Wang v. Zymergen Inc.

Background

This sealing order resolved pending requests connected to Biao Wang’s motion for leave to amend. Wang sought to seal information that the Zymergen defendants and certain investment-firm defendants had designated confidential or highly confidential. The Zymergen defendants were Zymergen Inc., Josh Hoffman, Enakshi Singh, Steven Chu, Jay T. Flatley, Christine M. Gorjanc, Travis Murdoch, Matthew A. Ocko, Sandra E. Peterson, Zach Serber, and Rohit Sharma. The other defendants identified in the sealing request were SB Investment Advisers (US) Inc., DCVC Management Co, LLC, and True Venture Management, L.L.C.

The Zymergen defendants argued that disclosure could harm the company and its former directors and officers by revealing information about compensation, technology, funding, compliance processes, corporate governance, competitive position, and relationships with investors and creditors. SB Investment Advisers, referred to as SBIA, argued that the material included sensitive details about its internal operations, business strategies, investments, and other internal documents. DCVC Management and True Venture did not file statements supporting Wang’s sealing motion.

Legal standard

The court applied the strong presumption that judicial records should be publicly accessible. For records connected to a motion to amend a complaint, the party seeking secrecy must show “compelling reasons” supported by specific facts that outweigh the public’s interest in access. The court noted that protecting trade secrets can qualify as a compelling reason, but confidentiality or coverage by a protective order alone is not enough.

The court explained that a trade secret is information used continuously in a business that gives the business an advantage over competitors who do not know or use it. Information about one-time or past events, such as particular financial terms, employee salaries, or past business dealings, generally does not meet that definition merely because it is confidential.

Court’s analysis

The primary document was Wang’s second amended complaint, which had become the operative complaint after the court granted leave to amend. The marked material concerned investments in Zymergen, investor management rights and protections, board members and board actions, personal relationships, control over business relationships, financial and operating challenges, responses by controlling stockholders, actions before Zymergen’s initial public offering, and directors’ employment and financial or relationship incentives.

The court concluded that this information did not appear to involve trade secrets or similarly sensitive information. Although details about a company’s internal operations can sometimes be trade secrets, the court found that the information at issue involved past business dealings and relationships and offered limited insight into current or future operations or strategies. The Zymergen defendants and SBIA did not clearly explain why the information was a trade secret rather than confidential business information, or identify other compelling reasons supported by specific facts that justified sealing.

Rulings and next steps

The court denied Wang’s motion to seal the marked portions of the amended complaint. If a party wished to keep material in the second amended complaint under seal, it could file a renewed statement or declaration by March 1, 2024, identifying the specific material and explaining why it was a trade secret or otherwise met the compelling-reasons standard. If no such filing occurred, Wang was directed to file an unredacted version of the second amended complaint.

The court also denied without prejudice the other sealing requests covering Wang’s motion to amend, later briefing, and related filings. A party could file a renewed statement or declaration by March 8, 2024, for material in those documents that was not included in the amended complaint and that the party believed met the compelling-reasons standard. If no renewed statements were filed, the parties were directed to file unredacted versions of the documents covered by those sealing motions. Judge P. Casey Pitts entered the order on February 27, 2024.