Judge Randolph M. Hammock, Case Number: 18STCV09674, Date: 2023-08-31 Tentative Ruling

Plaintiff ReactX, LLC alleges that Defendant Google, LLC misappropriated and/or misused ReactX’s Confidential Information, its Platform, and/or its proprietary source code in a variety of Google products and platforms, including but not limited to, AdSense “Auto Ads”; Google Ad Manager; Google Ad Exchange; Google Ads; and DV360, all without compensation to ReactX.

Pursuant to Google’s request, the court takes judicial notice of Google’s Exhibits A through E, and supplemental Exhibits A through C. The court takes judicial notice of the existence of the court records and video, but not the truth of matters asserted therein. (See Bd. of Pilot Commissioners v. Superior Ct. (2013) 218 Cal. App. 4th 577, 597.)

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294). Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741.)

As to each claim as framed by the Complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389.) A defendant has met its burden of showing that a cause of action has no merit if it demonstrates the absence of any single essential element of plaintiff’s case or a complete defense to plaintiff’s action. (Code Civ. Proc. § 437c(o)(2); Bacon v. Southern Cal. Edison Co. (1997) 53 Cal.App.4th 854, 858.) Once the defendant moving party has met the burden, the burden shifts to the plaintiff to show via specific facts that a triable issue of material facts exists as to a cause of action or a defense thereto. (§ 437c(o)(2).)

First, the court must “identify the issues framed by the pleadings.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) Plaintiff ReactX alleges it created a computer software application, known as the ReactX Platform (“the Platform”), which “represented a significant development in the Internet advertising business.” (Id. ¶ 8.) Unlike other advertising platforms at the time, ReactX’s Platform was “autonomously and virtually instantaneously able to identify available space for branded custom ads, to sell that space and to automatically scale the advertisement to the size of the space over multiple user platforms.” (Id.)

For six years, Google licensed the Platform from ReactX pursuant to various written agreements. (SAC ¶ 1.) In 2016, Google decided not to renew the license. (Id. ¶ 3.) At that point, ReactX alleges that Google “misappropriated and used the proprietary software applications it licensed from ReactX in violation of the trade secrecy agreements it had with ReactX.” (Id. ¶ 3.) ReactX alleges Google has gone on to use “ReactX’s Confidential Information, its Platform, and/or its proprietary source code in a variety of Google products and platforms, including but not limited to, AdSense ‘Auto Ads’; Google Ad Manager (formerly ‘Doubleclick for Publishers’ or DFP); Google Ad Exchange (‘AdX’); Google Ads; and DV360 (formerly ‘Doubleclick Bid Manager’ or DBM), all without compensation to ReactX.” (Id.)

In support of its Third Cause of Action for violation of the California Uniform Trade Secrets Act, ReactX alleges it took “reasonable efforts maintain [the Platform’s] secrecy” and that ReactX “derives independent economic value from [the Platform] not being generally known to the public or to other persons who can obtain economic value from its disclosure or use.” (Id. ¶ 110.) ReactX “disclosed the Platform only upon the [Google’s] written promise of confidentiality and non-disclosure.” (Id.) Google, however, allegedly “misappropriated the Platform and the other Confidential Information disclosed to them in confidence by ReactX and used it for their own use and financial benefit.” (Id. ¶ 111.)

“A cause of action for misappropriation of trade secrets requires a plaintiff to show the plaintiff owned the trade secret; at the time of misappropriation, the information was a trade secret; the defendant improperly acquired, used, or disclosed the trade secret; the plaintiff was harmed; and the defendant’s acquisition, use, or disclosure of the trade secret was a substantial factor in causing the plaintiff harm.” (AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923, 942 [citing CACI].)

In support of the MSA, Google argues that ReactX did not own a “trade secret” because ReactX disclosed its alleged trade secret information to the public, and because the trade secret information could be reverse engineered. In support of the first contention, Google contends that ReactX (1) disclosed its system to the public in a patent application that the U.S. Patent and Trademark Office (“USPTO”) published on December 19, 2013; (2) that ReactX detailed “exactly how” its System worked to potential customers in its user manuals, which it treated as marketing materials and widely distributed without any nondisclosure requirements; and (3) that ReactX made the code supporting its system publicly available on the Internet in human-readable form. (Mtn. 8: 17-22.)

The UTSA defines a trade secret as “information ... that: [¶] (1) Derives independent economic value, actual or potential, from not being generally known ...; and [¶] (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (§ 3426.1, subd. (d).) “The ‘test for a trade secret is whether the matter sought to be protected is information (1) that is valuable because it is unknown to others and (2) that the owner has attempted to keep secret. [Citation.] . . . [I]n order to qualify as a trade secret, the information “must be secret, and must not be of public knowledge or of a general knowledge in the trade or business.” ’ ” (AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923, 943.) “ ‘[A] trade secret . . . has an intrinsic value which is based upon, or at least preserved by, being safeguarded from disclosure.’ Public disclosure, that is the absence of secrecy, is fatal to the existence of a trade secret. ‘If an individual discloses his trade secret to others who are under no obligation to protect the confidentiality of the information, or otherwise publicly discloses the secret, his property right is extinguished.’ A person or entity claiming a trade secret is also required to make ‘efforts that are reasonable under the circumstances to maintain its secrecy.’ ” (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 304, internal citations omitted.)

“The secrecy requirement is generally treated as a relative concept and requires a fact-intensive analysis.” (DVD Copy Control Assn., Inc. v. Bunner (2004) 116 Cal. App. 4th 241, 251.) In determining whether or not a plaintiff made reasonable efforts to keep the trade secrets a secret, a jury must consider a myriad of factors. (See CACI 4404.) These include, but may not be limited to, “restricting access and physical segregation of the information, confidentiality agreements with employees, and marking documents with warnings or reminders of confidentiality.” (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 304.) No one factor is determinative. (See CACI 4404.)

“The issue of whether information constitutes a trade secret is a question of fact.” (Thompson v. Impaxx, Inc. (2003) 113 Cal.App.4th 1425, 1430.) “[W]hether a party claiming a trade secret undertook reasonable efforts to maintain secrecy is a question of fact [citation] and it may be implicit in a determination that the information does not qualify as a trade secret, also a question of fact.” (In re Providian Credit Card Cases (2002) 96 Cal. App. 4th 292, 306; see also Whyte v. Schlage Lock Co. (2002) 101 Cal. App. 4th 1443, 1453 [“The ultimate determination of trade secret status is subject to proof presented at trial.”].)

“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.” (Glob. Protein Prod., Inc. v. Le (2019) 42 Cal. App. 5th 352, 367 [citing Forcier v. Microsoft Corp. (N.D.Cal. 2000) 123 F.Supp.2d 520, 528; Stutz Motor Car of America v. Reebok Internat., Ltd. (C.D.Cal. 1995) 909 F.Supp. 1353, 1359].)

The ‘830 patent application includes graphics demonstrating the scout tag process. (SSUMF 37, 41; Patent Figures 7 & 8.) Figure 8 in the application, Google contends, discloses where the creative tag and the render engine were involved in the scout tag process. (SSUMF 43–44.) Google contends these facts, along with other figures contained in the patent application, reveal the process underlying ReactX’s system. (SSUMF 45, 46.)

The mere filing of the patent containing information on ReactX’s system is not dispositive. Instead, the question is whether the “implementation details and techniques” of ReactX’s system “go beyond what was disclosed in the patent.” (SkinMedica, Inc. v. Histogen Inc., 869 F. Supp. 2d 1176, 1195 (S.D. Cal. 2012).)

Here, ReactX has established a triable issue of material fact whether, and to what extent, the patent application contained trade secret information particular or relevant to the relationship between ReactX and Google. This question is highly fact intensive and cannot be resolved by the instant motion. In so concluding, it is noted that courts must “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc.¿(2006) 39 Cal.4th 384, 389.) Doing so here, ReactX has met its burden to establish a triable issue of material fact as to the disclosures made in the patent application.

Public Disclosure in User Manuals: Google also argues that ReactX forfeited its trade secrets by detailing the processes and procedures of the System in integration and specification documents, which were essentially “user manuals” for the System. (SSUMF 48-54.) ReactX supposedly did this without requiring recipients to sign confidentiality agreements.

But again, ReactX has established triable issues of fact over the extent to which the user manuals contained the trade secret information at issue. (See Dore, 39 Cal.4th at 389 [requiring courts to liberally construe evidence in opposing party’s favor on motion for summary judgment].) ReactX has demonstrated the documents may not have been exhaustive blueprints to its system, but rather, introductory materials containing somewhat cursory details. Indeed, ReactX presents evidence that Google’s engineers undertook great efforts to attempt to understand them.

Online Disclosure and Reverse Engineering: Google also contends ReactX lost any privacy interest by publishing the code for its scout tag, creative tag, and render engine in unobfuscated, human-readable format on the Internet for anyone to see. (SSUMF 96, 97.) Relatedly, Google argues the code was viewable to anyone viewing a ReactX enabled advertisement. In particular, ReactX’s use of JavaScript to write the code left the code exposed to anyone who simply clicked “view source” on an internet advertisement. (SSUMF 110-112.) California courts have 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].)

In related argument, Google argues that ReactX’s system is not subject to trade secret protection because the system could be readily reverse engineered based on public information. (SSUMF 115-120). Where “a zealous competitor could easily ascertain or reverse engineer through public information the core of” the alleged trade secret, “[s]uch an ability defeats the existence of a trade secret.” (Yeiser Rsch. & Dev. LLC v. Teknor Apex Co., 281 F. Supp. 3d 1021, 1046 (S.D. Cal. 2017).)

Here, ReactX presents evidence that it undertook efforts to obfuscate its code. (PMF 160-169.) The success of these attempts, and the resulting extent to which Google’s engineers could read or reverse engineer this code, is plainly disputed. (PMF 173-180.) ReactX has therefore established a triable issue as to how readily ReactX’s system could be reverse engineered, if at all.

In support of its motion, Google contends that ReactX’s First and Second causes of action fail because Google did not breach any confidentiality provisions of the contracts at issue. Instead, as Google argued previously, any purportedly confidential information was made public through various means, and therefore, is not protected by the License or the Terms. For purposes of this motion, the First and Second causes of action are essentially derivative of the Third.

Google also contends that the court should, at a minimum, grant the motion for summary adjudication at least as to the Terms because it is only the License—a fully integrated document—which governs the parties’ relationship. However, a motion for summary adjudication “shall be granted only if it completely disposes of a cause of action.” (See CCP § 437c(f)(1).) Because a ruling in Google’s favor on this issue would not completely dispose of the cause of action, summary adjudication is unavailable.