442 F.Supp.3d 1196
N.D. Cal.2020Background
- Snapkeys, an Israeli software company, developed an "iType" smartwatch keyboard and entered preliminary discussions with Google in July 2015.
- Parties executed a July 29, 2015 Developer Non-Disclosure Agreement (NDA) to "facilitate technical discussions"; NDA did not obligate either party to transact.
- Snapkeys provided two prototype smartwatches and technical information to Google under the NDA.
- Snapkeys alleges Google fraudulently induced disclosure, then used the technology itself and/or shared it with a competitor to develop a similar keyboard.
- Snapkeys filed a Second Amended Complaint asserting five claims (breach of NDA; fraud; conversion; UCL; breach of implied covenant). Google moved to dismiss; court incorporated the NDA by reference and resolved the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of NDA | Google used Snapkeys' confidential code/prototypes for its own smartwatch keyboard and disclosed them to third parties, violating NDA confidentiality and IP-limitation clauses. | Allegations are conclusory and fail to specify what confidential information was misused or how; plaintiff effectively tries to plead a trade-secret claim without specifics. | Denied — pleadings sufficiently allege prototypes and specific misuse to plausibly state breach of the NDA. |
| Fraud | Google misrepresented intent to partner (promises of access/introductions) to induce disclosure of technology. | Fraud claim is superseded by CUTSA; alternatively, plaintiff cannot plausibly plead justifiable reliance given NDA context. | Granted — fraud claim is superseded by CUTSA; dismissed with prejudice and leave to amend denied. |
| Conversion | Google retained or misused tangible prototypes Snapkeys entrusted to it, converting physical property. | Conversion is preempted by CUTSA and Snapkeys lacked a right to possession at conversion time (no return condition). | Denied in part — conversion claim survives to the extent it seeks recovery for the tangible prototypes' value (not for embedded trade-secret/information value). |
| UCL (fraudulent & unfair prongs) | Google’s misleading consumer alert and misrepresentations injured Snapkeys and were fraudulent/unfair in competition. | CUTSA supersedes any UCL "unlawful" theory; UCL fraudulent/unfair allegations lack specificity and fail to plead harm to competition. | Granted — UCL fraudulent and unfair prongs dismissed; Court grants limited leave to amend those prongs to cure deficiencies. |
| Breach of implied covenant of good faith and fair dealing | Google induced disclosure in bad faith and misappropriated confidential prototypes, frustrating NDA benefits. | Claim is duplicative of the breach-of-contract claim and therefore impermissible. | Granted — dismissed as duplicative of contract claim; leave to amend denied as futile. |
Key Cases Cited
- Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988 (9th Cir. 2018) (when documents form basis of claims, court may incorporate them by reference).
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 8 pleadings).
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must contain more than conclusory legal statements).
- United States v. Ritchie, 342 F.3d 903 (incorporation-by-reference doctrine for documents referenced in complaint).
- Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025 (court accepts factual allegations as true on 12(b)(6)).
- Lopez v. Smith, 203 F.3d 1122 (leave to amend should be freely given absent futility).
- Leadsinger, Inc. v. BMG Music Publ'g, 512 F.3d 522 (limits on leave to amend where amendment would be futile).
- Waymo LLC v. Uber Tech., Inc., 256 F. Supp. 3d 1059 (CUTSA supersession analysis for tort claims overlapping trade-secret allegations).
- Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210 (CUTSA does not displace contractual remedies or claims not based on trade-secret misappropriation).
- Cel‑Tech Commc'ns, Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163 (UCL "unfair" prong requires conduct that threatens competition or violates antitrust policy).
- Levitt v. Yelp! Inc., 765 F.3d 1123 (generalized allegations of competitive harm are insufficient under UCL unfair prong).
- Careau & Co. v. Security Pacific Bus. Credit, Inc., 222 Cal. App. 3d 1371 (claims alleging only contract breach may not support separate implied‑covenant cause of action).