GLOBAL PROTEIN PRODUCTS, INC., Plaintiff and Respondent, v. KEVIN K. LE et al., Defendants and Appellants; THE VPS COMPANIES, INC., et al., Interveners and Respondents.
H044628
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT
11/20/19
CERTIFIED FOR PUBLICATION (Santa Clara County Super. Ct. No. 105CV043903)
Although an order denying a renewed motion under
BACKGROUND
1. Le‘s Employment with Global Protein Products and The Stipulated Permanent Injunction
Global Protein Products is a protein-based coating company that claims as a trade secret a proprietary formula and process for treating field-cored iceberg lettuce. GPP‘s trade secret product, when applied to lettuce, prolongs shelf life by preventing dehydration, browning, and pinking of the lettuce‘s cut surface.
Le formed WCA after he left GPP. After he formed WCA, Le and WCA competed with GPP and attempted to sell WCA‘s products to GPP‘s customers.
On June 28, 2005, GPP filed a lawsuit against appellants alleging causes of action for trade secret misappropriation, breach of contract, and unfair competition.
GPP requested a temporary restraining order and a preliminary injunction against appellants. Mark Kierstead, GPP‘s president and founder, prepared a declaration in support of GPP‘s request. According to Kierstead, an inventor invented a process and formula for making a zein film in pure water in 1993. A patent was issued for this invention in 1997 (the 880 patent), which GPP subsequently acquired.3 Thereafter, GPP began researching whether its patented process for making zein film in pure water could be used on fresh produce. GPP‘s head scientist discovered that a particular organic acid, if used with the 880 patent, could extend the shelf life of lettuce for seven days. Kierstead declared that GPP never disclosed the identity of this organic acid, and GPP did not patent the combined use of the unnamed organic acid in conjunction with the 880 patent. Instead, GPP treated the unidentified organic acid, used in conjunction with the 880 patent, as a trade secret. Kierstead asserted that in 2005, he received a call from Dole Fresh, one of GPP‘s customers. A Dole Fresh employee told Kierstead that he had received e-mails from appellants promoting a new product that Le had purportedly developed. In a subsequent e-mail exchange between the Dole Fresh employee and Le, Le sent a “Material Safety Data Sheet” that included the undisclosed organic acid used in GPP‘s trade secret. Le said that his product used the same organic acid used in GPP‘s trade secret.
On June 27, 2005, the trial court granted GPP a temporary restraining order against appellants. The temporary restraining order enjoined appellants from acquiring, disclosing, using, or attempting or threatening to acquire, disclose, or use GPP‘s trade secret, and from directly or indirectly soliciting GPP‘s customers using GPP‘s trade secret. On July 18, 2005, the trial court granted GPP a preliminary injunction, enjoining appellants from engaging in these same acts.
Pursuant to the stipulated permanent injunction, appellants were permanently enjoined from: (1) “Acquiring, disclosing, using, or attempting or threatening to acquire, disclose, or use, GPP‘s Trade Secret product, including any information relating to its formulation and process and the identity of the organic acid used in said product,” (2) “Directly or indirectly soliciting any of GPP‘s customers using GPP‘s Trade Secret product and/or any information related thereto,” and (3) “Doing any other act using GPP‘s Trade Secret or any other information subject to Mr. Le‘s Confidentiality Agreement with GPP in order to compete with GPP.”
2. GPP‘s Ex Parte Application for Order to Show Cause Regarding Contempt, VPS‘s Complaint in Intervention, and Subsequent Proceedings
In October 2013, Bob Cyr, GPP‘s chief executive officer (CEO), met with representatives of Inn Foods, Inc., and its parent company, intervenor and respondent VPS Companies, Inc. (VPS), to discuss GPP‘s shelf life extender products. At the time, VPS notified Cyr that it was subject to legal restrictions due to a settlement from a prior lawsuit with appellants. VPS was not permitted to use shelf life extenders provided by Le and was restricted from engaging in development of shelf life extenders.
After learning this information, GPP conducted its own investigation. Based on its investigation, GPP believed that Le had attempted to sell VPS a trade secret formula that he had created called “WCA Blend T6.” GPP believed that the trade secret formula that Le created and sold was derived from GPP‘s trade secret. According to statements made by Le in his prior litigation with VPS, Le began consulting with Inn Foods in 2005 and began an employment relationship with VPS in 2007. Le previously stated in the prior VPS litigation that ” ‘[o]n July 31, 2012, Defendant MID-CON AG, LLC purchase[d] all ownership rights, title, and interest to the proprietary polysaccharide formulations developed by LE/WCA.’ ” Thus, GPP claimed that appellants had violated the permanent injunction previously issued by the trial court.
On October 30, 2014, the trial court granted VPS‘s motion to intervene, and VPS filed a complaint in intervention. VPS‘s complaint in intervention alleged that Le misappropriated GPP‘s shelf life extenders and falsely claimed to be the owner or inventor of the shelf life extenders that he had provided to VPS. VPS sold products to Kidco Farms Processing until Le‘s resignation. After Le‘s resignation, Kidco stopped purchasing products from VPS and began purchasing products from appellants. VPS sued appellants, Kidco, and Mid-Con Ag, LLC. Subsequently, VPS entered into a settlement in that case relying on appellants’ purportedly false statements that they, not GPP, had developed the shelf life extender at issue.
Appellants opposed the order to show cause, filed an opposition, and engaged in discovery. Appellants also demurred to VPS‘s complaint in intervention, moved to compel GPP to identify its trade secrets, and moved for a protective order preventing GPP from conducting discovery until it had identified its trade secrets. GPP later filed an amended disclosure of its trade secret products, which appellants argued was deficient.
On February 26, 2015, the trial court overruled appellants’ demurrer to VPS‘s complaint in intervention. The trial court denied appellants’ motion to compel a trade secret designation and for a protective order after determining that GPP‘s alleged trade secrets were described with reasonable particularity in their amended trade secret designation as required under
3. Motion to Modify or Dissolve the Stipulated Permanent Injunction
Appellants continued to engage in discovery and sent GPP requests for admissions. In their sixth request for admission, appellants asked GPP to admit that the organic acid identified in the first paragraph of the stipulated permanent injunction was citric acid, which GPP admitted. In their seventh request, appellants asked GPP to admit that the organic acid identified in the first paragraph of the stipulated permanent injunction was sodium benzoate, which GPP denied. GPP‘s answers were both subject to objections that the requests were improper in form and were not full and complete in and of itself.
Appellants argued that GPP itself could not define its own trade secret. Appellants’ motion quoted excerpts taken from depositions taken of GPP employees. In one quote, Cyr stated that Kierstead would know the identity of the trade secret.5 In another quote, Kierstead stated that the trade secret was ” ‘the formula’ ” as well as the ” ‘organic acid that Tony Jabar figured out.’ ” Jabar, however, was quoted as saying, ” ‘I don‘t know what an undisclosed acid is. So I don‘t have any way of knowing.’ ” GPP opposed the motion to modify or dissolve the stipulated permanent injunction. GPP maintained that it had not disclosed the organic acid used in its trade secret product and had continued to take reasonable steps to protect its proprietary formula. GPP argued that the stipulated permanent injunction‘s language was purposefully vague to maintain GPP‘s trade secret, and appellants had previously conceded that they knew the formula for GPP‘s trade secret and was thus aware of what they were enjoined from using. VPS also opposed appellants’ motion. On August 1, 2016, GPP moved to amend its responses to appellants’ first set of requests for admissions. GPP sought to amend its response to the sixth request for admission (whether the undisclosed organic acid was citric acid) to denied, and its response to the seventh request for admission (whether the undisclosed organic acid was sodium benzoate) to the information is protected by trade secret privilege. Both answers were subject to GPP‘s objection that the requests were improper in form and were not full and complete in and of itself. In its motion, GPP argued that it had mistakenly admitted that citric acid was the unidentified organic acid in its trade secret. GPP explained that the mistake occurred because citric acid was one of the organic acids used in GPP‘s trade secret; however, it was not the unidentified organic acid used in GPP‘s trade secret. GPP argued that an amendment should be permitted Appellants opposed GPP‘s motion to amend its admissions, but the trial court later granted GPP‘s request. On September 27, 2016, the trial court denied the motion to dissolve the stipulated permanent injunction after finding that appellants failed to make the showing required under On December 29, 2016, appellants filed a renewed motion to modify or dissolve the stipulated permanent injunction under Appellants attached copies of the 880 patent and the 147 patent application to its motion. The 880 patent, titled “Protein-Polysaccharide Complex Composition and Method of Use,” summarized its invention as follows: “Food products are preserved or stabilized against deterioration of organoleptic properties during storage by contacting the food products with an aqueous solution of a stabilizing composition containing at least one stabilizing acid and a protein-polysaccharide complex composition including at least one water-soluble polysaccharide and at least one substantially water-insoluble protein.” The 880 patent described several examples of how to prepare the protein-polysaccharide complex (PPC) composition referenced in the patent, with some examples going into great detail about the proposed methods of preparation for seafood. The 880 patent‘s first claim stated that “[w]hat is claimed is: [¶] 1. A food preserving composition for treating edible products to maintain or refurbish desirable organoleptic qualities thereof comprising: a The 147 patent application, titled “Method of Increasing Crop Yield,” stated that the invention could be used “to enhance the germination, emergence, root mass development, disease resistance, photosynthetic rate, plant growth, and crop yield of a variety of agricultural commodities including but not limited to . . . lettuce . . . .” The 147 patent application noted that “additives may be added to the aqueous alcohol solution to promote stability of the peptide-polysaccharide complex,” and further stated that additives could include “anti-microbial compounds such as . . . benzoic acid.” The 147 patent application was filed in 2002, before the parties agreed to the stipulated permanent injunction. The 880 patent was issued in 1997, also before the parties agreed to the stipulated permanent injunction. Thus, appellants claimed that GPP‘s prior disclosure of sodium benzoate demonstrated that GPP had no commercial advantage in its trade secret because business competitors could readily ascertain all of the components necessary to recreate GPP‘s trade secret. In support of their renewed motion, appellants filed a declaration prepared by Irving Rappaport, a patent attorney retained by appellants to render an opinion about GPP‘s trade secret. Rappaport stated that he believed that GPP had not articulated a sufficiently clear and unambiguous statement of its trade secret, and GPP had not identified and maintained the secrecy of its trade secret. Rappaport further stated that in his opinion, the combination of the 880 patent, the 147 patent application, and several articles discussing the use of sodium benzoate for preserving lettuce demonstrated that GPP‘s trade secret had never been a trade secret. GPP opposed appellants’ renewed motion to modify or dissolve the stipulated permanent injunction. In part, GPP argued that appellants failed to show a material change in the facts upon which the stipulated permanent injunction was issued. GPP disputed appellants’ claim that its trade secret was not a secret. GPP argued that “a trade secret can also be a formula, a process, a method or technique.” VPS also opposed appellants’ motion, arguing that appellants did not demonstrate new facts to support dissolving the injunction under On January 31, 2017, the trial court denied appellants’ renewed motion to modify or dissolve the stipulated permanent injunction, finding that the Appellants did not appeal from the trial court‘s order denying their first motion to modify or dissolve the stipulated permanent injunction. Instead, appellants appeal from the trial court‘s order denying their renewed motion filed pursuant to Likewise, GPP argues that orders denying renewed motions under Appellants’ assertion that there is a split in authority over the appealability of orders denying renewed motions under In Tate, the defendant filed an order to show cause seeking to set aside a child support order. (Tate, supra, 184 Cal.App.4th at p. 153.) The motion was denied in August 2008, and the defendant filed a renewed motion under On appeal, Tate first examined the appealability of motions for reconsideration made under Thus, Tate held that orders denying renewed motions under After Tate was decided, the Legislature amended In Chango, the appellate court considered the argument that Tate was abrogated by the Legislature‘s subsequent amendment to Appellants argue that Tate was wrongly decided and rested on the erroneous assumption that the differences between subdivisions (a) and (b) of Appellants misread VPS agrees with GPP‘s argument that the order denying the renewed motion under We requested supplemental briefing from the parties, asking if this court should exercise its discretion to consider appellants’ appeal as a petition for a writ of mandate, which we must do only “under unusual circumstances.” (Olson v. Cory (1983) 35 Cal.3d 390, 401 (Olson).) In response, all of the parties urge us to consider the appeal as a petition for writ of mandate. The California Supreme Court in Olson determined that it was appropriate to treat an appeal as a petition for a writ of mandate when there was no adequate remedy at law, “the issue of appealability was far from clear in advance,” the records and briefs included the necessary elements for a petition for a writ of mandate, there was nothing to indicate that the trial court would appear separately or become more than a nominal party, and dismissing the appeal rather than exercising the court‘s discretion to reach the merits would be ” ’ “unnecessarily dilatory and circuitous.” ’ ” (Olson, supra, 35 Cal.3d at p. 401.) Not all of the elements articulated in Olson are present here. In particular, this is not a case where the issue of appealability was far from clear in advance. The only published cases on the issue, Tate and Chango, have both held that renewed motions under This case, however, presents a relatively unusual procedural situation because it is unclear when or if appellants will be able to challenge the trial court‘s ruling from a later appealable order or judgment. Although a contempt proceeding is ongoing below, a judgment of contempt is not appealable. ( When it denied appellants’ renewed motion, the trial court determined that the renewed motion failed to satisfy both As we explain, we conclude that the trial court did not err when it determined that appellants’ motion did not satisfy We review the trial court‘s order denying a motion to dissolve an injunction for an abuse of discretion. (Loeffler v. Medina (2009) 174 Cal.App.4th 1495, 1505; People ex rel. Feuer v. Progressive Horizon, Inc. (2016) 248 Cal.App.4th 533, 540.) Appellants argue that the stipulated permanent injunction was based on trade secret law, and, as a result, the injunction must be based on a valid trade secret. Thus, appellants insist that the injunction should have been dissolved because the renewed motion demonstrated that a valid trade secret no longer existed. Appellants argue that under The Uniform Trade Secret Act defines a “trade secret” as “information, including a formula, pattern, compilation, program, device, method, technique, or process that: [¶] (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure; and [¶] (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” ( We agree with appellants that publication of a trade secret destroys it. Federal cases that have applied California law have consistently concluded that once a trade secret is publicly disclosed in a patent, the information contained in the trade secret is placed in the public domain and the trade secret is subsequently extinguished. (Forcier v. Microsoft Corp. (N.D.Cal. 2000) 123 F.Supp.2d 520, 528; Stutz Motor Car of America v. Reebok Intern., Ltd. (C.D.Cal. 1995) 909 F.Supp. 1353, 1359.) Likewise, California courts have also concluded that widespread publication of a purported trade secret extinguishes the trade secret. (DVD Copy Control Assn., Inc. v. Bunner (2004) 116 Cal.App.4th 241, 251 [widespread publication of information over Internet may destroy trade secret].) There is sufficient evidence to support the trial court‘s implied determination that GPP has a valid trade secret. Appellants observe that the 880 patent, which describes the process for making PPC compositions, states as its first claim the invention of “[a] food preserving composition for treating edible products . . . comprising a mixture of at least one stabilizing acid.” Later, the 880 patent states as another claim, “[t]he food preserving composition of claim 1 wherein the stabilizing acid is an organic food grade acid or a salt thereof.” However, disclosure of sodium benzoate as the “organic food grade acid” contemplated by the 880 patent does not, by itself, reveal the process that GPP‘s trade secret product is applied and used on lettuce. Likewise, the 880 patent describes the process to create a generic PPC composition but also specifically describes detailed examples of how to prepare different iterations of PPC compositions to be used on seafood. Appellants, however, do not articulate which preparation discloses GPP‘s trade secret.8 Appellants merely vaguely reiterate that GPP‘s trade secret is the combination of sodium benzoate with the 880 patent. Appellants further claim that the 147 patent application discloses the use of sodium benzoate to preserve lettuce, destroying GPP‘s commercial advantage. Appellants, however, do not cite to anything in the record that demonstrates that the 147 patent application actually discloses GPP‘s trade secret. In fact, it appears that the 147 patent application merely makes a passing For these reasons, appellants’ claim that the trial court abused its discretion when it did not dissolve the stipulated permanent injunction under Appellants argue that the stipulated permanent injunction fails to adequately provide a standard of conduct because its terms are too vague. Appellants further argue that the trial court lacked authority over the injunction because it would be precluded from finding appellants in contempt under Appellants, however, agreed to the terms of the stipulated permanent injunction that they now claim are too vague to be enforced. Appellants did not seek relief from their stipulations, and to the extent appellants challenge issues that could have been raised in a prior appeal—such as an appeal from the permanent injunction itself—those issues are not now reviewable here. (See Malatka v. Helm (2010) 188 Cal.App.4th 1074, 1085 [issues that could have been raised in appeal from original restraining order could not be raised on appeal from order refusing to dissolve the restraining order]; Harris v. Spinali Auto Sales, Inc. (1966) 240 Cal.App.2d 447, 452-454 [party remains bound to stipulation unless relief is obtained by trial court].) Appellants claim that recently discovered evidence underscores the vagueness of the permanent injunction, citing to the deposition testimony of various GPP employees including Cyr, Jabar, and Kierstead. Appellants further argue that GPP‘s own amended trade secret designation reflects that GPP cannot articulate how its trade secret is used on lettuce and fails to list information that was not already publicly available. Finally, appellants insist that the ends of justice would be served by dissolving the stipulated permanent injunction because the injunction was void and entered in excess of the trial court‘s jurisdiction; thus, the trial court would be precluded from finding appellants in contempt of the injunction. Appellants primarily rely on Loftis v. Superior Court (1938) 25 Cal.App.2d 346. There, the appellate court determined that the trial court acted in excess of its jurisdiction when it entered an injunction restraining certain public officers from duties required of them by existing, valid state law. (Id. at pp. 353-354.) Loftis determined that the provisions of GPP and VPS both insist that under Wanke, the stipulated permanent injunction was not issued in excess of the trial court‘s jurisdiction. Thus, GPP and VPS claim that appellants cannot defend against the trial court‘s enforcement of the injunction as described in Wanke. The issue contemplated in Wanke, however, is not completely analogous to the issues argued by appellants in the present action. Here, appellants argue that the injunction should be dissolved under Ultimately, we do not need to decide whether the stipulated permanent injunction was entered in excess of the trial court‘s jurisdiction as contemplated in Loftis or whether appellants cannot defend against the enforcement of the injunction as described in Wanke. As we have explained, appellants’ claim that the stipulated permanent injunction is unenforceable and should be terminated under We find that the trial court did not abuse its discretion when it concluded that appellants did not meet the requirements of The constructive petition for writ of mandate is denied. Respondent and intervenor are entitled to their costs. Premo, J. WE CONCUR: Greenwood, P.J. Elia, J. Global Protein Products, Inc. v. Le et al. H044628 Global Protein Products, Inc. v. Le et al. H0446284. The Renewed Motion to Modify or Dissolve the Stipulated Permanent Injunction
DISCUSSION
1. Appealability
a.
2. The Renewed Motion Failed on Its Merits
a. General Legal Principles and Standard of Review
b. Existence of a Valid Trade Secret
c. Vagueness and Enforceability of the Stipulated Permanent Injunction
d. Conclusion
DISPOSITION
Trial Court: Santa Clara County Superior Court Superior Court No. 105CV043903 Trial Judge: Hon. William J. Elfving Counsel for Plaintiff/Respondent: Global Protein Products, Inc. Berding & Weil Paul Wilfred Windust Counsel for Defendants/Respondents: Kevin Le West Coast AG Berstein Law David Alan Berstein John Dimuzio Jr. Counsel for Interveners/Respondents: The VPS Companies, Inc. Inn Foods, Inc. Johnson & James Robert K. Johnson