1 QUINN EMANUEL URQUHART & SULLIVAN, LLP Claude M. Stern (Bar No. 96737) 2
[email protected] Daniel C. Posner (Bar No. 232009) 3
[email protected] Jordan R. Jaffe (Bar No. 254886) 4
[email protected] John McCauley (Bar No. 274197) 5
[email protected] 50 California Street, 22nd Floor 6 San Francisco, California 94111-4788 Telephone: (415) 875-6600 7 Facsimile: (415) 875-6700 8 Attorneys for PRIMER TECHNOLOGIES, INC. 9
SUPERIOR COURT OF THE STATE OF CALIFORNIA
10
COUNTY OF SAN FRANCISCO
11 12 QUID, INC., a California Corporation,
CASE NO. CGC-19-574788
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[CORRECTED] PRIMER’S OPPOSITION PRIMER’S OPPOSITION PARTE APPLICATION TO QUID’ QUID’S EX PARTE FOR PRELIMINARY INJUNCTION AND RESPONSE TO ORDER TO SHOW CAUSE
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Plaintiff, vs.
15 PRIMER TECHNOLOGIES, INC.; SEAN GOURLEY; AMY HEINEIKE; EMMANUEL 16 YERA; DOES 1-10, inclusive, 17
Defendant.
Hearing Date: April 12, 2019 Time: 1:30 p.m. Dept.: 302 Judge: Hon. Ethan P. Schulman
18 Trial Date:
None Set
19 20 21 22 23 24 25 26 27 28
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Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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I.
PRELIMINARY STATEMENT
To make a showing to support a preliminary injunction, the plaintiff must show a
3 reasonable probability of success on the merits and irreparable irreparable harm. Using a selective and often 4 misleading recitation of allegations, Plaintiff Quid, Inc. (“Quid”) attempted to make that showing 5 in its opening papers with salacious allegations regarding the downloading of large number numbe r of 6 files, the illicit creation of a new company compan y unbeknownst to his former employer Quid and abject 7 surprise at his continued access to his prior email email account. Quid has mislead this Court as to the 8 true facts and circumstances here. No injunction is warranted warranted and this case should be immediately 9 dismissed for purposes of mediation and arbitration. Taking each point in turn: 10 -
The Alleged Downloads - The only downloads that Quid alleges Dr. Gourley executed
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occurred during his employment and and thus do not support trade trade secret misappropriation. misappropriation. Quid
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puts forth no competent evidence of Dr. Gourley downloading of information subsequent to
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employment. Dr. Gourley has provided a sworn sworn declaration he did not access or use any Quid
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proprietary information after he left Quid’s employ. Ongoing forensic expert analysis of Dr.
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Gourley’s devices is consistent with Dr. Gou rley’s declaration on this point, indicating that he
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has not accessed any of these materials since 2012, long before his Quid employment ended.
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an y protectable trade secrets The Alleged Trade Secrets - Quid fails to identify or show any
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whatsoever, as is its burden. Expert analysis confirms that none of what Quid identifies is a
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protectable trade secret or even confidential. For example, one of the “86 python files” that
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Quid alleges Dr. Gourley downloaded appears app ears to be an empty file — literally literally nothing.
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Moreover, much of Quid’s softwar e algorithms and techniques are disclosed in its own public
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patents and thus cannot be trade secrets. Quid’s customer lists and investors are sim similarly not
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trade secrets — they they are publicly disclosed on the internet too. And arguing for a non-
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solicitation injunction based on Dr. Gourley’s contract is prohibited by Section 16600 under
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California law. Finally, though just as importantly, Quid’s trade secret and related contract
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claims also cannot succeed because they the y are barred by the statute of limitations.
27 -
Forming Primer - Quid claims surprise at Gourley’s founding of Primer during the time of
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his transition transition agreement and before his termination in 2015. It cannot credibly do so. Gourley Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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negotiated with Quid and the parties expressly agreed in Dr. Gourley’s transition agreement
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that he would be able to seek other employment during this time period. Moreover, Neville
3
Crowley, who later became Quid’s CEO, knew about and was participating in the formation
4
of Primer at this same time. Quid included a declaration from Mr. Goodson stating he was
5
unaware of Dr. Gourley’s activities, but Quid concealed from this Court the knowledge of the
6
company as a whole, including the future Quid CEO Mr. Crowley, who knew about the
7
formation of Primer in 2014 and 2015.
8 -
Dr. Gourley’s Quid.com Email Account Access - This is another instance where Quid’s
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feigned surprise is contrary to the facts and its own knowledge. Quid again puts in in a
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declaration from Mr. Goodson expressing surprise that Dr. Gourley still had access to his
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quid.com email address, but fails to inform the Court that the former CEO negotiated
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continued access for Dr. Gourley’s to his quid.com email email account. Dr. Gourley was paid a
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sales commission by Quid after his termination termination as part of that same agreement. That Quid
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never turned off email access does not at all affect their consent. Moreover, for several of the the
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emails that Quid claims were “misdirected” by Dr. Gourley, those emails were actually sent to
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[email protected] and auto-forwarded to
[email protected] [email protected] based based on old email settings.
17
They were never “Quid opportunities” in the first place, though Quid attempts to mislead the
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Court in thinking they are. For several others, they are relationships built by Dr. Gourley
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independent of his work at Quid and again not any oppo opportunities rtunities that are the property of Quid.
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Quid ambushed Primer and the defendants defend ants with a motion for a temporary restraining order
21 with only hours to prepare, prepare, even though Quid itself took months to prepare its allegations. This 22 highly prejudiced the defendants in the process. Primer now responds to the motion put forth by 23 Quid and has fully demonstrated that Quid is not entitled to any injunctive relief because be cause of its 24 lack of evidence, among other reasons. Quid cannot now be permitted to submit additional 25 evidence in its response as that would wou ld be yet another ambush violating violat ing basic principles of due 26 process. 27
Finally, and most egregiously, Quid either was negligent in failing to discover or
28 intentionally hid from the Court that Quid and Gourley specifically negotiated and agreed that Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 future IP disputes, including alleged trade secret misappropriation, would b e arbitrated and not 2 subject to this Court’s jurisdiction. No injunction should be granted. granted. 3 4 5 6
II.
STATEMENT OF RELEVANT FACTS
A. You Noodle Was a Startup Social Network Before Dr. Gourley Pivoted the Company to Build a Network Graph Machine Learning Product I.e. (I.e., Quid)
You Noodle, Inc. was founded in 2007 to develop a social network for startups. startups. Goodson.
7 Decl. ¶ 7; Gourley Decl. at ¶ 6. On June 23, 2008, it retained Sean Gourley as a consultant to 8 develop a startup database that analyzed the companies as they grew. grew. Gourley Decl. at ¶ 6. At 9 that time, Dr. Gourley was serving as a post-doctoral post-doct oral researcher at Oxford University where he 10 was developing open source data dat a monitoring tools for international conflict zones. Id . at ¶ 2. He 11 had recently obtained his PhD in physics from Oxford, which he attended on a Rhodes 12 Scholarship. Id . 13
You Noodle was impressed with Dr. Gourley’s initial work for them and hired him full-
14 time on or around January 11, 2009. Id. at ¶ 6. As Dr. Gourley’s Gourley’s work progressed, progressed, it became 15 clear that his analytical tools were becoming a more promising product than the compan y’s social 16 network. Id. at ¶ 7. His initial work analyzing startups had grown into into a product which could be 17 used to ingest large amounts of written information and analyze the relationships between the 18 concepts discussed within. Id . at ¶¶ 6-7. Specifically, the product produced visual diagrams and 19 charts that show which of the topics selected by a user were often related to each other (and which 20 were related more often than others). Id . By Spring 2010, the founders and board decided to 21 divide the business and center the company around Dr. Gourley’s work. You Noodle would 22 rename itself Quid and refocused on data analysis tools. Id . at ¶ 7. 23
Quid launched in or around the week of September 15, 2010. Id . at ¶ 8. As more and
24 more companies tested the product it started gaining tractio n. Id . By March 2011, Dr. Gourley 25 published an article describing Quid’s startup predictor in the Harvard Business Business Review. Id. at 26 ¶ 9, Ex. A. This article included a chart showing how Quid’s software analyzed data and output a 27 graphic showing the relationship between the topics in the articles that the user selects for analysis. 28 Id. Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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Quid’s opening motion described certain events leading up to a January 2012 Quid board
2 meeting. App. at 12. Quid omits several important facts and paints a misleading picture regarding 3 that event and timeframe. Although the technical components of Quid Quid were successful, it had 4 financial difficulties difficulties during this time period. Gourley Decl. at ¶ 10. Quid had a significant “burn 5 rate” and by late late 2011 was running out of money. Id. The board blamed CEO Bob Goodson for 6 the lack of budgeting and demanded monthly financial financial reports. Id. This was one of the primary 7 topics in the January 16, 2012 board meeting where the consensus was that the business side of the 8 company needed to be reformed. Id. It was during this same same meeting that Dr. Dr. Gourley 9 demonstrated the functioning of Quid’s new software to the board. Id. at ¶ 11. After the the meeting, 10 Mr. Goodson was demoted and relieved of his duties as CEO.1 The board then began the search 11 for a new CEO. Id. They located Kevin Freedman in February and he took the position in March 12 2014. Mr. Goodson was demoted to Chief Revenue Officer. Id. at ¶ 12. 13
As for Dr. Gourley, f ar ar from “fail[ing]” as Quid suggests, on March 20, 2012 he presented
14 the same technology he had presented to the board publicly at a “Data Driven NYC” event. Id. at 15 ¶ 11. The technology, which largely mirrors Quid’s Quid’s functionality today, worked. Id. Moreover, 16 after Mr. Freedman was named CEO, Quid awarded Dr. Gourley a significant bonus and pay 17 increase. Id. at ¶ 13. 18
Pr ompts Dr. Gourley to Exit Quid While Continuing to B. Quid’s Leadership Crisis Prompts Work With its Officers on New Projects and Fundraise for the Company.
19 Despite the technical successes, successes, Quid’s management remained a problem. Dr. Gourley
20 decided to take action and in June 2014 met with the Chairman of the Board Charles Lho to 21 discuss his concerns. Id. at ¶ 15-16. While the board reviewed Mr. Freedman’s performance, Mr. 22 Freedman decided to terminate Dr. Gourley. Id. at ¶ 17. However, because Dr. Gourley was such such 23 an integral member of the company, they decided that the termination would be gradual so that he 24 could continue to help Quid Q uid with sales and fundraising while seeking new projects. Id. at ¶ 18-19. 25 When Dr. Gourley received an initial draft of this “Transition Agreement,” it included an
26 27
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Mr. Goodson, who provides a declaration in support of Quid’s motion, stayed on at Quid. 28 After two other CEOs had the job and left, Mr. Goodson again took the position. Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 arbitration provision that allowed “either party to seek injunctive relief in court for improper 2 disclosure of a party’s private, confidential, propriety or trade secret business information. Id. at 3 ¶¶ 20-21. In response, Dr. Gourley wrote a letter to Kevin Freedman, then CEO of Quid, 4 explaining that the agreement as written was unacceptable: 5
If I help in the transition, I don’t want to find myself in a position several months later whereby Quid tries to keep me out ou t of the industry by asserting that my skill set, knowledge and/or new inventions are somehow Quid trade secrets. Consequently, I would want an understanding u nderstanding with the company that I would not be impeded in the pursuit of a new career based on my skills. If questions arise with respect to trade secrets or IP, we should have a procedure whereby any issues can be quickly and fairly presented and resolved in confidence confidence with a quick quick arbitration arbitration if necessary. necessary.
6 7 8 9
Id. at ¶¶ 20-21 and Ex. E (emphasis added).
10 Dr. Gourley then sent back a revised version of the Transition Agreement with revised 11 arbitration provisions, consistent with the statements in his letter. Id. Notably, that version 12 the language permitting either party to seek injunctive relief in court for trade secret removed the 13 business information. Id. Instead, it included a broad arbitration provision that states that all 14 disputes, “including “including the availability of injunctive or other equitable relief , shall be resolved
15 exclusively through binding arbitr ation.” ation.” Id. 16 The transition agreement also expressly contemplates that Gourley will be permitted to 17 pursue new ventures during this time. Id. at ¶ 20, 83; Goodson Decl. Ex. E at 1 (“These Transition 18 Duties are not expected to require your daily or full-time attendance at the office, and you may 19 take time off from. your Transition Duties to seek other o ther employment so long as your Transition 20 Duties are timely completed at a satisfactory or better level of pe rformance.”) Eight weeks after 21 this agreement is entered the board terminated Quid CEO Freedman. Gourley Decl. at ¶ 17. 22 C. Dr. Gourley Develops Primer With The Future CEO of Quid, Neville Crowley
23 When Dr. Gourley was expressly allowed to seek other othe r employment under the Transition 24 Agreement, Dr. Gourley began creating Primer. Id. at ¶¶ 24-29. His original partner in these 25 efforts was Neville Crawley, then COO of Quid. Id. at ¶¶ 24-25. Together they discussed 26 Decl. at ¶¶ 6-8. Mr. Primer’s business plan and solicited investors. Id. at ¶ 24-26; see Dauber Decl. 27 Crawley did not join Primer because several weeks w eeks into these discussions he was offered the CEO 28 Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 position at Quid. Id. But he continued to support Primer and discuss it with Dr. Gourley after 2 assuming the role. Id. at ¶ 27. He also sought to keep Dr. Gourley Gourley involved in Quid, even after 3 the January 15 date listed in the termination agreement, so that he could continue to help the 4 company bring in business. Id. He offered Dr. Gourley 10% of the revenue from any sales he 5 brought in. Id. at ¶ 34. Accordingly, when Dr. Gourley’s employment with Quid ended on 6 January 15, 2015 he requested that his e-mail access be extended. Id. He met with Mr. Mr. Crawley 7 and they agreed to extend it. Several Quid officers, board members, and employees sought Dr. 8 Gour ley’s ley’s assistance at this e-mail address months after the originally anticipated January 15, 9 2015 termination date. When Quid implemented two-factor authentication authentication for its e-mail in 2016 it it 10 provided Dr. Gourley with new credentials to continue accessing his Quid email. Id. at ¶ 41. 11
As Dr. Gourley used this e-mail address, he made it i t clear to customers that he was no
12 longer a full-time employee of Quid. Id. at ¶ 82. When he was asked about his current current work or 13 Primer, he explained that it was his new venture. Id. at ¶¶ 36, 79. Dr. Gourley did not arrange for 14 any investors who e-mailed him about Quid to invest in Primer. Id. at ¶¶ 44, 78, 84. And all of 15 Primer’s investors fully understood that this was Dr. Gourley’s company, not part of Quid. Id. at 16 ¶ 84. 17
D. Primer Technologies Is Not Competitive with Quid
18
Quid and Primer produce different different technologies. Although both analyze large amounts of
19 data, Quid analyzes the relationship between different keywords selected by the user and outputs o utputs 20 visual diagrams and charts that show which topics which are often related to each other (and in 21 some instances identify key words). Id. at ¶¶ 52-61. Primer’s technology, by contrast, compares 22 all information provided by the sources and writes summaries synthesizing all key information. 23 Id . The two pieces of software software are used for different different purposes and the use of one does not reduce 24 demand for the insights which can be provided by the other. Id . Accordingly there have been no 25 customers who Dr. Gourley convinced to buy Primer over Quid. Id . at ¶ 61. 26
E. Dr. Gourley Did Not Access Quid’ s Product Files After Leaving the Company.
27
Following his departure Dr. Gourley did not access or use any Quid proprietary
28 information. Id. at ¶¶ 62-77. Because of the volume of data, the the processing and analysis is Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 ongoing, but current expert forensic analysis anal ysis indicates that Dr. Gourley used his Quid e-mail 2 account but did not access any locations where product or technical information would be stored. 3 Bui Decl.at ¶¶ 6-12. It similarly indicates that Dr. Gourley did not access any of the contents of 4 his Quid Google Suite after his employment ended. Id . 5
F. Quid Has Identified No Trade Secrets
6
Primer has retained a technical expert in artificial intelligence, Professor Padhraic Smyth
7 of UC Irvine. Irvine. He has analyzed all all the evidence provided by Quid in its opening papers. None 8 comprise trade secrets. Smyth Decl. at at ¶¶ 3-6, 13, 20-43. All the technical information Quid 9 purports to identify reflects broad concepts and techniques that are publicly known. Id. 10 Consistent with this, Quid publishes much of its technical information in articles and its own US 11 patents. Id. at ¶¶ 44-45. 12
G. Primer’s Primer’s Further Further Investigation
13
After this lawsuit was filed, Primer, via its counsel, has undertaken an investigation above
14 and beyond the allegations made by Quid, to ensure that no Quid proprietary information is used 15 in developing Primer and that no Quid confidential information is in the possession of Primer or 16 its employees. In the course of its its investigation, it uncovered that Ms. Heineke and Dr. Yera may 17 have some old Quid files from from their prior employment. Ms. Heineke does not recall ever 18 accessing these files files since she joined Primer. Heineke Decl. at ¶ 6. As discussed below, Mr. Yera 19 does not recall accessing them since early 2015. Yera Decl. at ¶¶ 6-9. Ms. Heineke and Dr. Dr. Yera 20 immediately provided these devices to Primer’s forensic consultants who are imaging the devices, 21 segregating and quarantining any Quid data. Id. Any files are now no longer in Ms. Heineke and 22 Dr. Yera's possession. Id. Primer will immediately immediately return to Quid any Quid files if located. 23
Primer also learned, as discussed in Dr. Yera's declaration, that he may have used a Quid
24 file in early 2015 to locate four numbers when beginning his work work at Primer. Yera Decl. at ¶¶ 6-9. 25 He did so as a matter of convenience, even though he could have derived the numbers himself 26 based on public source code and scientific papers. Id. Because these numbers can be derived 27 from generally known techniques they are not trade secrets. Regardless, with the exception of one 28 number that is publicly available, these numbers numbe rs were long ago removed from Primer P rimer ’s code and Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 are not used in any Primer product. Id. Ms. Heineke, to the best of her knowledge, has never 2 looked at or used any Quid proprietary information in her work at Primer. Heineke Decl. at ¶ 6. 3
Even though Dr. Yera or Ms. Heineke’s were not alleged to have retained any files by
4 Quid in its motion or even in its complaint, Primer does not want any Quid files or proprietary 5 information at Primer and thus thus took these extra steps in the last week. No Quid information 6 remains in either of their possession. 7
III.
8
LEGAL STANDARD
As a “threshold” matter, Quid must introduce evidence that an irreparable injury will occur
9 absent an injunction. Costa Mesa City Employees' Assn. v. City of Costa Mesa, 209 Cal. App. 4th 10 298, 305-06 (2012), as modified (Oct. (Oct. 10, 2012). After making a showing of irreparable irreparable harm, 11 Quid must then establish that (1) its claims have a “reasonable probability” of prevailing on the 12 merits and (2) an injunction will avoid more injury than it will cause. Cont'l Baking Co. v. Katz, 13 68 Cal. 2d 512, 528 (1968) (citations omitted). Quid has “the burden of presenting facts which 14 show a reasonable probability” that its trade secret claims will prevail at trial. Citizens for Better 15 Streets v. Bd. of Supervisors, 117 Cal. App. 4th 1, 6 (2004) (emphasis added). 16
IV.
17
ARGUMENT
A. THIS COURT LACKS JURISDICTION BECAUSE OF A CLEAR ARBITRATION CLAUSE
18 As discussed in Primer’s petition to compel arbitration, this Court lacks jurisdiction and 19 thus there is no likelihood likelihood of success on the merits. merits. Gourley and Quid negotiated and agreed to 20 arbitration provision for the express purpose of dealing with these type of claims. Gourley Decl. at 21 ¶¶ 20-22, Ex. E. Even the question of arbitrability is subject to arbitration. arbitration. Greenspan v. LADT, 22 demonstrates LLC , 185 Cal. App. 4th 1413 (2010). That Quid did not disclose this history either demonstrates 23 negligence or an intent to hide the facts from the Court. Court. The Court should decide (and grant) the 24 motion to compel arbitration first, avoiding any need ne ed to address the motion for injunctive relief. 25 26
B. QUID HAS NOT SHOWN PRIMER OR SEAN GOURLEY MISAPPROPRIATED TRADE SECRETS.
27
Misappropriation of trade secrets requires unauthorized disclosure, unauthorized use, or
28 acquisition by improper means. Cal. Civ. Code § 3426.1. Mere possession possession does not constitute Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 misappropriation or any other illegal conduct and cannot by itself justify an injunction. FLIR Sys., 2 Inc. v. Parrish, 174 Cal. App. 4th 1270, 1279 (2009) (“ possession of trade secrets by a departing 3 employee is not enough for an injunction[,]” particular ly ly where the employee did not retain the 4 alleged trade secrets). Id.. As all elements of its claims, Quid has the burden to produce evidence 5 showing that it is likely to prevail on misappropriation. misappropriation. This burden can only be satisfied satisfied with 6 evidence, not mere speculation about possible wrongful conduct. See Costa Mesa, 209 Cal. App. 7 4th at 305 and Citizens for Better Streets v. Bd. of Supervisors, 117 Cal. App. 4th at 6. 8
Quid’s only evidence of purported trade secret misappropriation only sugg ests that Dr.
9 Gourley copied files during his employment . Kaderabek Decl. at ¶¶ 6-8; Compl. ¶¶ 51-54, 57-61 10 (alleging that he made copies on two or three occasions prior to his termination date).2 While the 11 analysis is ongoing, current forensic evidence indicates that Dr. Gourley has not accessed any an y of 12 these files after he was employed at Quid. Bui Decl. at ¶¶ 6-12. All of Dr. Gourley’s relevant 13 devices are also in the possession po ssession of Primer’s forensic experts, not Dr. Gourley. Bui Decl. ¶ 3; 14 FLIR Sys., Inc., 174 Cal. App. 4th at 1278-80 (finding that no injunction can issue when the 15 employee no longer has the files allegedly containing trade secrets). 16
Quid’s application and Mr. Goodson Declaration include assertions that Dr. Gourley
17 “continued” to access information or “monitored” Quid product development. But neither 18 reference any observation or technical information supporting such an inference (or the first-hand 19 knowledge of any witness or content of any document).3 See Bui Decl. at ¶ 13. The absence of 20 evidence is telling. If Dr. Gourley had continued to log in to applications applications containing Quid 21 technical information, Quid would be able to readily confirm that with user log data. Ibid . 22 23 2
But even if Dr. Gourley had copied these files, files, on all three three of those occasions Dr. Gourley was 24 a Quid employee utilizing his files saved in his employee employee accounts. Quid has not alleged that he wrongfully used or disclosed them on those occasions. 25 3 Quid’s unsupported suggestion that Dr. Gourley was monitoring Quid’s Google applications 26 during the very hour when they cancelled his account in October 2018 lacks credibility even on its own terms. It is also also readily explained by the fact that Dr. Gourley’s e-mail was connected to his 27 phone, which immediately and automatically alerted him that it could no longer synch with one of 28 his e-mail accounts. Gourley Decl. at ¶¶ 42-43. Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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Quid has introduced no facts probative of actual use by Dr. Dr. Gourley or Primer. Its
2 application seems to ask this Court to infer use from the fact that Primer is a company that also 3 produces machine learning technology. This conclusory assertion is wrong because the products 4 work differently and serve different purposes. Quid’s outputs visual diagrams and charts that 5 show which topics in a data set which are often related to each. See Smyth Decl. ¶ 20. Primer’s 6 technology, by contrast, compares the information provided by each source different sources, and 7 writes human readable executive summaries synthesizing all key information available. Id. ¶ 21. 8
Even if Primer ’s ’s technology was generally similar, the inference Quid seeks invites only
9 error. It constitutes a thinly-veiled attempt to use the inevitable disclosure doctrine doctrine in support of a 10 trade secret injunction, a doctrine that has been flatly rejected in California. Whyte v. Schlage 11 Lock Co. (2002) 101 Cal. App. 4th 1443, 1462 (citing Bus. & Prof. Code, § 16600, and cases 12 applying it). The fact that Primer is also an artificial intelligence intelligence company is insufficient to 13 support any actual or threatened use of trade secrets under California law. Whyte, 101 Cal. App. 14 4th 1461-1462. 15
Dr. Gourley’s e-mails also do not justify an inference that trade secrets were available for
16 download (or copied or used). Quid seeks to use Dr. Dr. Gourley statements about the relationship relationship 17 between Quid and Primer to characterize how Primer’s technology was developed. But the 18 connections Quid draws rely on mischaracterizations and in some instances misquote the e-mails. 19 In one instance, Quid quotes an e-mails in which Dr. Gourley used the word “we” but replaces it 20 with “[Quid]” even though the e-mail makes no reference to Quid and Dr. Gourley is undeniably 21 talking about Primer. App at 14:12-13; Goodson Decl. Ex L. In another, Quid cites a $1.1 million 22 sale that Dr. Gourley negotiated for Quid as an instance of him “using Quid confidential 23 information to benefit Primer.” Primer.” App at 15, fn. 8; Goodson Decl. Decl. ¶ 36, Ex. W. The basis for this 24 incorrect claim seems to be that, years after the negotiation, Dr. Gourley forwarded the contract 25 from his Quid account to his Primer P rimer account. Id.. But he only did this after after later finding finding out Quid 26 underpaid him the sales sales commission he was entitled to. to. Gourley Decl. ¶ 36. Quid and Mr. 27 Goodman also mischaracterize the relationship between parties, calling an individual who Dr. 28 Gourley met at an academic event who tried to hire Sean post-termination an “existing and Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 potential Quid client and investor.” Goodson Decl. ¶¶ 29-30, Ex K. It applies this same 2 description to a businessman who Dr. Gourley knew independent of Quid but met with in 2015 3 and tried to sell Quid products to after his formal termination. Goodson Decl. ¶¶ 29-30, Ex H; 4 Gourley Decl. ¶ 36, 87. In several other instances, Quid omits the first first or last e-mail in the chain, 5 showing that the conversation was initiated by Dr. Gourley’s personal e-mail or by another party. 6 Gourley Decl. ¶¶ 36, 38. These mischaracterizations highlight a pattern of misrepresenting misrepresenting Dr. 7 Gourley’s words and conduct where what he really said and did does not fit Quid’s narrative. 8
Quid and Mr. Goodson also attempt to mislead this Court by (falsely) suggesting that
9 Primer was hiding from from Quid, hoping again to justify an inference of wrongdoing. After quoting a 10 string of 2015 e-mails Mr. Goodson declares that “[t]hroughout the relevant time period, Gourley 11 kept his efforts hidden from Quid by, among amon g other things, operating in a self-described ‘stealth 12 mode’ until his product was ready for launch.” Goodson Decl. at ¶ 41. But Mr. Goodson knew of 13 Primer and its development. He texted Dr. Gourley in December 2015 to congratulate him on 14 Primer’s “progress” which he was “glad to hear about.” Id. at Ex. BB. Mr. Crowley, then Quid’s 15 CEO, also knew all about Primer, Primer, having once been a potential co-founder. Given the extent of 16 Quid’s misrepresentations, its various stories about Primer should not be allowed to substitute for 17 actual evidence of wrongdoing. 18
C. QUID HAS NOT IDENTIFIED ANY TRADE SECRETS.
19
California law requires that plaintiffs identify any alleged trade secrets with “reasonable
20 particularity” at the outset of litigation. Code Civ. Proc., § 2019.210. This rule was was adopted to 21 “promot[e] well-investigated claims and dissuad[e] the filing of meritless trade secret complaints.” 22 Perlan Therapeutics, Inc. v. Superior Court , 178 Cal. App. 4th 1333, 1343 (2009). 23 Notwithstanding this, and Quid’s claims at the March 28 hearing he aring that it waited several months to 24 apply for a temporary restraining order so that it could “investigate” alleged downloads,4 Quid’s 25 26 4
Quid admits it has known since at least October 2018 that Primer’s founder still had access to his old Quid email and Google Suite accounts. Goodson Decl. ¶ 47; Reed Decl. ¶¶ 4-5. Quid act ivity that supposedly forms the basis for the 28 further admits it has known about the forensic activity
27
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1 complaint, application, and declarations ignore ignore this burden. Quid ’s application and complaint do 2 not identify or describe a single specific piece of commercial information which qualifies as a 3 trade secret. 4
Trade secret claims pled without reasonable particularity cannot justify a preliminary
5 injunction. Action Learning Sys., Inc. v. Crowe, No. CV 14-5112-GW(SHX), 2014 WL WL 6 12564011, at *4 (C.D. Cal. Aug. 11, 2014) (denying preliminary injunction because the court 7 could not “see how a plaintiff can carry carr y its heavy burden [to justify the injunction] without 8 specifying what, exactly, it is trying to protect ”). See also Religious also Religious Tech. Ctr. v. Netcom On-Line 9 Commc'n Servs., Inc., 923 F. Supp. 1231, 1252 (N.D. Cal. 1995). Here Quid has simply suggested suggested 10 that because there are documents allegedly kept confidential that may have been copied, trade 11 secrets must have been taken and misappropriated. misappropriated. But absent identification of the trade secrets in 12 those documents there is no claim upon which litigation can begin. See Via Techs., Inc. v. Asus 13 Comp. Int'l, 2016 WL 1056139, at *3 (N.D. Cal. Mar. 17, 2016) (finding that a reference to “3300 14 pages [that] are simply whatever [plaintiff’s] employees printed before they left” did not identify a 15 trade secret); Perlan Therapeutic, 178 Cal. App. 4th at 1351-2 (holding that the identification iden tification must 16 segregate the claimed trade secrets from accompanying accompa nying public information); Jobscience, Inc. v. 17 CVPartners, Inc., 2014 WL 93976, at *5 (N.D. Cal. Jan. 9, 2014) (finding identification of 18 “software code” too vague). 19
Without knowing the specific algorithm, process, or technique at issue, Primer cannot
20 present defenses, like arguing that the claimed information is already in the public domain. This is 21 a crucial question because all of the information allegedly copied was from 2015 and prior. Supra 22 § III(B). Since 2015, a litany of events have likely extinguished any potential trade trade secrets. Chief 23 among them are Quid’s own patent applications. App. at 10:2-4 (Quid ’s “innovations. . . are the 24 subject of issued United States patents”); Stutz Motor Car of Am., Inc. v. Reebok Int'l, Ltd., 909 F. 25 Supp. 1353, 1359 (C.D. Cal. 1995), aff'd , 113 F.3d 1258 (Fed. Cir. 1997) (“disclosure of 26 a trade secret in a patent places the information comprising the secret into the public do main . . . 27
present request for expedited relief since at least January 2019. Goodson Decl. ¶¶ 51-52; Reed 28 Decl. ¶¶ 6-9. Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 [and] the trade secret is extinguished ”). ”). Quid has also launched several products since 2012, 2 thereby disclosing the processes and techniques which its software employs.5 Goodson Decl. at 3 ¶¶ 7, 21. However since Quid has not identified what information is claimed as a trade secret, 4 Primer cannot show that the relevant relevant information is public. This leaves “the most important 5 consideration” in a trade secret case unexamined. Lehman v. Dow Jones & Co., 783 F.2d 285, 298 6 (2d Cir. 1986). 7
Primer has retained Dr. Smyth to look at the limited information that Quid has identified
8 as trade secrets in its opening motion. Smyth Decl. at ¶¶ 3-6, 13, 20-43. 20-43. Looking at all the 9 information that Quid has provided, he cannot identify any information that would qualify as a 10 trade secret. Id. He also has identified a broad set of technical information describing Quid’s 11 algorithms, product and internal software information. Id.; Gourley Decl. Ex. A. 12
In these circumstances, Quid has not shown that these claims have any likelihood of
13 success. Action Learning Sys, 2014 WL 12564011, at *4 (quoting Altavion, Inc. v. Konica 14 Minolta Sys. Lab. Inc., 226 Cal. App. 4th 26, 43 (2014)) (“Until the content and nature of the 15 claimed [trade] secret is ascertained, it will likely be impossible to intelligibly analyze the 16 remaining elements that constitute the cause of action.”) (emphasis added) As revealed at the 17 March 28 hearing, Quid made a strategic decision to spend months investigating the alleged 18 copying of its files before seeking an injunction. Its contrasting “ refusal to pin down in argument 19 the specific nature of the information it claims to own” shields the other elements of its claim from 20 scrutiny, raising serious questions about the strength of its case. See Swarmify, Inc. v. Cloudflare, 21 Inc., No. C 17-06957 WHA, 2018 WL 1142204, at *3 (N.D. Cal. Mar. 2, 2018) (expressing 22 skepticism of the merits of trade secret claims which are too amorphous to assert defenses against, 23 while a denying preliminary injunction on other grounds) (emphasis added). Quid cannot be 24 5
See Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 221-22, 109 Cal. Rptr. 3d 27, 39 (2010), as modified on denial of reh'g (May 27, 2010), and disapproved of by Kwikset Corp. v. 26 Superior Court , 51 Cal. 4th 310, 246 P.3d 877 (2011), and disapproved of by Swarmify, Inc. v. Cloudflare, Inc., No. C 17-06957 WHA, 2018 WL 1609379 (N.D. Cal. Apr. 3, 2018) (holding that
25
27
the design of a computer program being sold publically is not a trade secret where the process 28 becomes evident to anyone using the program). Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 permitted to articulate any trade secret claims on reply as that would result in more ambush and 2 Primer would not have had an opportunity to respond to the allegations. See Proctor v. Vishay 3 Intertechnology, Inc. 213 Cal.App.4th 1258, 1274 (2013). With the central elements of its claims 4 shrouded in mystery, Quid cannot satisfy its burden of showing that it is likely to prevail on the 5 merits. 6
Quid’s failure to identify trade secrets also denies the Court the foundation for a proper
7 injunction. Action Learning Sys, 2014 WL 12564011, at *4. Without knowing what Quid’s trade 8 secrets are, the Court cannot craft craft an order which defines the the prohibited activities. A prohibition 9 on activities associated with unspecified trade secrets would be too vague to enforce. See In re 10 Berry, 68 Cal. 2d 137, 155-7 (1968) (finding that an injunction must be specific and 11 understandable to a reasonable person to satisfy satisfy Constitutional due process protections). The 12 potential impact on third-party customers, vendors, and investors underscores that any Court order 13 should be able to stand on its own, clearly delineating what conduct is prohibited. 14
D. QUID’S FLEETING REFERENCES REFE RENCES TO IDENTITIES OF CUSTOMERS AND INVESTORS DO NOT CONSTITUTE TRADE SECRET CLAIMS.
15 Even assuming arguendo that that Quid’s customers and investors identities were 16 identified with particularity, particularity, they still cannot be a trade secret. Quid publicizes the identity of its 17 customers regularly. regularly. They are therefore therefore not kept secret and generally known. Quid has entire 18 19
sections of its website dedicated to publicizing its customers. 6 Far from being secret, Quid lists its customers on its public Wikipedia page.7 The identity of Quid’s customers are thus not trade
20 secrets. RBC Bearings Inc. v. Caliber Aero, LLC LL C , No. SACV121442FMOPLAX, 2016 WL 21 6562068, at *5 (C.D. Cal. Aug. 1, 2016) (holding that a trade secret claim based on a customer list 22 23 24
6
See https://quid.com/feed/ recapping-our-biggest-customer-event-yet-quid-explore-london
(“The day began with presentations from Quid experts at Siemens, Accenture, University College London, CNC, Ketchum, and Bite Global who all shared how they’re harnessing the power of 26 Quid for their organizations.); see also https://quid.com/feed/quid-helps-walmart-build-theamerican-family-today-report (discussing Walmart as Quid customer); 27 https://quid.com/feed?category=from-our-clients https://quid.com/feed?category=from-our-clients..
25
28
7
https://en.wikipedia.rg/wiki/Quid_Inc.#Customers.. See https://en.wikipedia.rg/wiki/Quid_Inc.#Customers Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 was objectively specious under CCP 3426.4 when the identities of customers were publically 2 available and awarding attorneys’ fees). See also Cal. Civ. Code. §3426.1(d)(2). 3
Quid’s investors are similarly routinely identified by name in compan y press releases
4 following successful successful fundraising rounds. See, e.g., McCauley Decl. Ex. A. News and industry 5 commentary also confirm that the identity of Quid’s investors is public knowledge. McCauley 6 Decl. Exs. B, C. This eliminates the possibility possibility of trade secret protection. The Ret. Grp. v. 7 Galante, 176 Cal. App. 4th 1226, 1240 (2009). 8
secrets as a matter of law. A The identities of Quid’s investors further cannot be trade secrets
9 trade secret must be information which a compan y owns and profits from. CytoDyn of New 10 Mexico, Inc. v. Amerimmune Pharm., Inc., 160 Cal. App. 4th 288, 297 (2008). A company cannot 11 hold the required property interest in the identity of its investors, or profit profit from them. Rather it is 12 the investors who own the property interest in and profit from from the company. Accordingly, 13 investors and “ideas regarding who to approach as an investor . . . cannot be trade secrets.” Boyd 14 v. Univ. of Illinois, No. 96 CIV 9327 TPG, 2001 WL 246402, at *6 (S.D.N.Y. Mar. 13, 2001). 15
Even if a small customer or reclusive investor is not publically p ublically known, this pattern of
16 disclosure shows that Quid has not consistently safeguarded this information as required by 17 California law. law. Cal. Civ. Code. §3426.1(d)(2); In re Providian Credit Card Cases, 96 Cal. App. 18 4th 292, 308 (2002). Quid ’s ’s customers and investors are not trade secrets. 19
E. QUID CONSENTED TO GOURLEY’S GOURLEY’S CONTINUED EMAIL USE.
20
Dr. Gourley openly discussed Primer with Quid officers before leaving the company and
21 used his Quid e-mail afterwards because they asked him to continue continue to represent Quid. Following 22 the negotiation of his transition agreement, Dr. Gourley and Mr. Neville Crawley (Quid’s COO at 23 the time) began planning to launch a new business. Gourley Decl. at ¶¶ 24-28. They discussed 24 specific ideas for Primer’s technology, products, structure, and fundraising. Id. Mr. Crawley 25 prepared a list of investors to reach out to about the company, and spoke with several. Id. Mr. 26 Crawley ultimately did not join Primer because he was offered the position of CEO of Quid. Id. 27 But he remained supportive of the company and Dr. Gourley, who asked to continue to help Quid 28 with sales while working on setting up Prime. Id. Dr. Gourley and Mr. Crawley also also met with Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 Charles Lho, Chairman of Quid’ Board of Directors, in the spring of 2015 (several months after 2 Dr. Gourley’s regular employment with Quid ended). Id. at ¶ 48. They discussed Primer and Mr. 3 Lho asked if he could invest in the company. Dr. Gourley declined but he and Mr. Lho Lho continued 4 to discuss Primer’s progress over the next several years. Id., Ex. AA. 5
Quid knew about and effectively ratified Dr. Gourley’s conduct. On the termination date
6 outlined in his transition agreement Dr. Gourley and CEO Crawley agreed to leave Dr. Gourley’s 7 e-mail account open for 6-12 months so that he could continue conversations with and 8 “converting” potential clients, existing clients, clients, and recruits for Quid. Goodson Ex. F; Gourley 9 Decl. at ¶¶ 30-42. Dr. Gourley was paid sales commissions by Quid after his termination as part 10 of that same agreement. Gourley Decl. at ¶¶ 34, 36, Ex. L. L. Meanwhile, Quid officers and 11 employees continued to contact him at his Quid e-mail address to discuss these matters. Id. at 12 ¶ 35. When Quid implement two-factor authentication in 2016 Dr. Gourley was informed, 13 successfully registered, and received credentials. That Quid never turned off email access until 14 2018 does not at all affect their consent. Id. at ¶ 41. 15
COMPET ITION CLAIM IS PRE-EMPTED F. QUID’S UNFAIR COMPETITION
16
Quid ’s ’s action for violation of California’s Unfair Competition (“UCL”) is preempted by
17 California’s Uniform Uniform Trade Secrets Act (“CUTSA”). Cal. Bus. & Prof. Code § 17200 and 3426. 18 Quid’s application only argues that it will prevail on its UCL claim because Primer allegedly 19 misappropriated proprietary information. App. at 21:19-22:4. But in California, “CUTSA 20 provides the exclusive civil remedy for conduct falling within its terms, terms, so as to supersede other 21 civil remedies ‘based upon misappropriation of a trade secret.’” Silvaco Data Sys. v. Intel Corp., 22 184 Cal. App. 4th 210, 236 (2010) (quoting Cal. Civ. Code § 3426.7(a), (b)); see KC Multimedia, 23 Inc. v. Bank of Am. Tech. & Ops., Inc., 171 Cal. App. 4th 939, 954 (2009) (holding that CUTSA 24 “occupies the field in California” with respect to “ alternative civil remedies based on trade secret 25 misappropriation”). CUTSA’s preemptive effect extends to UCL causes o f action that are based 26 on trade-secret misappropriation. Silvaco, 184 Cal. App. 4th at 241 (“CUTSA bars UCL claims 27 sounding in misappropriation of trade secrets.”); KC Multimedia, 171 Cal. App. 4th at 961 (same). 28 This there is no separate UCL claim which Quid can prevail on. Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1
G. QUID CANNOT ENFORCE ITS CONTRACT CLAIMS.
2
Quid cannot establish that Dr. Gourley’s contract was breached. First, the claims against
3 Dr. Gourley largely arise from restrictions on the use of “proprietary information.” Section 8 of 4 the agreement limits to confidential and non-public information. Goodson Decl. Ex A. As 5 discussed above, Quid has identified no confidential information that Gourley has 6 misappropriated. Moreover, Quid’s numerous public disclosures of information, information, sales of products, 7 and patent filings operates as defenses to these claims as well. Supra at § III(C). III(C). And even if this this 8 information had been copied by Dr. Gourley pre-termination, Quid offers no evidence to support 9 its assertion that he “disclose[d]” or “use[d]” it post-termination. Second, the other provisions of 10 the agreement, which Quid argues preclude Dr. Gourley from soliciting Quid clients and 11 employees cannot be enforced in such a manner under California law.8 Barker v. Insight Glob., 12 LLC, No. 16-CV-07186-BLF, 2019 WL 176260, at *3 (N.D. Cal. Jan. 11, 2019) (“California law 13 is properly interpreted post- Edwards to invalidate employee non-solicitation provisions”) (citing 14 AMN Healthcare, Inc. v. Aya Healthcare Servs., Inc., I nc., 28 Cal. App. 5th 923, 936 (Ct. App. 2018)) 15 (same) (citing Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937, 942, 947-948 (2008). 16
Moreover, Quid waived any right to enforce en force relevant portions of its confidentiality
17 agreement. The party who can enforce a contractual provision provision relinquishes its right right to do so by 18 words or conduct “so inconsistent with an intent to enforce the right as to induce a reasonable reason able 19 belief that such right has been relinquished .” .” Wind Dancer Prod. Grp. v. Walt Disney Pictures, 10 20 Cal. App. 5th 56, 78-81 (Ct. App. 2017). Here, although the confidentiality agreement agreement purported 21 to require Dr. Gourley to return and relinquish relinqu ish access to company e-mail and online resources 22 upon termination, Quid’s conduct consistently indicated that it did not expect him to do so. This 23 pattern began on the termination date, when Dr. Gourley asked CEO Crawley to leave his e-mail 24 account open for 6-12 months so that he could continue conversations with and “converting” 25 potential clients, existing clients, and recruits for Quid. Goodson Ex. F; Gourley Decl. ¶¶ 32-36. 26 8
The confidentiality agreements were only signed by individual employees and not by Primer. Quid does not argue that Primer is bound by this contract, nor could it. Thus this claim cannot 28 justify an injunction against Primer. 27
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1 CEO Crawley agreed to discuss that with him and later asked him to continue con tinue promoting Quid to 2 investors, paying him commissions on new investments which he brought to Quid. Ibid. All of 3 this conduct is irreconcilable with the alleged expectation that Dr. Gourley disconnect his 4 company e-mail on January 15, 2015. Quid was effectively effectively paying him to continue using it 5 through 2016. In these circumstances, the company has relinquished any claim to enforce these 6 portions of the confidentiality agreement. 7
CLAIMS ARE BEYOND THE STATUTE OF LIMITATIONS H. ALL OF QUID’S CLAIMS ARE
8
201 5 which is beyond the statute of limitations. Quid’s claims arose no later than January 2015
9 Trade secret claims must be brought within three years of the alleged conduct and an d breach of 10 contract and unfair competition claims must be brought within within four years. Cal. Civ. Code 11 § 3426.6; Cal. Civ. Proc. § 337; Cal. Bus. & Prof. Code § 17208. Quid’s declarations only allege 12 that data was copied in or before January, 2015. Supra at § III(B). III(B). Quid had notice of these 13 claims immediately, because its own CEO, officers, and emplo yees knew that Dr. Gourley 14 retained access to Quid’s Google Suite and was utilizing his Quid e-mail. Supra at § III (E and G); 15 Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1109-11 (1988). Quid’s vague and conclusory allusions 16 of monitoring after January, 2015 have no evidentiary support and therefore the refore cannot resurrect these 17 claims or justify an injunction. Ibid.. There is thus thus no tenable claim which can succeed at all. 18
I. THE BALANCE OF HARDSHIPS FAVORS PRIMER AND QUID CANNOT SHOW IRREPARABLE HARM.
19 Preliminary injunctions are only available upon a showing of irreparable harm. Costa 20 Mesa City Employees’ Assn Assn, 209 Cal. App. 4th at 306; Cal. Retail Portfolio Fund GmbH & Co.
21 KG v. Hopkins Real Estate Grp., 193 Cal. App. 4th 849, 857 (2011). “[P]laintiffs seeking
22 preliminary relief [must] demonstrate demonstrate that irreparable injury is likely in the absence of an 23 (emphasis). injunction.” Winter v. Nat. Res. Def. Council, Inc., In c., 555 U.S. 7, 22 (2008) (emphasis). 24 injunctio n underscores its inability to show Quid’s years-long delay in applying for an injunction 25 irreparable harm. By its own declarations, Quid Quid discovered the potential information information loss three to 26 six months ago. Supra at § III(B). III(B). This is “itself evidence that there [is] no urgent necessity. nec essity.” 27 App. 3d 651, 677 (1979). (1979). In similar Agric. Labor Relations Bd. v. Laflin & Laflin, 89 Cal. App. 28 Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 circumstances, California courts have held that a “ sixth month delay in seeking injunctive relief 2 establishes a lack of irreparable harm that is, on its own, a sufficient basis to deny the injunctive 3 relief.” Oren Enterprises, Inc. v. Stefanie Cove & Co., No. CV 17-3619 PA P A (AFMX), 2017 WL 4 8220230, at *5 (C.D. Cal. June 2, 2017) (denying injustice relief against a former employee 5 alleged to have copied electronic files containing trade secrets before departing the company); 6 Way.com, Inc. v. Singh, No. 3:18-CV-04819-WHO, 2018 WL 6704464, at *11 (N.D. Cal. Dec. 20, 7 2018) (same for for four plus month delay). Here, where Quid knew or should have known of Dr. 8 Gourley’s email access for access for years after his termination, Quid cannot show irreparable harm. 9
“Mere injuries, however substantial, in terms of money, time and energy necessarily
10 expended . . . are not enough. The possibility that adequate compensatory or other corrective relief 11 will be available at a later date d ate . . . weighs heavil y against a claim of irreparable harm.” Qualcomm 12 Inc. v. Compal Elecs., Inc., 17-CV-01010, 2017 WL 3967289, at *7 (S.D. Cal. Sept. 7, 2017). 13 Quid has not shown that monetary monetar y relief would be inadequate, arguing only that injunctive relief is 14 available for trade secret claims.9 But the alleged alleged trade secrets here are 2015 information information 15 concerning products which have been on the market for years. years. Quid has not shown monetary 16 damages are insufficient redress its claims where both parties are selling products in the 17 marketplace. 18
An injunction, by contrast, inflicts significant and potentially irreversible harm on Primer,
19 a fledgling startup. Primer depends on investors for capital and must continue to show show progress in 20 product development to stay afloat. Gourley Decl. at ¶¶ 44, 84. In assessing an injunction, this 21 Court must balance these potential hardships against those th ose of Quid. “The ultimate goal of any test 22 to be used in deciding decidin g whether a preliminary injunction should issue is to minimize the harm 23 which an erroneous interim decision may cause.” IT Corp. v. Cty. of Imperial, 35 Cal. 3d 63, 73 24 (1983). Here it is only Primer who is truly at risk risk of suffering irreparable harm which means Quid 25 9
The possibility of injunctive relief referenced in Dr. Gourley’s employment contract does not 26 bind Primer and would not control here even if it did. See DVD Copy Control Ass’n, Inc. v. eject a stipulation Kaleidescape, Inc., 176 Cal. App. 4th 697 (2009) (“[A] court must r eject 27 contemplating an equitable remedy that is contrary co ntrary to law or public policy, such as where the 28 evidence shows that an aggrieved party actually has an adequate remedy at law.”). Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1 cannot justify an injunction. A broad injunction potentially applying to most of their products and 2 business relationships could cripple the company. 3 4
J. PROHIBITING PRIMER FROM SOLICITING INVESTORS AND CUSTOMERS ASSOCIATED WITH QUID IS OVERBROAD AND CONTRARY TO PUBLIC POLICY
5
Under California law, an injunction can only onl y restrict the solicitation of customers to the
6 extent that the solicitation relies on a trade secret customer list. Galante, 176 Cal. App. 4th at 7 1238-40 (citing Edwards and Cal. Bus. & Prof. Code § 16600, supra). Quid admitted at the 8 March 28 hearing they have hav e no such list, nor could they as their customers are publicly disclosed 9 as discussed supra. Moreover, under the recent decision of AMN Healthcare, Inc. v. Aya 10 Healthcare Services, Inc. (2018) 28 Cal.App.5th 923, 939, “California law is properly interpreted 11 post- Edwards Edwards to invalidate employee nonsolicitation provisions.” Barker v. Insight Glob., LLC , 12 2019 WL 176260, at *3 (N.D. Cal. Jan. 11, 2019) (citing AMN ). ). For the same reasons, a customer 13 or investor nonsolicitation provision cannot be enforced because becaus e it is contrary to California law. 14 This is yet another instance of Quid attempting to craft an injunction that is contrary to California 15 law without disclosing the relevant law or facts to the Court. 16
K. A SIGNIFICANT BOND IS REQUIRED IF INJUNCTIVE RELIEF IS GRANTED
17 Quid has not shown that any of o f the Defendants have misappropriated any an y trade secrets or 18 confidential information of Quid. But, to the extent that Quid’s proposed order is adopted, it does
19 not identify any trade secrets or define the scope of relief in such a way wa y that Primer could 20 meaningfully comply. Such an amorphous order could thus thus bring Primer’s business to a standstill, standstill, 21 endangering the life of the company and all investment in it. In these circumstances, circumstances, if any 22 injunction is granted (which it should not be), Quid must be required to post the bond required by 23 California Code of Civil Procedure § 529(a) 529 (a) in the amount of at least $50 million to account for 24
investment which could be lost as a result of an injunction.10 Abba Rubber Co. v. Seaquist , 235
25 Cal. App. 3d 1, 10-11 (Ct. App. 1991). 26 27
10
See https://www.crunchbase.com/organization/primer-7cbe (“Total Funding Amount:
28 $54.7M). Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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1
Respectfully Submitted,
2 DATED: April 8, 2019 3 4 5 6
QUINN EMANUEL URQUHART & SULLIVAN, LLP
By
Jordan R. Jaffe
Jordan R. Jaffe Attorneys for PRIMER TECHNOLOGIES, INC.
7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case No. CGC-19-574788 [CORRECTED] PRIMER’S OPPOSITION TO ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION
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