriptions are vague, catchall, and fail to separate protectable secrets from general industry knowledge | Triable issue: the Barretto declaration (sealed) created enough specificity to send the matter to a jury |
| Whether InteliClear’s alleged secrets were actually secret (reasonable measures) | InteliClear encrypted/compiled source, used licensing confidentiality provisions, limited disclosures to licensees | Some infrastructure/details visible to end-users and thus “readily ascertainable” | Triable issue: confidentiality agreements and protective measures suffice to create a factual dispute on secrecy |
| Whether the district court abused discretion by denying Rule 56(d) discovery | Discovery was essentially nonexistent and would allow refinement/clarification of trade-secret identifications | Discovery would not cure the deficiency in InteliClear’s identification | Abuse of discretion: summary judgment was premature; court should have allowed discovery under Rule 56(d) |
| Whether summary judgment should have been granted pre-discovery | Summary judgment was premature given genuine disputes and lack of discovery | No protectable trade secrets and no evidence of access to source code | Reversed: summary judgment vacated; ETC may renew motion after discovery |
Key Cases Cited
- Forro Precision, Inc. v. Int’l Bus. Machines Corp., 673 F.2d 1045 (9th Cir. 1982) (broad definition of trade secret)
- MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993) (plaintiff must identify trade secrets; confidentiality can be reasonable measures)
- Imax Corp. v. Cinema Techs., Inc., 152 F.3d 1161 (9th Cir. 1998) (must describe tangible trade-secret material; no catchall labels)
- IDX Sys. Corp. v. Epic Sys. Corp., 285 F.3d 581 (7th Cir. 2002) (software trade-secret descriptions that are too vague/inclusive fail)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (movant’s initial burden on summary judgment)
- Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832 (9th Cir. 2001) (summary judgment premature where nonmovant needs discovery under Rule 56(d))
- Tatum v. City & County of San Francisco, 441 F.3d 1090 (9th Cir. 2006) (standard of review for denial of Rule 56(d) requests)
- United States v. Nosal, 844 F.3d 1024 (9th Cir. 2016) (confidential disclosures to licensees/employees do not destroy trade-secret status)
- United States v. Chung, 659 F.3d 815 (9th Cir. 2011) (oral/written confidentiality agreements can be reasonable secrecy measures)
- Pyramid Techs., Inc. v. Hartford Cas. Ins. Co., 752 F.3d 807 (9th Cir. 2014) (conflicting inferences must go to the jury)