Auris Health, Inc. v. Noah Medical Corporation ( 2024 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 AURIS HEALTH, INC., et al., Case No. 22-cv-08073-AMO (LJC) 8 Plaintiffs, ORDER GRANTING IN PART AND DENYING IN PART JOINT 9 v. DISCOVERY LETTER BRIEF; GRANTING ADMINISTRATIVE 10 NOAH MEDICAL CORPORATION, et al., MOTION TO CONSIDER WHETHER ANOTHER PARTY’S MATERIAL 11 Defendants. SHOULD BE SEALED 12 13 Pending before the Court is the parties’ Joint Discovery Letter Brief. ECF No. 118. The 14 parties primarily dispute how much of Defendant Noah Medical Corporation’s (Noah) proprietary 15 source code Plaintiffs Auris Health, Inc. (Auris), Verb Surgical Inc. (Verb), and Cilag GmbH 16 International (Cilag) (collectively, Plaintiffs) should be allowed to access and review during 17 discovery. The Court held a hearing on February 2, 2024. ECF No. 123. Having carefully 18 considered the parties’ arguments and relevant authority, and for the reasons stated below, the 19 Court hereby GRANTS IN PART and DENIES IN PART the relief requested in the Joint 20 Discovery Letter Brief.1 21 I. BACKGROUND 22 The Court assumes the parties’ familiarity with the underlying facts of this case. Request 23 1 In connection with the Joint Discovery Letter Brief, Plaintiffs filed an Administrative Motion to 24 File Under Seal, seeking to maintain under seal portions of the Joint Discovery Letter Brief that referenced details about Plaintiffs’ trade secrets. ECF No. 119. The Court granted the motion on 25 the record at the hearing on February 2, 2024, for good cause shown. ECF No. 123. Plaintiffs also filed an Administrative Motion to Consider Whether Another Party’s Material Should Be 26 Sealed. ECF No. 120. Noah filed a statement in support of sealing as required by Civil Local Rule 79-5(f). ECF No. 122. The material in question referenced Noah’s commercially sensitive 27 confidential information, specifically, source code parameters for a non-public instrument being 1 for Production (RFP) No. 20, which was propounded by Plaintiffs, requests: “All software, 2 firmware and tests written or modified by any Individual Defendant for Noah Medical.” ECF No. 3 118 at 2 (emphasis in original).2 Plaintiffs assert all of their source code-related trade secrets 4 against Noah (id. at 2), but Diana Cardona Ujueta is the only individual Defendant accused of 5 taking Plaintiffs’ source code. See ECF No. 36 (First Amended Complaint, or FAC) ¶¶ 113–19. 6 Plaintiffs allege that Cardona Ujueta downloaded a large number of documents from her Auris- 7 issued laptop, which included source code files, onto a personal external hard drive from April 8 2021 to when she left Auris in August 2021. Id. Cardona Ujueta joined Noah in September 2021 9 as an “R&I Senior Robotics and Controls Engineer.” Id. ¶ 121. There is forensic evidence 10 indicating that she accessed some of these documents and files in September 2021. Id. ¶¶ 122–23. 11 Noah does not dispute the fact that Cardona Ujueta took Plaintiffs’ documents, including source 12 code files, with her after she left Auris. ECF No. 118 at 4. 13 However, Noah points out that in a verified interrogatory response, Cardona Ujueta stated 14 that she did not transfer Plaintiffs’ information to Noah. Id. And although Noah searched for 15 these source code files in its systems and Cardona Ujueta’s Noah-issued laptop—using agreed- 16 upon search terms negotiated by the parties—no responsive documents were found by Noah, and 17 nothing was produced. Id. Noah claims that Cardona Ujueta is not a software engineer and did 18 not write source code for Plaintiffs or for Noah. Id. at 4. Noah concedes, however, that one of her 19 job responsibilities is to “test hardware using code written by others, to see if things are working 20 correctly.” Id. 21 Individual Defendant Mouslim Tatarkhanov was Noah’s Head of Research and Innovation 22 Software. FAC ¶ 178. Tatarkhanov did write source code for Noah, specifically, code for motion 23 control of prototype devices. ECF No. 118 at 3, 5. And Tatarkhanov also worked on software and 24 firmware related to Auris’s products during his time with the company. FAC ¶ 175. But Plaintiffs 25 do not assert any source-code related trade secrets against Tatarkhanov, which they claim is the 26 result of Tatarkhanov reformatting his hard drives right before leaving Auris, meaning there is no 27 1 forensic evidence that he took any source code files, as there is with Cardona Ujueta. ECF No. 2 118 at 3. Specifically, Plaintiffs allege that on February 22, 2021, the next business day after he 3 resigned from Auris, Tatarkhanov downloaded over 60 Software Quality Management Documents 4 from the Agile System, and three hours after this download completed, he erased the contents of 5 one of his hard drives by reformatting that drive. FAC ¶ 176. On March 5, 2021, his last day at 6 Auris, Tatarkhanov allegedly erased the contents of another Auris hard drive by reformatting the 7 drive. Id. Plaintiffs claim that Tatarkhanov reformatted his hard drives without Auris’s 8 permission, although Noah contends that he spoke to an IT employee before doing so, and that he 9 “provided the names of employees who were aware of it or had reformatted their own laptops 10 when leaving.” ECF No. 118 at 3, 5. At the hearing, Noah admitted that it does not know the 11 name of the IT employee that Tatarkhanov spoke to, and that the employees referenced in the Joint 12 Discovery Letter Brief were Tatarkhanov’s subordinates. 13 Nevertheless, Tatarkhanov has told Plaintiffs that he only saved the files he downloaded to 14 his Auris-issued laptop, not to an external device or account. Id. at 5. Like Cardona Ujueta, 15 Tatarkhanov has served a verified discovery response stating that he did not transfer Plaintiffs’ 16 information to Noah. Id. at 5. And as with Cardona Ujueta, Noah ran search terms in connection 17 with Tatarkhanov—including terms with the file names of the 60 files Plaintiffs accuse 18 Tatarkhanov of exfiltrating—and found no responsive documents to produce. Id. 19 Apart from the particulars related to the parties’ present discovery dispute, the Court notes 20 that there is a Stipulated Protective Order in this case. ECF No. 79. Section 7.3 of the Protective 21 Order sets rules for the disclosure of Highly Confidential – Source Code information and items. 22 Id. at 10–11. 23 II. LEGAL STANDARD 24 Rule 26(b)(1) of the Federal Rules of Civil Procedure allows parties to obtain “discovery 25 regarding any nonprivileged matter that is relevant to any party’s claim or defense and 26 proportional to the needs of the case, considering the importance of the issues at stake in the 27 action, the amount in controversy, the parties’ relative access to relevant information, the parties’ 1 expense of the proposed discovery outweighs its likely benefit.” The right to discovery, even 2 plainly relevant discovery, is not limitless. Rule 26 allows the Court to deny discovery where: “(i) 3 the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some 4 other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking 5 discovery has had ample opportunity to obtain the information by discovery in the action; or 6 (iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).” Fed. R. Civ. P. 7 26(b)(2)(C). It is “[t]he [C]ourt’s responsibility, using all the information provided by the parties, 8 [ ] to consider these and all the other factors in reaching a case-specific determination of the 9 appropriate scope of discovery.” Fed. R. Civ. P. 26(b), Advisory Committee Notes (2015 10 Amendment). 11 III. DISCUSSION 12 Plaintiffs want a forensic neutral firm to “identify source code files, firmware, and tests 13 authored or modified by any Individual Defendant.” ECF No. 118 at 4. But in the Joint 14 Discovery Letter Brief, Plaintiffs focus only on Defendants Cardona Ujueta and Tatarkhanov. Id. 15 at 2–3. Noah believes Plaintiffs to be narrowing their source code request (id. at 4), although 16 Plaintiffs state that this is “false” and that they have never altered RFP No. 20. Id. at 6. 17 In trade secret misappropriation cases where source code discovery is sought, “[a]s a 18 starting point, the party alleging trade secret misappropriation should have identified what alleged 19 trade secret was misappropriated.” Peter S. Menell et al, Trade Secret Case Management Judicial 20 Guide, Chapter 6.7.2, Federal Judicial Center (2023); see also Waymo LLC v. Uber Techs., Inc., 21 No. C 17-00939 WHA, 2017 WL 6883929, at *1 (N.D. Cal. Oct. 19, 2017) (noting that “[t]here is 22 nothing improper about requiring Waymo to make some showing” that a witness “actually took its 23 source code in the first place before attempting to use [them] as an excuse for pawing through 24 Uber’s source code without limitation.”) Here, Plaintiffs’ source code-related trade secrets are 25 only asserted against Cardona Ujueta, although they are making the argument that Cardona Ujueta 26 somehow may have colluded with Tatarkhanov to misappropriate the source code she took. But 27 Plaintiffs have otherwise made no showing nor presented any argument to the Court as to any 1 Plaintiffs’ request to “paw” through Noah’s source code for anything authored or modified by any 2 Individual Defendant is DENIED. 3 As to Cardona Ujueta, Noah’s proposed compromise is that the forensic neutral firm first 4 review her personal device to assess whether downloaded files were transferred. ECF No. 118 at 5 5. If (and only if) there are “signs of transfer,” then Noah would work with Plaintiffs to review 6 Cardona Ujueta’s interactions with GitLab—a tool used by Noah to store its software—to “show 7 that her interactions with Noah’s source code storage tool only relate to her testing role.” Id. 8 The Court finds that Noah’s proposed compromise is reasonable. The Court denies 9 Plaintiffs’ request to review source code files, firmware, and tests authored or modified by 10 Cardona Ujueta at this point in time. The Court, however, orders the parties to engage a forensic 11 neutral firm to review Cardona Ujueta’s personal device to assess whether files downloaded from 12 Auris and saved to her personal external hard drive were later transferred from her personal 13 device. If the forensic neutral firm determines that files were transferred from the device, 14 Plaintiffs shall be permitted to review Cardona Ujueta’s interactions with GitLab to examine her 15 interactions with Noah’s source code storage tool. The neutral forensic firm shall abide by the 16 terms of the Stipulated Protective Order and any other protective conditions that the parties 17 establish for its review. 18 Finally, as to Tatarkhanov, Noah argues that because “Plaintiffs made no source code 19 allegations against” him nor have they identified any such claims, “they are not entitled to have 20 Noah dump all the code he wrote for the company.” ECF No. 118 at 6. Plaintiffs’ theory as to 21 why they are entitled to Noah source code authored or modified by Tatarkhanov is essentially that 22 his “working relationship” with Cardona Ujueta “provided a further opportunity for the defendants 23 to use the indisputably stolen source code at Noah.” Id. at 3. Tatarkhanov and Cardona Ujueta 24 worked on the same research and innovation team at Noah, and she allegedly began gathering 25 Plaintiffs’ documents and source code files a month after Tatarkhanov joined Noah. Id. There is 26 also the fact that Tatarkhanov modified his hard drives shortly before leaving Auris, which 27 Plaintiffs claim was an attempt by Tatarkhanov to “conceal[] his misconduct.” Id. 1 involvement in Noah’s source code that may evidence misappropriation of Auris’s information. 2 || Noah sets too high a bar for source code discovery and fails to recognize that by reformatting his 3 hard drives, Tatarkhanov blocked Plaintiffs’ ability to determine what files may have been 4 || transferred from those drives. While it would be excessive to allow Plaintiffs’ free-ranging review 5 || of all Noah source code created by Tatarkhanov, the Court orders the parties to engage a forensic 6 neutral firm to identify Noah source code files, firmware and tests authored or modified by 7 Tatarkhanov, and to share with the parties the minimal amount of information about this material 8 || necessary for the parties to later meet and confer to determine the scope of Noah’s source code 9 || production. The forensic neutral firm shall abide by the terms of the Stipulated Protective Order 10 || and any other protective conditions that the parties establish for its review. 11 || Iv. CONCLUSION 12 For the reasons stated above, the Court GRANTS IN PART and DENIES IN PART the 5 13 relief requested by the parties in the Joint Discovery Letter Brief. The parties shall engage a 14 || forensic neutral firm to complete the search of Cardona Ujueta’s personal device for signs of file 3 15 transfer. If such signs are found, then the parties may proceed with the review of Cardona a 16 || Ujueta’s interactions with GitLab. The forensic neutral firm shall also identify any Noah source 3 17 code files, firmware, and tests authored or modified by Tatarkhanov, and then share with the 18 || parties the minimal amount of information necessary which will allow the parties to meet and 19 || confer to determine the scope of Noah’s source code production. 20 IT IS SO ORDERED. 21 Dated: February 13, 2023 22 23 Ki joo — J. CI ROS 24 Unfted States Magistrate Judge 25 26 27 28