Mattson Technology, Inc. v. Applied Materials, Inc.

Background

Mattson alleged that it developed two confidential approaches for semiconductor plasma-processing equipment, called the Green Path and Grey Path. Mattson alleged that Rene George and Vladimir Nagorny helped develop those approaches while working for Mattson, signed confidentiality agreements, and later went to work for Applied Materials, Inc. Mattson further alleged that Applied filed patent applications disclosing aspects of those approaches.

Mattson asserted seven claims: violation of the federal Defend Trade Secrets Act; breach of contract against George and Nagorny; inducing breach of written contract against Applied; intentional and negligent interference with prospective economic relations against Applied; violation of California’s Unfair Competition Law; and conversion. The defendants moved to dismiss, and Applied also moved to strike the state-law claims and Mattson’s request for punitive damages.

Trade-secret and contract claims

The court concluded that Mattson sufficiently pleaded a claim under the Defend Trade Secrets Act. At the motion-to-dismiss stage, Mattson adequately identified the alleged trade secrets, alleged that it had not publicly disclosed them, and described efforts to keep them confidential, including confidentiality agreements, passwords, encryption, need-to-know restrictions, and restricted physical access.

The court declined to resolve the defendants’ factual argument that Mattson’s patent filings had already disclosed the alleged trade secrets. It determined that resolving that issue would require a technical comparison of the filings and the alleged secrets, which was not appropriate at the pleading stage without expert discovery.

The court also concluded that Mattson sufficiently alleged that Applied could be held vicariously liable for the alleged misappropriation by George and Nagorny. The court found it reasonably foreseeable, at the pleading stage, that hiring employees from a competitor could result in misuse of confidential information obtained from the former employer. The court did not treat this conclusion as a substitute for proving actual or threatened misappropriation.

The court separately allowed the breach-of-contract claim against George and Nagorny to continue. It rejected the argument that the contract claim necessarily failed whenever the trade-secret claim failed, explaining that the two claims have different legal requirements. In any event, the court noted that the trade-secret claim survived.

State-law claims and motions to strike

The court dismissed the remaining state-law claims as preempted by the California Uniform Trade Secrets Act. The court explained that this law generally provides the exclusive civil remedy for conduct involving the misappropriation of trade secrets and preempts other civil claims based on the same alleged taking or use of confidential information. The court determined that Mattson’s claims for inducing breach of written contract, intentional and negligent interference with prospective economic relations, violation of the California Unfair Competition Law, and conversion were all based on the alleged misuse of Mattson’s trade-secret or proprietary information.

The dismissals were entered with leave to amend. The court stated that amendment might not be futile if Mattson could allege, in good faith and with sufficient detail, a basis for those claims that was distinct from trade-secret misappropriation and consistent with the court’s preemption analysis.

The court denied Applied’s request to strike the state-law claims under California’s anti-Strategic Lawsuits Against Public Participation statute without prejudice. It denied as moot Applied’s request to strike the punitive-damages request because Mattson sought punitive damages only in connection with a claim that the court dismissed.

Disposition

The court granted in part and denied in part the motions to dismiss and strike, with leave to amend. The Defend Trade Secrets Act and breach-of-contract claims survived dismissal. All remaining claims were dismissed with leave to amend. The anti-Strategic Lawsuits Against Public Participation motion to strike was denied without prejudice, and the motion to strike the punitive-damages request was denied as moot. Mattson’s deadline to file an amended complaint was August 15, 2024.