Proofpoint, Inc. v. Vade Secure, Incorporated

Background

The court had previously ordered the parties to conduct discovery under the Federal Rules of Civil Procedure rather than under the evidentiary-exchange procedures of the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. Defendants moved for reconsideration of that decision and sought a stay of discovery while the motion was pending. The court had also construed a separate stay request as seeking to pause compliance with the earlier discovery order.

Defendants separately sought a protective order barring discovery until Plaintiffs identified the alleged trade secrets with reasonable particularity under California Code of Civil Procedure § 2019.210.

Motion for Reconsideration

Defendants argued that the earlier discovery decision failed to consider important facts and legal arguments. They also argued that producing information under the Federal Rules could violate France’s blocking statute, which restricts disclosure of certain economic, commercial, industrial, financial, or technical information for use in foreign proceedings. Defendants submitted declarations, legal opinions, correspondence, and other materials concerning French law and the location and origin of the information sought in discovery.

The court found that Defendants had received ample opportunity to present their arguments. It also found that Defendants had repeatedly changed or qualified their position about whether the information was merely stored in France or had originated there. Because Defendants did not clearly establish that French law prohibited production of all the information sought, this factor weighed against them.

The court explained that the Hague Convention provides an optional method for obtaining evidence abroad and does not automatically replace the Federal Rules. Under the Supreme Court’s decision in Societe Nationale Industrielle Aerospatiale v. United States District Court, a district court may order a party subject to its jurisdiction to produce evidence physically located in a treaty country. The court also stated that a foreign blocking statute does not remove an American court’s power to order production or require American courts to use Hague Convention procedures first.

The court considered the nonexclusive factors identified in Richmark Corp. v. Timber Falling Consultants, including the importance and specificity of the requested information, whether it originated in the United States, the availability of alternative means of obtaining it, the competing interests of the United States and France, the hardship of inconsistent enforcement, and the likelihood that enforcement would achieve compliance.

The court concluded that these factors overwhelmingly favored discovery under the Federal Rules. It found Defendants’ argument about possible criminal penalties under France’s blocking statute unpersuasive, citing the statute’s limited enforcement history and decisions describing the risk of prosecution as minimal. The court therefore denied Defendants’ motion for reconsideration and vacated the stay of discovery so discovery could proceed under the Federal Rules.

Motion for Protective Order

Defendants argued that Plaintiffs’ disclosure was a lengthy “kitchen-sink” submission that did not adequately identify the alleged trade secrets, separated them insufficiently from generally known information, and included whole source-code directories. California law requires a plaintiff alleging trade-secret misappropriation to identify the trade secret with reasonable particularity before beginning related discovery.

The court explained that this requirement is intended to encourage investigated claims, prevent discovery from being used to obtain a defendant’s trade secrets, help courts define discovery’s scope, and allow defendants to prepare their defenses. It does not require a plaintiff to describe every detail of a trade secret, achieve absolute precision, or prove the merits of the misappropriation claim before discovery begins.

The court also considered a declaration from a computer-science professor who opined that Plaintiffs’ disclosure allowed a person with relevant technical training and experience to understand the claimed email-security trade secrets and distinguish them from generally known information or techniques. The court found that Defendants had not explained why Plaintiffs’ disclosure was unreasonable at this stage or how it prevented Defendants from preparing a defense or prevented the court from setting discovery limits. It therefore denied Defendants’ motion for a protective order.

Disposition

The court denied Defendants’ motion for reconsideration, vacated the stay of discovery, and denied Defendants’ motion for a protective order. Discovery could proceed under the Federal Rules of Civil Procedure.