IP Law Daily, TRADE SECRETS—N.D. Cal.: Dismissal granted in electronics coatings dispute, (Sep 25, 2024)

By Kevin M. Finson

Claims for misappropriation of trade secrets related to water repellant coatings for cell phones were dismissed because they were described without sufficient particularity, and because they were time barred.

A patentee failed to state claims for misappropriation of trade secrets or indirect patent infringement, the U.S. District Court in San Francisco has held. The claimed secrets were described in such an overbroad way that the defendants were not on notice as to their boundaries. The claims also were dismissed as time-b rred (P2i Ltd. v. Favored Tech USA Corp., No. 3:23-cv-01690-AMO (N.D. Cal. Sept. 24, 2024)).

P2i Ltd. (P2i) was a designer and seller of water-repellent coating technology used for electronic devices such as cell phones and was the assignee of U.S. Patents Nos. 8,389,070 (the ’070 patent) and 11,041,087 (the ’087 patent) related to that technology. P2i brought suit against two group of defendants, Favored Tech USA Corp. and its parent company Jiangsu Favored Nanotechnology Co., Ltd. (collectively, Favored) and GN Audio USA, Inc. (GN Audio), alleging that both misappropriated P2i’s trade secrets in violation of the Defend Trade Secrets Act (DTSA) and infringed its patents by manufacturing, importing, or selling products using its patented coating and method of coating application. Both sets of defendants moved to dismiss.

Trade secrets. Favored argued that P2i failed to sufficiently describe the purported trade secrets and that the claims were time-barred. The court had previously dismissed the trade secrets allegations in P2i’s first amended complaint as too high level to provide effective notice of the boundaries of the purported secrets.

The court held that the second amended complaint, which was the operative pleading, fared no better, claiming sweeping categories such as “specific chemical identity of reaction precursors” and “valuable internal business documents.” Many of these items were additionally not protectable as trade secrets because they were publicly available, having been disclosed in P2i’s own patent applications.

As an independent ground for dismissal, the court also found that P2i was on at least inquiry notice of the alleged theft of its trade secrets more than three years prior to the filing of the present suit, because it alleged theft of the same information by a non-party Favored entity in 2019.

Induced, contributory, and willful infringement. Favored and GN Audio challenged the induced and willful infringement claims on the basis of a lack of pre-suit notice. The court found that there was no allegation of the sort of specific knowledge of a patent and of infringement of that patent required to plead either theory of relief, as a pre-suit letter was sent to a non-party, and even if it had been received by the correct entity, it failed to identify an accused product or accused method. As to contributory infringement, the court found that P2i failed to plausibly allege that the accused products had no substantial non-infringing uses. To the contrary, it appeared the machines had a wide range of settings and modifications, only some of which would be infringing.

The court granted the motion to dismiss the challenged claims and declined leave to further amend. P2i’s claims of direct infringement, which were not challenged, remained in the case.

The Case is No. 3:23-cv-01690-AMO.

Judge: Olguín, A.

Attorneys: Scott Matthew Lowry (Lowry Blixseth APC) for P2i Ltd. Matthew Cook Bernstein (Perkins Coie LLP) for Favored Tech USA Corp.

Companies: P2i Ltd.; Favored Tech USA Corp.; Jiangsu Favored Nanotechnology Co., Ltd.; GN Audio USA, Inc.

Cases: Patent TradeSecrets CaliforniaNews