Quintara Biosciences, Inc. v. Ruifeng Biztech Inc.

Background

Quintara brought a federal claim for trade-secret misappropriation in a dispute arising from a deteriorating joint-business venture. The federal claim supplied the basis for the court’s supplemental jurisdiction, meaning the court’s authority to hear related state-law claims in the same case.

Earlier, the court ordered Quintara to identify its asserted trade secrets with enough detail before receiving trade-secret discovery. The court required Quintara to provide, for each alleged secret: a specific summary; its background and economic value from not being generally known; the efforts used to keep it secret; and the precise claimed secret and its elements. The defendants moved to strike Quintara’s disclosure and withheld discovery while asking the court to rule on its adequacy.

Analysis

The court explained that it has broad discretion to control discovery and that the disclosure requirement was intended to define the reasonable limits of discovery, give the defendants enough notice to prepare a defense, and prevent Quintara from using discovery to identify information later and then labeling it a stolen trade secret.

The court found that Quintara adequately described two asserted secrets: its customer-profile database and its vendor database. The customer-profile database included customer purchases, payment histories, products purchased, purchase dates, prices, feedback, and possible additional products or services. The vendor database included service providers’ contact and business information, purchasing plans, and financial information. The court considered these descriptions sufficient because the underlying transaction data was specific to Quintara and could be distinguished from defendants’ or publicly available information during discovery and summary judgment.

The court found the remaining nine asserted secrets inadequately described. Quintara generally identified categories of information rather than the specific secrets, including business and marketing information, plans for new products and services, computer code, and customized DNA-sequencing protocols and reagents. The court concluded that these descriptions did not explain what made the information distinct from public information, industry practice, or competitors’ methods. The court also rejected Quintara’s arguments that the dispute should be treated as a motion to dismiss or that discovery could reveal the contents of the alleged secrets. The order concerned the adequacy of the disclosure, not whether the information ultimately qualified as a trade secret.

Ruling

Judge William Alsup granted the motion to strike in part. Quintara’s trade-secret misappropriation claim may proceed, including to discovery, only as to the customer-profile and vendor databases. All state-law claims and counterclaims were stayed. The court directed the parties to continue discovery on the narrowed trade-secret claim, kept the existing case-management schedule, and vacated the March 18 hearing.