Cuebiq Group, LLC v. Paedae, Inc.

Background

Cuebiq Group filed this declaratory-judgment action after acquiring assets from Cuebiq Inc. in a foreclosure sale. Before that acquisition, PaeDae and Gimbal had sued Cuebiq Inc. in California, alleging that it misappropriated Gimbal’s trade secrets, breached a license agreement, failed to pay license fees, and misrepresented its use of the defendants’ technology. Cuebiq Group sought a declaration that the acquired software did not contain the trade secrets at issue and that Cuebiq Group was not the successor to Cuebiq Inc.’s liabilities.

The parties presented a discovery dispute concerning Request for Production No. 5, which sought documents and communications concerning the technology developed by Gimbal and its predecessor. The dispute also concerned the production and review of source code. Cuebiq Group proposed a process under which both sides would exchange relevant source code for review under a protective order. The defendants proposed a phased process under which Cuebiq Group would first produce its source code, after which the defendants would identify the relevant scope of their own source code and discuss producing it.

Parties’ Positions

Cuebiq Group argued that the defendants’ allegedly misappropriated trade secrets were directly relevant to its declaratory-judgment claims and that the defendants should not impose unilateral conditions on production. It said it was willing to produce its own source code under special protective-order protections.

The defendants argued that Cuebiq Group had not shown why it needed access to all of PaeDae’s source code. They contended that the request was overbroad, burdensome, and disproportionate, and that identifying the trade secrets described in the California complaint was sufficient. They asked the court to deny the request to compel production of PaeDae’s source code.

Ruling

The court granted Cuebiq Group’s request with modifications. Judge Jessica G. L. Clarke directed the parties to confer about a stipulated protective order and submit the proposed order for the court’s review by June 9, 2025. The court also directed them to agree on a specific date for a simultaneous exchange. On that date, Cuebiq Group must produce its applicable source code to the defendants, and the defendants must produce the source code reflecting the trade secrets they allege Cuebiq Inc. misappropriated to Cuebiq Group. The exchange must occur within a reasonable time after the court enters the protective order, and the exchanged information will be subject to that order.

Disposition

The court granted the plaintiff’s discovery request with the stated modifications. This order addressed the parties’ discovery dispute; it did not decide whether trade-secret misappropriation occurred or whether Cuebiq Group is liable for Cuebiq Inc.’s obligations.