Access Optical Networks, Inc. v. Seagate Technology LLC

Background

Access Optical Networks, Inc. (AON) alleged that Seagate Technology LLC misappropriated AON’s trade secrets and breached the parties’ nondisclosure agreements. AON alleged that it shared confidential information about optical data storage and related technology with Seagate between 2012 and 2015 while the parties considered a possible business relationship. The agreements limited how confidential information could be used and, for information covered by the First Supplemental Nondisclosure Agreement, imposed confidentiality periods of five years from disclosure.

AON alleged that Seagate later developed and commercialized heat-assisted magnetic recording technology using information AON had shared. AON said it became concerned in 2018, investigated by seeking assurances from Seagate and trying to obtain a Seagate device, and learned more from published Seagate patent applications in 2021. AON filed the action in May 2024. Its claims included misappropriation of trade secrets under California law, misappropriation under the federal Defend Trade Secrets Act, and breach of contract under California law.

Legal standard

Seagate moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not allege enough facts to support a legally plausible claim. At this stage, the court generally accepts the complaint’s factual allegations as true and views them in the plaintiff’s favor, but it does not have to accept legal conclusions presented as facts.

Statute of limitations

The court denied Seagate’s argument that all of AON’s claims were time-barred. The trade-secret claims had three-year limitations periods, and the contract claim had a four-year period. The court accounted for a 180-day suspension during the COVID-19 pandemic.

The court held that AON plausibly alleged that the delayed-discovery rule made its claims timely. AON alleged that it discovered the factual basis for its claims when Seagate’s patent applications were published in 2021. Although Seagate argued that AON should have discovered the claims in 2018, the court found that AON plausibly alleged a reasonable investigation at that time. AON had sought assurances from Seagate, received a denial, and could not obtain a Seagate device because the devices were released only to a limited number of enterprise customers. The court denied the statute-of-limitations defense at the motion-to-dismiss stage, while stating that Seagate could raise it again at summary judgment or trial on a more complete record.

Breach-of-contract claim

The court dismissed AON’s breach-of-contract claim because AON did not plausibly allege that the information disclosed in 2012 or 2013 was covered by the First Supplemental Nondisclosure Agreement. That agreement covered information related to “Energy Assisted Magnetic Recording,” but did not cover information related to “Holographic Recording.” The court also found that AON’s allegations using “and/or” language were impermissibly unclear about which technology its disclosures concerned.

The court nevertheless found that AON plausibly alleged other facts supporting the claim, including that Seagate used the information during the applicable confidentiality periods and that AON’s delayed discovery allegations made the claim timely. Because AON represented that the disclosures concerned Energy Assisted Magnetic Recording and could clarify that allegation, the court granted leave to amend.

Trade-secret claims

The court denied Seagate’s argument that the trade-secret claims should be dismissed because AON failed to mark the disclosed information as confidential. AON plausibly alleged that at least one 2012 white paper was marked “CONFIDENTIAL” as required by the Master Nondisclosure Agreement. The court did not decide whether every written disclosure was properly marked or whether the oral disclosures would reasonably have been understood to be confidential. It stated that those issues could be explored in discovery.

Disposition

The court’s conclusion states that Seagate’s motion was GRANTED IN PART as to AON’s breach-of-contract claim and was otherwise DENIED. AON could file an amended complaint addressing the identified pleading deficiencies within fourteen days of the January 17, 2025 order.