Cisco Systems, Inc. v. Chung

Background

Cisco sued Wilson Chung and others for allegedly misappropriating its trade secrets. In an earlier order, the court ruled on Plantronics Inc.’s motion to strike and challenge the sufficiency of Cisco’s trade-secret designation under California Code of Civil Procedure § 2019.210. The court also granted in part and denied in part Cisco’s requests to seal documents filed in connection with that motion and directed Cisco to prepare a redacted version of its disclosure for public filing.

Cisco sought partial reconsideration of the earlier sealing decision. Its motion challenged the unsealing of five portions of its disclosure and one slide in a supporting document. The challenged material concerned internal revenue targets, project strategy and pricing, an end-to-end cost model, and a presentation. Foxconn, a non-party, separately moved to keep under seal information in the end-to-end cost-model portion that Foxconn said contained its confidential pricing information.

Cisco’s Motion for Reconsideration

Under Civil Local Rule 7-9(b), reconsideration requires a material difference in fact or law that was previously unknown, new material facts or a change in law after the order, or a manifest failure to consider material facts or dispositive legal arguments presented before the order. Cisco argued that the court had overlooked or misapplied relevant law and evidence.

The court rejected each of Cisco’s four grounds:

1. California trade-secret statute. Cisco argued that California Civil Code § 3426.5 required the court to seal any information Cisco alleged was a trade secret. The court rejected that categorical interpretation. It reasoned that merely labeling information a trade secret does not automatically require sealing. The court also relied on its earlier determination that Cisco had failed to show independent economic value for information concerning strategy and costs for pre-release video-conferencing display products. The court had concluded that this information could not support Cisco’s trade-secret claims. Cisco therefore could not use the sealing statute to protect information that the court had already determined did not qualify as an actionable trade secret.

2. Ninth Circuit sealing authority. Cisco argued that the court had misapplied the “compelling reasons” standard discussed in Kamakana v. City & County of Honolulu. The court disagreed because Cisco had not shown that the challenged business information qualified as trade-secret information. The court also noted that, as to information allegedly misappropriated by James He, Cisco had adequately alleged independent economic value only for headset prototype design documents and hardware diagrams—not for the related business information in the challenged portions.

3. Cisco’s declarations and evidence. Cisco argued that the court had overlooked declarations describing competitive harm. The court found that one declaration addressed hardware information rather than the business information at issue. It also found that the declaration by Cisco’s outside counsel described the information only generally and did not explain the specific harm that disclosure of each portion would cause. The court further concluded that a newly submitted declaration from Cisco’s senior director of product management was not proper reconsideration evidence because Cisco could have submitted it earlier.

4. Applicable sealing standard. Cisco argued that the court should have applied the less demanding “good cause” standard because Plantronics’ underlying motion was a procedural discovery motion. The court rejected that characterization. It held that the motion concerned which alleged trade-secret information fell within the scope of earlier orders and was sufficiently related to the merits to require the “compelling reasons” standard.

The court concluded that none of Cisco’s arguments justified sealing the challenged portions. Except for the Foxconn information addressed separately, the sealing decisions in the earlier order remained in effect.

Foxconn’s Motion to Maintain Its Information Under Seal

Foxconn submitted a declaration stating that it manufactures electronics components, sells them to technology companies for use in consumer devices, and considers its pricing highly confidential. Foxconn stated that disclosure could allow a competitor to undercut its pricing for a key customer, Cisco. The court also noted that a protective order required the parties to notify non-parties when their information was subject to production, and the record did not show that Cisco had complied with that requirement before serving the disclosure on defendants.

The court found that Foxconn adequately demonstrated competitive harm and ordered that the disclosure at 39:15-40:1 remain under seal. The order’s conclusion states that the court denied Cisco’s motion for reconsideration and granted Foxconn’s motion to keep its information under seal.

Additional Orders

The court ordered Cisco to provide Plantronics, within two days, the public version of the disclosure with redactions consistent with the earlier sealing decisions, except that the Foxconn information at 39:15-40:1 would remain sealed. Plantronics was ordered to file that disclosure on the public docket within four days after receiving it. Cisco was also required to file a redacted version of the supporting document identified as docket entry 156-1. The court stated that it would not entertain further motions related to its prior rulings.