SolarPark Korea Co., Ltd. v. Solaria Corporation

Background

SolarPark Korea Co., Ltd. manufactures solar modules. The Solaria Corporation developed and owns intellectual property concerning “shingling” technology for solar modules. Complete Solaria, Inc. was formed through a merger involving Solaria, and Solaria became its wholly owned subsidiary.

SolarPark and Solaria worked together under several agreements, including a Technology License Agreement, a Supply Agreement, and a Solar Module Sales Agreement. The agreements addressed intellectual-property ownership and confidentiality. The Technology License Agreement and the Solar Module Sales Agreement also required arbitration in Singapore after a failed settlement effort. SolarPark claimed that it owned manufacturing know-how for mass-producing low-cost, high-quality shingled solar modules and that Solaria had disclosed or threatened to disclose that know-how to other manufacturers.

Solaria filed an arbitration against SolarPark in Singapore. SolarPark then filed this action against Solaria, Complete Solaria, and Doe defendants. SolarPark sought a preliminary injunction concerning its trade secrets, production and sale of certain shingled solar modules, and contacts with other manufacturers. It also sought an injunction against allegedly defamatory statements and expedited discovery. Solaria moved to dismiss several claims based on the arbitration agreements and sought a stay of the litigation.

Preliminary injunction concerning trade secrets

A preliminary injunction is temporary court-ordered relief issued before a final judgment. The court applied the four required factors: likelihood of success, likely irreparable harm without an injunction, the balance of hardships, and the public interest.

The court found that SolarPark sufficiently identified its alleged trade secrets as specialized know-how for mass-producing shingled solar modules. The court distinguished that know-how from Solaria’s own shingling patents and found that SolarPark’s manufacturing improvements could qualify as trade secrets. The court also found evidence of independent economic value, including the ability to produce high-quality modules at lower cost, and reasonable efforts to preserve secrecy through confidentiality agreements and employee obligations.

The court further found that SolarPark was likely to succeed in showing that Solaria had misappropriated or threatened to misappropriate the trade secrets. The court relied on evidence that Solaria remained in possession of SolarPark’s manufacturing know-how and did not acknowledge that the know-how belonged to SolarPark. The court found a likely risk of irreparable harm because disclosure could eliminate SolarPark’s competitive advantage and future business opportunities. The balance of hardships and public interest also favored a narrowly tailored injunction requiring compliance with trade-secret laws and the parties’ confidentiality obligations.

The court therefore granted the trade-secret portion of SolarPark’s requested preliminary injunction. Solaria, Complete Solaria, and persons or entities acting under, with, or for them—or receiving actual notice of the order—were restrained from using, disclosing, transferring, copying, distributing, marketing, or otherwise providing access to SolarPark’s identified mass-production trade secrets. SolarPark was not required to post a bond, and the injunction was made immediately effective and set to remain in force through entry of judgment following trial.

The court denied the requests to prohibit Solaria from producing, selling, advertising, or importing its shingled solar modules except those manufactured through SolarPark, and to prohibit Solaria from soliciting or negotiating with other manufacturers. The court concluded those restrictions would go beyond protecting SolarPark’s trade secrets, interfere with Solaria’s use of its own patents, and create an exclusive manufacturing relationship that had not previously existed. Accordingly, SolarPark’s motion for a preliminary injunction was GRANTED in part and DENIED in part.

Defamation injunction

SolarPark also sought to prevent Solaria and Complete Solaria from making allegedly defamatory statements, including statements in a registration filing that SolarPark had serious financial problems, permanently ceased production, and filed for bankruptcy. The court treated the requested order as a prior restraint—a court order restricting speech before a final decision on whether the speech is unlawful. SolarPark did not attempt to overcome the strong presumption against such restraints and had not yet obtained a merits determination that the statements were actionable defamation. The court therefore DENIED the requested defamation injunction.

Expedited discovery

The court found that SolarPark’s proposed early discovery was too broad and burdensome as requested, including requests covering seven years of manufacturer contacts and expedited depositions of Solaria executives. The court nevertheless found good cause for narrower discovery because SolarPark needed information to identify Doe defendants and other entities potentially involved in misappropriating its trade secrets, and to help enforce the injunction during the stay.

The court granted limited expedited discovery. Within 14 days, Solaria and Complete Solaria were ordered to produce or make available documents and communications in their possession, custody, or control exchanged with manufacturers or potential manufacturers that described or referenced SolarPark’s identified mass-production trade secrets. The production covered materials dated from October 6, 2018, through the present. SolarPark could seek additional discovery upon a further showing of good cause.

Arbitration and stay

The court DENIED defendants’ motion to dismiss. Counts III and IV alleged that Complete Solaria and Doe defendants interfered with or induced breaches of the agreements. Because those defendants were not parties to the arbitration agreements, the court held that it could not enforce those agreements against them. The court noted, however, that those counts could still be stayed.

Counts V and VI included unfair-competition and civil-conspiracy theories based on several underlying acts, including contract interference, trade-secret misappropriation, and defamation. As to Solaria, the court stayed those counts rather than dismissing them. The court held that the agreements’ incorporation of the Singapore International Arbitration Centre rules clearly and unmistakably delegated questions about the scope of arbitrability to the arbitrator.

The court also granted defendants’ request to stay the litigation pending the Singapore arbitration. It found overlapping facts and issues, including whether Solaria breached its agreements with SolarPark, and concluded that proceeding in court could duplicate the arbitration and require the parties to spend substantial resources on overlapping matters. The court’s conclusion was that the arbitration proceedings could affect the claims remaining in this case and that a stay was warranted.

Disposition

The court ruled as follows:

- Defendants’ motion to dismiss was DENIED. - SolarPark’s motion for a preliminary injunction was GRANTED in part and DENIED in part. - Solaria and Complete Solaria were enjoined from using or disclosing SolarPark’s identified trade secrets. - SolarPark’s request to enjoin allegedly defamatory speech was DENIED. - Limited expedited discovery was granted. - Defendants’ motion to stay the litigation pending arbitration was GRANTED.

Judge Araceli Martinez-Olguin signed the order on August 2, 2023.