Global Protein Products, Inc. v. Le ( 2019 )

Filed 11/20/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
GLOBAL PROTEIN PRODUCTS, INC., H044628
(Santa Clara County
Plaintiff and Respondent, Super. Ct. No. 105CV043903)
v.
KEVIN K. LE et al.,
Defendants and Appellants;
THE VPS COMPANIES, INC., et al.,
Interveners and Respondents.
Appellants Kevin K. Le and West Coast AG, LLC (WCA)1 appeal from the trial
court’s denial of their renewed motion to dissolve a stipulated permanent injunction filed
pursuant to Code of Civil Procedure section 1008, subdivision (b).2 The stipulated
permanent injunction prohibits appellants from acquiring, disclosing, or using a trade
secret developed by respondent Global Protein Products, Inc. (GPP). According to
appellants, dissolution of the stipulated permanent injunction under section 533 is
required because recently discovered evidence demonstrates that GPP does not have a
valid trade secret. Thus, appellants claim that the underlying basis for the stipulated
permanent injunction no longer exists.
Although an order denying a renewed motion under section 1008, subdivision (b)
is not appealable, we exercise our discretion to treat appellants’ appeal as a petition for
1
We collectively refer to Le and WCA as “appellants.” We refer to Le and WCA
separately as needed for clarity.
2
Unspecified statutory references are to the Code of Civil Procedure.
writ of mandate and deny the constructive petition. The trial court reasonably concluded
that appellants did not meet the requirements of section 533. Thus, the trial court did not
abuse its discretion when it denied appellants’ renewed motion.
BACKGROUND
1. Le’s Employment with Global Protein Products and
The Stipulated Permanent Injunction
Global Protein Products is a protein-based coating company that claims as a trade
secret a proprietary formula and process for treating field-cored iceberg lettuce. GPP’s
trade secret product, when applied to lettuce, prolongs shelf life by preventing
dehydration, browning, and pinking of the lettuce’s cut surface.
Le, a scientist, was employed by GPP from 2000 to 2003. According to facts later
stipulated to by Le, during Le’s employment, GPP disclosed to Le the proprietary
formula for its trade secret product and the identity of an organic acid used in the product.
Le signed a confidentiality agreement with GPP that required him to withhold GPP’s
confidential information.
Le formed WCA after he left GPP. After he formed WCA, Le and WCA
competed with GPP and attempted to sell WCA’s products to GPP’s customers.
On June 28, 2005, GPP filed a lawsuit against appellants alleging causes of action
for trade secret misappropriation, breach of contract, and unfair competition.
GPP requested a temporary restraining order and a preliminary injunction against
appellants. Mark Kierstead, GPP’s president and founder, prepared a declaration in
support of GPP’s request. According to Kierstead, an inventor invented a process and
formula for making a zein film in pure water in 1993. A patent was issued for this
invention in 1997 (the 880 patent), which GPP subsequently acquired.3 Thereafter, GPP
3
According to appellants, “ICEIN” is the commercial name for the product
patented in the 880 patent.
2
began researching whether its patented process for making zein film in pure water could
be used on fresh produce. GPP’s head scientist discovered that a particular organic acid,
if used with the 880 patent, could extend the shelf life of lettuce for seven days.
Kierstead declared that GPP never disclosed the identity of this organic acid, and GPP
did not patent the combined use of the unnamed organic acid in conjunction with the 880
patent. Instead, GPP treated the unidentified organic acid, used in conjunction with the
880 patent, as a trade secret. Kierstead asserted that in 2005, he received a call from Dole
Fresh, one of GPP’s customers. A Dole Fresh employee told Kierstead that he had
received e-mails from appellants promoting a new product that Le had purportedly
developed. In a subsequent e-mail exchange between the Dole Fresh employee and Le,
Le sent a “Material Safety Data Sheet” that included the undisclosed organic acid used in
GPP’s trade secret. Le said that his product used the same organic acid used in GPP’s
trade secret.
On June 27, 2005, the trial court granted GPP a temporary restraining order
against appellants. The temporary restraining order enjoined appellants from acquiring,
disclosing, using, or attempting or threatening to acquire, disclose, or use GPP’s trade
secret, and from directly or indirectly soliciting GPP’s customers using GPP’s trade
secret. On July 18, 2005, the trial court granted GPP a preliminary injunction, enjoining
appellants from engaging in these same acts.
On January 11, 2006, GPP and appellants agreed to a stipulated permanent
injunction that would “fully and finally resolve all existing and potential differences
between them” arising from appellants’ use of GPP’s trade secret. The parties stipulated
that “GPP claim[ed] as a trade secret a proprietary formula and process for treating field
cored iceberg lettuce to increase shelf life of the lettuce (‘GPP’s Trade Secret product’).”
The parties further stipulated that “[t]he formulation of GPP’s Trade Secret product and
3
the identity of the organic acid used in the formulation and process were disclosed to Mr.
Le during his employment at GPP.”
Pursuant to the stipulated permanent injunction, appellants were permanently
enjoined from: (1) “Acquiring, disclosing, using, or attempting or threatening to acquire,
disclose, or use, GPP’s Trade Secret product, including any information relating to its
formulation and process and the identity of the organic acid used in said product,”
(2) “Directly or indirectly soliciting any of GPP’s customers using GPP’s Trade Secret
product and/or any information related thereto,” and (3) “Doing any other act using
GPP’s Trade Secret or any other information subject to Mr. Le’s Confidentiality
Agreement with GPP in order to compete with GPP.”
2. GPP’s Ex Parte Application for Order to Show Cause Regarding Contempt, VPS’s
Complaint in Intervention, and Subsequent Proceedings
In October 2013, Bob Cyr, GPP’s chief executive officer (CEO), met with
representatives of Inn Foods, Inc., and its parent company, intervenor and respondent
VPS Companies, Inc. (VPS), to discuss GPP’s shelf life extender products. At the time,
VPS notified Cyr that it was subject to legal restrictions due to a settlement from a prior
lawsuit with appellants. VPS was not permitted to use shelf life extenders provided by
Le and was restricted from engaging in development of shelf life extenders.
After learning this information, GPP conducted its own investigation. Based on its
investigation, GPP believed that Le had attempted to sell VPS a trade secret formula that
he had created called “WCA Blend T6.” GPP believed that the trade secret formula that
Le created and sold was derived from GPP’s trade secret. According to statements made
by Le in his prior litigation with VPS, Le began consulting with Inn Foods in 2005 and
began an employment relationship with VPS in 2007. Le previously stated in the prior
VPS litigation that “ ‘[o]n July 31, 2012, Defendant MID-CON AG, LLC purchase[d] all
ownership rights, title, and interest to the proprietary polysaccharide formulations
4
developed by LE/WCA.’ ” Thus, GPP claimed that appellants had violated the
permanent injunction previously issued by the trial court.
On July 29, 2014, GPP filed an ex parte application for an order to show cause
regarding contempt. That same day, the trial court issued an order to show cause to
appellants.
On October 30, 2014, the trial court granted VPS’s motion to intervene, and VPS
filed a complaint in intervention. VPS’s complaint in intervention alleged that Le
misappropriated GPP’s shelf life extenders and falsely claimed to be the owner or
inventor of the shelf life extenders that he had provided to VPS. VPS sold products to
Kidco Farms Processing until Le’s resignation. After Le’s resignation, Kidco stopped
purchasing products from VPS and began purchasing products from appellants. VPS
sued appellants, Kidco, and Mid-Con Ag, LLC. Subsequently, VPS entered into a
settlement in that case relying on appellants’ purportedly false statements that they, not
GPP, had developed the shelf life extender at issue.
Appellants opposed the order to show cause, filed an opposition, and engaged in
discovery. Appellants also demurred to VPS’s complaint in intervention, moved to
compel GPP to identify its trade secrets, and moved for a protective order preventing
GPP from conducting discovery until it had identified its trade secrets. GPP later filed an
amended disclosure of its trade secret products, which appellants argued was deficient.
On February 26, 2015, the trial court overruled appellants’ demurrer to VPS’s
complaint in intervention. The trial court denied appellants’ motion to compel a trade
secret designation and for a protective order after determining that GPP’s alleged trade
secrets were described with reasonable particularity in their amended trade secret
designation as required under section 2019.210.4
4
One of the categories identified in GPP’s amended trade secret designation was
the proprietary formulations of its shelf-life extenders for “P100-Fresh Cut Potatoes,”
(continued)
5
3. Motion to Modify or Dissolve the Stipulated Permanent Injunction
Appellants continued to engage in discovery and sent GPP requests for
admissions. In their sixth request for admission, appellants asked GPP to admit that the
organic acid identified in the first paragraph of the stipulated permanent injunction was
citric acid, which GPP admitted. In their seventh request, appellants asked GPP to admit
that the organic acid identified in the first paragraph of the stipulated permanent
injunction was sodium benzoate, which GPP denied. GPP’s answers were both subject to
objections that the requests were improper in form and were not full and complete in and
of itself.
On July 20, 2016, appellants filed a motion to modify or dissolve the stipulated
permanent injunction under section 533. Appellants argued that newly discovered
facts—that citric acid was the previously undisclosed organic acid in the stipulated
permanent injunction—demonstrated that GPP’s trade secret did not possess a
commercial advantage, and GPP’s trade secret was previously publicly disclosed in a
patent (the 880 patent). Appellants further argued that the stipulated permanent
injunction’s language was overly broad and failed to provide appellants adequate notice
of the specific actions that were enjoined. Appellants also claimed that citric acid was
widely used for food preservation.
Appellants argued that GPP itself could not define its own trade secret.
Appellants’ motion quoted excerpts taken from depositions taken of GPP employees. In
one quote, Cyr stated that Kierstead would know the identity of the trade secret.5 In
another quote, Kierstead stated that the trade secret was “ ‘the formula’ ” as well as the
“Clean and Core” and “P200” (“Subject Shelf-Life Extenders”). The second category
was GPP’s pricing for its “Subject Shelf-Life extenders,” and the third and fourth
categories identified by GPP included GPP’s proprietary formulas and ingredients for the
proprietary formulas.
5
Appellants’ motion states that Kierstead was also GPP’s former CEO.
6
“ ‘organic acid that Tony Jabar figured out.’ ” Jabar, however, was quoted as saying, “ ‘I
don’t know what an undisclosed acid is. So I don’t have any way of knowing.’ ”
GPP opposed the motion to modify or dissolve the stipulated permanent
injunction. GPP maintained that it had not disclosed the organic acid used in its trade
secret product and had continued to take reasonable steps to protect its proprietary
formula. GPP argued that the stipulated permanent injunction’s language was
purposefully vague to maintain GPP’s trade secret, and appellants had previously
conceded that they knew the formula for GPP’s trade secret and was thus aware of what
they were enjoined from using. VPS also opposed appellants’ motion.
On August 1, 2016, GPP moved to amend its responses to appellants’ first set of
requests for admissions. GPP sought to amend its response to the sixth request for
admission (whether the undisclosed organic acid was citric acid) to denied, and its
response to the seventh request for admission (whether the undisclosed organic acid was
sodium benzoate) to the information is protected by trade secret privilege. Both answers
were subject to GPP’s objection that the requests were improper in form and were not full
and complete in and of itself.
In its motion, GPP argued that it had mistakenly admitted that citric acid was the
unidentified organic acid in its trade secret. GPP explained that the mistake occurred
because citric acid was one of the organic acids used in GPP’s trade secret; however, it
was not the unidentified organic acid used in GPP’s trade secret. GPP argued that an
amendment should be permitted because appellants would not be prejudiced since they
already knew the identity of the unidentified organic acid.
Appellants opposed GPP’s motion to amend its admissions, but the trial court later
granted GPP’s request.
7
On September 27, 2016, the trial court denied the motion to dissolve the stipulated
permanent injunction after finding that appellants failed to make the showing required
under section 533.
4. The Renewed Motion to Modify or Dissolve the Stipulated Permanent Injunction
On December 29, 2016, appellants filed a renewed motion to modify or dissolve
the stipulated permanent injunction under section 1008, subdivision (b). According to
appellants’ motion, GPP had served its amended responses to appellants’ request for
admissions on October 28, 2016. Appellants argued that GPP’s amended responses
represented new facts that materially altered the circumstances surrounding the prior
motion to dissolve the stipulated permanent injunction. Specifically, when GPP filed its
amended response to appellants’ request for admissions, instead of filing an amended
response in accordance with its motion to amend its admissions, GPP admitted that the
organic acid identified in the first paragraph of the stipulated permanent injunction was
sodium benzoate. According to appellants, sodium benzoate was well-known and
extensively used in the food preservation industry, and GPP itself disclosed its use of
sodium benzoate in a prior patent (again, the 880 patent) and a prior patent application
(the 147 patent application).
Appellants attached copies of the 880 patent and the 147 patent application to its
motion. The 880 patent, titled “Protein-Polysaccharide Complex Composition and
Method of Use,” summarized its invention as follows: “Food products are preserved or
stabilized against deterioration of organoleptic properties during storage by contacting the
food products with an aqueous solution of a stabilizing composition containing at least
one stabilizing acid and a protein-polysaccharide complex composition including at least
one water-soluble polysaccharide and at least one substantially water-insoluble protein.”
The 880 patent described several examples of how to prepare the
protein-polysaccharide complex (PPC) composition referenced in the patent, with some
8
examples going into great detail about the proposed methods of preparation for seafood.
The 880 patent’s first claim stated that “[w]hat is claimed is: [¶] 1. A food preserving
composition for treating edible products to maintain or refurbish desirable organoleptic
qualities thereof comprising: a mixture of at least one stabilizing acid and a [PPC]
composition comprising: [¶] between about 90% to 99.5% by weight of a water soluble
-polysaccharide impregnated with between about 10% to 0.5% by weight of a
substantially water-insoluble protein.” The 880 patent further described as its eleventh
claim: “The food preserving composition of claim 1 wherein the stabilizing acid is an
organic food grade acid or a salt thereof.”
The 147 patent application, titled “Method of Increasing Crop Yield,” stated that
the invention could be used “to enhance the germination, emergence, root mass
development, disease resistance, photosynthetic rate, plant growth, and crop yield of a
variety of agricultural commodities including but not limited to . . . lettuce . . . .” The 147
patent application noted that “additives may be added to the aqueous alcohol solution to
promote stability of the peptide-polysaccharide complex,” and further stated that
additives could include “anti-microbial compounds such as . . . benzoic acid.”
The 147 patent application was filed in 2002, before the parties agreed to the
stipulated permanent injunction. The 880 patent was issued in 1997, also before the
parties agreed to the stipulated permanent injunction. Thus, appellants claimed that
GPP’s prior disclosure of sodium benzoate demonstrated that GPP had no commercial
advantage in its trade secret because business competitors could readily ascertain all of
the components necessary to recreate GPP’s trade secret.
In support of their renewed motion, appellants filed a declaration prepared by
Irving Rappaport, a patent attorney retained by appellants to render an opinion about
GPP’s trade secret. Rappaport stated that he believed that GPP had not articulated a
sufficiently clear and unambiguous statement of its trade secret, and GPP had not
9
identified and maintained the secrecy of its trade secret. Rappaport further stated that in
his opinion, the combination of the 880 patent, the 147 patent application, and several
articles discussing the use of sodium benzoate for preserving lettuce demonstrated that
GPP’s trade secret had never been a trade secret.
GPP opposed appellants’ renewed motion to modify or dissolve the stipulated
permanent injunction. In part, GPP argued that appellants failed to show a material
change in the facts upon which the stipulated permanent injunction was issued. GPP
disputed appellants’ claim that its trade secret was not a secret. GPP argued that “a trade
secret can also be a formula, a process, a method or technique.” VPS also opposed
appellants’ motion, arguing that appellants did not demonstrate new facts to support
dissolving the injunction under section 533.
On January 31, 2017, the trial court denied appellants’ renewed motion to modify
or dissolve the stipulated permanent injunction, finding that the motion did not meet the
requirements of section 1008, subdivision (b) and section 533. On February 10, 2017,
appellants filed a notice of appeal specifying that the appeal was taken from the trial
court’s order denying appellants’ renewed motion.
DISCUSSION
Appellants did not appeal from the trial court’s order denying their first motion
to modify or dissolve the stipulated permanent injunction. Instead, appellants appeal
from the trial court’s order denying their renewed motion filed pursuant to section 1008,
subdivision (b). Although we conclude that an order denying a renewed motion pursuant
to section 1008, subdivision (b) is not appealable, we treat appellants’ appeal as a petition
for a writ of mandate and address their claims. Based on our review, we conclude that
the trial court did not abuse its discretion when it denied the renewed motion to dissolve
the stipulated permanent injunction.
10
1. Appealability
a. Section 1008
Section 1008 describes applications for reconsiderations of court orders (§ 1008,
subd. (a)) and renewals of previous motions (§ 1008, subd. (b)).
Section 1008, subdivision (a) states in pertinent part: “When an application for an
order has been made to a judge, or to a court, and refused in whole or in part, or granted,
or granted conditionally, or on terms, any party affected by the order may, within 10 days
after service upon the party of written notice of entry of the order and based upon new or
different facts, circumstances, or law, make application to the same judge or court that
made the order, to reconsider the matter and modify, amend, or revoke the prior order.”
Likewise, section 1008, subdivision (b) states in pertinent part: “A party who
originally made an application for an order which was refused in whole or part, or
granted conditionally or on terms, may make a subsequent application for the same order
upon new or different facts, circumstances, or law, in which case it shall be shown by
affidavit what application was made before, when and to what judge, what order or
decisions were made, and what new or different facts, circumstances, or law are claimed
to be shown.”
Section 1008, subdivision (g) specifies that “[a]n order denying a motion for
reconsideration made pursuant to subdivision (a) is not separately appealable. However,
if the order that was the subject of a motion for reconsideration is appealable, the denial
of the motion for reconsideration is reviewable as part of an appeal from that order.”
b. Appealability of Orders Denying Renewed Motions
GPP argues that orders denying renewed motions under section 1008,
subdivision (b) are not appealable. Appellants claim that there is a “split in authority”
over the appealability of a renewed motion under section 1008, subdivision (b), and this
court should find that the order denying the renewed motion is appealable.
11
Appellants’ assertion that there is a split in authority over the appealability of
orders denying renewed motions under section 1008, subdivision (b) is misleading. In
their reply brief, appellants cite to no cases that hold that orders denying renewed
motions are appealable, and we have found no cases that support appellants’ position. In
contrast, two appellate cases, Tate v. Wilburn (2010) 184 Cal. App. 4th 150 (Tate) and
Chango Coffee, Inc. v. Applied Underwriters, Inc. (2017) 11 Cal.App.5th 1247 (Chango),
have concluded that orders denying renewed motions under section 1008, subdivision (b)
are not appealable. We find Tate and Chango persuasive.
In Tate, the defendant filed an order to show cause seeking to set aside a child
support order. (Tate, supra, 184 Cal.App.4th at p. 153.) The motion was denied in
August 2008, and the defendant filed a renewed motion under section 1008,
subdivision (b) in October 2008. (Tate, supra, at p. 154.) The defendant attached new
evidence with his renewed motion that demonstrated that he was not the father of the
child who was the subject of the support order. (Id. at pp. 154-155.) The trial court
denied the renewed motion, and the defendant appealed. (Id. at pp. 152, 155.)
On appeal, Tate first examined the appealability of motions for reconsideration
made under section 1008, subdivision (a). (Tate, supra, 184 Cal.App.4th at pp. 158-159.)
At the time Tate was decided, section 1008, subdivision (g) was not yet enacted, and
there was a split of authority concerning the appealability of orders denying section 1008,
subdivision (a) motions, with the majority of recent cases holding that motions for
reconsideration were not appealable. (Tate, supra, at pp. 158-159.) Tate observed that
motions for reconsideration under section 1008, subdivision (a) and renewed motions
under section 1008, subdivision (b) were closely related. (Tate, supra, at pp. 159-160.)
Tate then applied the same analysis that courts had previously applied to find orders
denying motions under section 1008, subdivision (a) nonappealable to orders denying
motions under section 1008, subdivision (b). (Tate, supra, at p. 160.)
12
Thus, Tate held that orders denying renewed motions under section 1008,
subdivision (b) were not appealable because such a determination would eliminate the
possibility that “(1) a nonappealable order or judgment would be made appealable, (2) a
party would have two appeals from the same decision, and (3) a party would obtain an
unwarranted extension of time to appeal.” (Tate, supra, 184 Cal.App.4th at p. 160.)
After Tate was decided, the Legislature amended section 1008 and added
section 1008, subdivision (g). (Stats. 2011, ch. 78, § 1.) As amended, section 1008,
subdivision (g) expressly states that orders denying motions for reconsideration under
section 1008, subdivision (a) are not separately appealable. The statute, however, is
silent as to whether orders denying renewed motions under section 1008, subdivision (b)
are appealable.
In Chango, the appellate court considered the argument that Tate was abrogated
by the Legislature’s subsequent amendment to section 1008. (Chango, supra, 11
Cal.App.5th at p. 1253.) The respondents in Chango argued that because the amendment
to section 1008 did not likewise provide that renewed motions under section 1008,
subdivision (b) are not separately appealable, Tate was effectively abrogated. (Chango,
supra, at p. 1253.) Chango disagreed, observing that the Legislature is presumed to
know of existing judicial decisions when enacting or amending legislation. (Ibid.) Thus,
“the Legislature’s decision not to address the appealability of orders denying renewed
motions under section 1008, subdivision (b) suggests the Legislature intended the Tate
court’s construction to control.” (Ibid.)
Appellants argue that Tate was wrongly decided and rested on the erroneous
assumption that the differences between subdivisions (a) and (b) of section 1008 were
minor and cosmetic. Appellants characterize reconsideration motions under section
1008, subdivision (a) as a vehicle for trial courts to engage in error-correction and insist
13
that these motions have a broader reach and are more powerful than renewed motions
under section 1008, subdivision (b).
Appellants misread section 1008, subdivisions (a) and (b). As stated in Tate, “[a]
party filing either a motion under section 1008, subdivision (a) or (b) is seeking a new
result in the trial court based upon ‘new or different facts, circumstances, or law.’
(§ 1008, subds. (a), (b).)” (Tate, supra, 184 Cal.App.4th at p. 160.) A motion for
reconsideration under section 1008, subdivision (a) is not focused on error-correction.
Like a renewed motion, it asks the trial court to reconsider its earlier ruling either based
on additional evidence or new law. As a result, we agree with Tate and Chango and
conclude that order denying appellants’ renewed motion under section 1008,
subdivision (b) was not appealable.
VPS agrees with GPP’s argument that the order denying the renewed motion
under section 1008, subdivision (b) is not appealable but argues that this court should
exercise its discretion and consider the case on the merits. As GPP acknowledges in its
respondent’s brief, Tate explained that there may be instances where “a party is unable to
obtain appellate review of a ruling in a significant proceeding in which newly discovered
evidence was presented” because renewed motions under section 1008, subdivision (b)
are not appealable. (Tate, supra, 184 Cal.App.4th at p. 161, fn. 10.) In these instances, a
party may file a petition for writ of mandate seeking extraordinary relief. (Ibid.)
We requested supplemental briefing from the parties, asking if this court should
exercise its discretion to consider appellants’ appeal as a petition for a writ of mandate,
which we must do only “under unusual circumstances.” (Olson v. Cory (1983) 35 Cal. 3d
390, 401 (Olson).) In response, all of the parties urge us to consider the appeal as a
petition for writ of mandate.
The California Supreme Court in Olson determined that it was appropriate to treat
an appeal as a petition for a writ of mandate when there was no adequate remedy at law,
14
“the issue of appealability was far from clear in advance,” the records and briefs included
the necessary elements for a petition for a writ of mandate, there was nothing to indicate
that the trial court would appear separately or become more than a nominal party, and
dismissing the appeal rather than exercising the court’s discretion to reach the merits
would be “ ‘ “unnecessarily dilatory and circuitous.” ’ ” (Olson, supra, 35 Cal.3d at
p. 401.)
Not all of the elements articulated in Olson are present here. In particular, this is
not a case where the issue of appealability was far from clear in advance. The only
published cases on the issue, Tate and Chango, have both held that renewed motions
under section 1008, subdivision (b) are not appealable. (Tate, supra, 184 Cal.App.4th at
p. 160; Chango, supra, 11 Cal.App.5th at p. 1254.)
This case, however, presents a relatively unusual procedural situation because it is
unclear when or if appellants will be able to challenge the trial court’s ruling from a later
appealable order or judgment. Although a contempt proceeding is ongoing below, a
judgment of contempt is not appealable. (§§ 904.1, subd. (a)(1), 1222.) Additionally, the
merits of the issues raised by appellants have been fully briefed by all parties, there is no
indication that the trial court would appear separately or become more than a nominal
party, and failing to reach the merits of the issues raised would be unnecessarily
circuitous as similar issues may recur as the stipulated permanent injunction remains in
force. As a result, we exercise our discretion and treat appellants’ appeal as a petition for
a writ of mandate.6
6
We also observe that an order denying a motion to dissolve or modify an
injunction under section 533 is appealable. (§ 904.1, subd. (a)(6).) We see no reason
why appellants would have been barred from filing a second motion under section 533.
Instead, appellants chose to frame the motion as a renewed motion under section 1008,
subdivision (b). Had appellants filed a successive motion under section 533, the trial
court’s denial of that motion would have been appealable.
15
2. The Renewed Motion Failed on Its Merits
When it denied appellants’ renewed motion, the trial court determined that the
renewed motion failed to satisfy both sections 1008, subdivision (b) and 533. On appeal,
appellants argue that the trial court erred because their renewed motion met the
requirements of both sections 1008, subdivision (b) and 533.
As we explain, we conclude that the trial court did not err when it determined that
appellants’ motion did not satisfy section 533.7 As a result, the trial court did not err
when it denied appellants’ motion.
a. General Legal Principles and Standard of Review
Section 533 provides that “[i]n any action, the court may on notice modify or
dissolve an injunction or temporary restraining order upon showing that there has been a
material change in the facts upon which the injunction or temporary restraining order was
granted, that the law upon which the injunction or temporary restraining order was
granted has changed, or that the ends of justice would be served by the modification or
dissolution of the injunction or temporary restraining order.”
Civil Code section 3426.2, subdivision (a) provides that “[u]pon application to the
court, an injunction shall be terminated when the trade secret has ceased to exist, but the
injunction may be continued for an additional period of time in order to eliminate
commercial advantage that otherwise would be derived from misappropriation.”
We review the trial court’s order denying a motion to dissolve an injunction for an
abuse of discretion. (Loeffler v. Medina (2009) 174 Cal. App. 4th 1495, 1505; People ex
rel. Feuer v. Progressive Horizon, Inc. (2016) 248 Cal. App. 4th 533, 540.) The trial
7
Since we conclude that the trial court did not err when it determined that the
renewed motion did not meet the requirements of section 533, we do not need to reach
the trial court’s alternate ground for denying the motion—that the requirements of
section 1008, subdivision (b) were not met.
16
court’s decision not to dissolve a permanent injunction “ ‘ “ ‘rests in the sound discretion
of the trial court upon a consideration of all the particular circumstances of each
individual case.’ ” ’ ” (People v. Brewer (2015) 235 Cal. App. 4th 122, 136.) Here,
appellants strenuously dispute whether GPP’s trade secret was a trade secret. “The issue
of whether information constitutes a trade secret is a question of fact.” (Thompson v.
Impaxx, Inc. (2003) 113 Cal. App. 4th 1425, 1430.) To the extent we review the trial
court’s factual findings, we apply the substantial evidence standard of review. (Loeffler,
supra, at p. 1505.) In general, “[w]e presume that the trial court[’s] order is correct, and
imply findings that are necessary to support the judgment.” (Estate of O’Connor (2017)
16 Cal.App.5th 159, 169.)
b. Existence of a Valid Trade Secret
Appellants argue that the stipulated permanent injunction was based on trade
secret law, and, as a result, the injunction must be based on a valid trade secret. Thus,
appellants insist that the injunction should have been dissolved because the renewed
motion demonstrated that a valid trade secret no longer existed. Appellants argue that
under section 533, there was a material change in the facts upon which the stipulated
permanent injunction was granted. Appellants claim that appellants’ prior disclosures of
its unidentified organic acid—such as in the 880 patent cited in their renewed motion—
vitiated GPP’s commercial advantage because a technical person versed in food
preservation practices could easily reverse engineer GPP’s trade secret.
The Uniform Trade Secret Act defines a “trade secret” as “information, including
a formula, pattern, compilation, program, device, method, technique, or process that: [¶]
(1) Derives independent economic value, actual or potential, from not being generally
known to the public or to other persons who can obtain economic value from its
disclosure; and [¶] (2) Is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.” (Civ. Code, § 3426.1, subd. (d).)
17
We agree with appellants that publication of a trade secret destroys it. Federal
cases that have applied California law have consistently concluded that once a trade
secret is publicly disclosed in a patent, the information contained in the trade secret is
placed in the public domain and the trade secret is subsequently extinguished. (Forcier v.
Microsoft Corp. (N.D.Cal. 2000) 123 F. Supp. 2d 520, 528; Stutz Motor Car of America v.
Reebok Intern., Ltd. (C.D.Cal. 1995) 909 F. Supp. 1353, 1359.) Likewise, California
courts have also concluded that widespread publication of a purported trade secret
extinguishes the trade secret. (DVD Copy Control Assn., Inc. v. Bunner (2004) 116
Cal. App. 4th 241, 251 [widespread publication of information over Internet may destroy
trade secret].)
As the trial court did not make any express findings on the record, we must imply
findings necessary to support its order. (Estate of O’Connor, supra, 16 Cal.App.5th at
p. 169.) Here, the trial court could have reasonably concluded that the publication of the
880 patent and the 147 patent application, combined with the identification of sodium
benzoate as the stipulated permanent injunction’s previously undisclosed organic acid,
did not destroy GPP’s trade secret. In the stipulated permanent injunction, the parties
agreed that “GPP claim[ed] as a trade secret a proprietary formula and process for
treating field cored iceberg lettuce to increase shelf life of the lettuce (‘GPP’s Trade
Secret product’).” In other words, GPP’s trade secret was not limited to the identity of
the components used; the trade secret encompassed the proprietary formula and the
process for treating lettuce.
There is sufficient evidence to support the trial court’s implied determination that
GPP has a valid trade secret. Appellants observe that the 880 patent, which describes the
process for making PPC compositions, states as its first claim the invention of “[a] food
preserving composition for treating edible products . . . comprising a mixture of at least
one stabilizing acid.” Later, the 880 patent states as another claim, “[t]he food preserving
18
composition of claim 1 wherein the stabilizing acid is an organic food grade acid or a salt
thereof.” However, disclosure of sodium benzoate as the “organic food grade acid”
contemplated by the 880 patent does not, by itself, reveal the process that GPP’s trade
secret product is applied and used on lettuce. Likewise, the 880 patent describes the
process to create a generic PPC composition but also specifically describes detailed
examples of how to prepare different iterations of PPC compositions to be used on
seafood. Appellants, however, do not articulate which preparation discloses GPP’s trade
secret.8 Appellants merely vaguely reiterate that GPP’s trade secret is the combination of
sodium benzoate with the 880 patent.
Appellants further claim that the 147 patent application discloses the use of
sodium benzoate to preserve lettuce, destroying GPP’s commercial advantage.
Appellants, however, do not cite to anything in the record that demonstrates that the 147
patent application actually discloses GPP’s trade secret. In fact, it appears that the 147
patent application merely makes a passing reference to the preservation of lettuce using
“anti-microbial compounds” such as “benzoic acid,” a term that appellants claim is
synonymous with sodium benzoate. Based on its title, “Methods of Increasing Crop
Yield,” the 147 patent application does not contemplate the invention of a product that
extends shelf life. The 147 patent application states that the invention is meant “to
8
One example of how to prepare a PPC composition is described in the 880 patent
as follows: “Fifty grams (50 g) of citric acid was added to 0.675 kg of water used to
prepare 4.5 kg of an 85:15 alcohol: water aqueous organic solvent system. Five hundred
grams of zein was added to the aqueous organic solvent system in a suitable vessel. The
aqueous organic solvent was kept in motion during the addition with the aid of a
mechanical stirrer. Accordingly, a solution of 10% by weight of zein in aqueous alcohol
was prepared. [¶] Nine and one-half kg of guar gum was added to the 10% zein solution
with mixing in a Stokes Heavy Duty sigma-type blender. After about 30 minutes of
continuous mixing, the mass was homogenous, slightly tan, and had a wet, sand-like
consistency. The mass was dried in an explosion-proof drier to yield a
protein-polysaccharide complex.”
19
enhance the germination, emergence, root mass development, disease resistance,
photosynthetic rate, plant growth, and crop yield of a variety of agricultural commodities
including but not limited to . . . lettuce . . . .” Appellants do not cite to a particular
portion of the 147 patent application that expressly discusses extending the shelf life of
cut lettuce, and there is nothing in the record that demonstrates that this specific process
is public information or has been otherwise published.
For these reasons, appellants’ claim that the trial court abused its discretion when
it did not dissolve the stipulated permanent injunction under section 533 and Civil Code
section 3426.2 is without merit.
c. Vagueness and Enforceability of the Stipulated Permanent Injunction
Appellants argue that the stipulated permanent injunction fails to adequately
provide a standard of conduct because its terms are too vague. Appellants further argue
that the trial court lacked authority over the injunction because it would be precluded
from finding appellants in contempt under Civil Code section 3426.2. Thus, appellants
argue that “the ends of justice would be served” (§ 533) by dissolving the stipulated
permanent injunction.
Appellants, however, agreed to the terms of the stipulated permanent injunction
that they now claim are too vague to be enforced. Appellants did not seek relief from
their stipulations, and to the extent appellants challenge issues that could have been raised
in a prior appeal—such as an appeal from the permanent injunction itself—those issues
are not now reviewable here. (See Malatka v. Helm (2010) 188 Cal. App. 4th 1074, 1085
[issues that could have been raised in appeal from original restraining order could not be
raised on appeal from order refusing to dissolve the restraining order]; Harris v. Spinali
Auto Sales, Inc. (1966) 240 Cal. App. 2d 447, 452-454 [party remains bound to stipulation
unless relief is obtained by trial court].)
20
Appellants claim that recently discovered evidence underscores the vagueness of
the permanent injunction, citing to the deposition testimony of various GPP employees
including Cyr, Jabar, and Kierstead. Appellants further argue that GPP’s own amended
trade secret designation reflects that GPP cannot articulate how its trade secret is used on
lettuce and fails to list information that was not already publicly available.
The trial court, however, could have reasonably concluded that the language of the
stipulated permanent injunction was sufficiently definite, despite appellants’ contrary
evidence. (See § 2019.210 [in any action alleging a misappropriation of a trade secret,
the party alleging the misappropriation must identify the trade secret with reasonable
particularity]; Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc. (2014) 226
Cal. App. 4th 26, 43-44 [“the trade secret must be described ‘with sufficient particularity
to separate it from matters of general knowledge in the trade or of special knowledge of
those persons who are skilled in the trade, and to permit the defendant to ascertain at least
the boundaries within which the secret lies’ ”]; Perlan Therapeutics, Inc. v. Superior
Court (2009) 178 Cal. App. 4th 1333, 1349 [trial court “must exercise its sound discretion
in determining how much disclosure is necessary to comply with section 2019.210 under
the circumstances of the case”].) As we previously observed, the parties stipulated that
that “GPP claim[ed] as a trade secret a proprietary formula and process for treating field
cored iceberg lettuce to increase shelf life of the lettuce (‘GPP’s Trade Secret product’).”
The stipulated permanent injunction did not identify the precise formula or ingredients
used in GPP’s trade secret, but its failure to do so did not mean that GPP’s description of
its trade secret was not sufficiently clear. (See Advanced Modular Sputtering, Inc. v.
Superior Court (2005) 132 Cal. App. 4th 826, 835 [§ 2019.210 does not require that a
party alleging misappropriation must “define every minute detail of its claimed trade
secret”].)
21
Finally, appellants insist that the ends of justice would be served by dissolving the
stipulated permanent injunction because the injunction was void and entered in excess of
the trial court’s jurisdiction; thus, the trial court would be precluded from finding
appellants in contempt of the injunction.
Appellants primarily rely on Loftis v. Superior Court (1938) 25 Cal. App. 2d 346.
There, the appellate court determined that the trial court acted in excess of its jurisdiction
when it entered an injunction restraining certain public officers from duties required of
them by existing, valid state law. (Id. at pp. 353-354.) Loftis determined that the
provisions of Civil Code section 3423, which provided in part that an injunction cannot
be granted “ ‘[t]o prevent the execution of a public statute by officers of the law for the
public benefit’ ” (Loftis, supra, at p. 352), was a limitation on the exercise of the trial
court’s jurisdiction. Here, appellants argue that like the injunction contemplated in
Loftis, the stipulated permanent injunction in this case was entered in excess of the trial
court’s jurisdiction because it contravened Civil Code section 3426.2, which requires the
termination of injunctions when a trade secret no longer exists.
In contrast, both GPP and VPS argue that Wanke, Industrial, Commercial,
Residential, Inc. v. Keck (2012) 209 Cal. App. 4th 1151 is squarely applicable to this case
and precludes appellants from arguing that the stipulated permanent injunction cannot be
enforced. In Wanke, the Fourth Appellate District held that “a party may successfully
defend against the enforcement of an injunction on the ground that the injunction is
invalid only in the narrow circumstance in which the party can demonstrate that the
injunction was beyond the trial court’s jurisdiction to issue in the first instance.” (Id. at
p. 1177.) In its decision, Wanke distinguished between injunctions issued in excess of a
court’s jurisdiction and injunctions that are legally erroneous and therefore void. Citing
In re Berry (1968) 68 Cal. 2d 137 and Signal Oil & Gas Co. v. Ashland Oil & Refining
Co. (1958) 49 Cal. 2d 764, Wanke observed that an order does not suffer from
22
jurisdictional defects if the invalidity of the agreement does not appear upon the face of
the order and if the order was issued based on an error of law of less than constitutional
stature. (Wanke, supra, at pp. 1173-1174; Berry, supra, at p. 148; Signal Oil, supra, at p.
776.)
GPP and VPS both insist that under Wanke, the stipulated permanent injunction
was not issued in excess of the trial court’s jurisdiction. Thus, GPP and VPS claim that
appellants cannot defend against the trial court’s enforcement of the injunction as
described in Wanke. The issue contemplated in Wanke, however, is not completely
analogous to the issues argued by appellants in the present action. Here, appellants argue
that the injunction should be dissolved under section 533 and Civil Code section 3426.2,
in part because there is no valid trade secret to protect. Nothing in Wanke suggests that a
legally erroneous injunction cannot be dissolved if the trial court determines that the
requirements of section 533 have been met.
Ultimately, we do not need to decide whether the stipulated permanent injunction
was entered in excess of the trial court’s jurisdiction as contemplated in Loftis or whether
appellants cannot defend against the enforcement of the injunction as described in
Wanke. As we have explained, appellants’ claim that the stipulated permanent injunction
is unenforceable and should be terminated under Civil Code section 3426.2 is premised
on their assertion that GPP has no valid trade secret. Based on our conclusion that
sufficient evidence supports the trial court’s implied determination that GPP has a valid
trade secret, appellants’ argument that the stipulated permanent injunction is
unenforceable and void under Civil Code section 3426.2 is without merit.
d. Conclusion
We find that the trial court did not abuse its discretion when it concluded that
appellants did not meet the requirements of section 533. Likewise, the trial court did not
23
abuse its discretion by determining that it was not required to terminate the stipulated
permanent injunction under Civil Code section 3426.2, subdivision (a).
DISPOSITION
The constructive petition for writ of mandate is denied. Respondent and
intervenor are entitled to their costs.
24
Premo, J.
WE CONCUR:
Greenwood, P.J.
Elia, J.
Global Protein Products, Inc. v. Le et al.
H044628
Trial Court: Santa Clara County Superior Court
Superior Court No. 105CV043903
Trial Judge: Hon. William J. Elfving
Counsel for Plaintiff/Respondent: Berding & Weil
Global Protein Products, Inc. Paul Wilfred Windust
Counsel for Defendants/Respondents: Berstein Law
Kevin Le David Alan Berstein
West Coast AG John Dimuzio Jr.
Counsel for Interveners/Respondents: Johnson & James
The VPS Companies, Inc. Robert K. Johnson
Inn Foods, Inc.
Global Protein Products, Inc. v. Le et al.
H044628