Nanotechnology v. Lawrence
Security
Filed 6/27/12 General
Nanotechnology v. Lawrence Livermore
Nat. Security CA1/5
NOT TO BE PUBLISHED
IN OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for purposes
of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
GENERAL NANOTECHNOLOGY LLC et al.,
Plaintiffs and Appellants,
v.
LAWRENCE
LIVERMORE NATIONAL SECURITY LLC et al.,
Defendants and Respondents.
A129016/A129428
(Alameda County Super. Ct.
No. VG08384523)
Lawrence
Livermore National Security LLC (LLNS) manages and operates the Lawrence
Livermore National Laboratory under contract with the U.S. Department of
Energy. Victor Kley, and companies which
he owned and controlled (General Nanotechnology LLC (GN) & Metadigm LLC
(Metadigm)
collectively, appellants), claimed that LLNS misappropriated trade secrets
which he developed and owned. Appellants
filed suit, additionally alleging breach of a
covenant of good faith and fair dealing, and fraud against LLNS.
and fraud claims time-barred and granted summary adjudication of those causes
of action. A jury returned a verdict in
favor of LLNS on the remaining breach of
contract claims. LLNS was awarded
the attorney fees it incurred in defending the time-barred misappropriation
claim under Civil Code section 3426.4,
after the trial court found that appellants pursued the claim in bad
faith. Appellants challenge the jury
verdict, the trial court’s rulings on summary adjudication, and the award of
attorney fees. We affirm in all
respects.
I. Factual
and Procedural Background
Among
its projects, LLNS has for many years done research into inertial confinement
fusion (ICF), a process involving the use of lasers to raise the temperature of
hydrogen isotope fuel (tritium or deuterium), contained in very small target
capsules, to extremely high temperatures in order to produce energy from
nuclear fusion. LLNS operates the National Ignition Facility (NIF) as
part of a major research effort dedicated to achieving ICF. One aspect of the ICF program is research and
development of the very small target capsules (about 2000 microns in diameter)
ICF experiments. ICF shells must be made
of a material that has a low atomic number, such as carbon, boron, lithium, and
beryllium. The target capsules are also
known as ablators. In 2004, Dr. Robert Cook was the leader of LLNS’s ICF
capsules group, which developed the target capsules. In 2003 and 2004, the ICF program was working
primarily on development of plastic and beryllium capsules.
Kley
is an inventor. At trial, he testified
that he invented the touch pad, among other things. In the 1990’s, Kley became increasingly
interested in the field of nanotechnology and began collaborating with a group
at Lawrence Berkeley Laboratories. He
formed GN and began building tiny diamond nanostructures. In early March 2004, Kley met with
various LLNS scientists in the ICF program, during which Kley presented a
“basic proposal” for making diamond ICF shells.
On March 15, 2004, the parties entered into a
Metadigm, wherein LLNS agreed to maintain in confidence proprietary information
relating to appellants’ methods for making diamond ICF capsules. Under the NDA, appellants and LLNS agreed
“[t]o exchange and use the PROPRIETARY INFORMATION solely for the purpose of
evaluation, testing, and development of potential collaborations, joint
ventures, and/or license of the technology . . . .” This lawsuit arises from appellants’ claim
that LLNS violated the NDA and used appellants’ proprietary information without
authorization or compensation.
The Complaint
Appellants
filed suit against LLNS on April 29, 2008.
Appellants filed their first amended complaint
(FAC) on July 21, 2008, alleging
misappropriation of trade secrets, breach of written contract, breach of
implied covenant of good faith, and fraud causes of action. In the misappropriation of
trade secrets claim, GN and Metadigm pleaded a variety of misappropriations,
including “unauthorized disclosure of the trade secrets to others including the
Fraunhofer Institute, presenting the trade secrets at a trade conference and
publishing the trade secrets in a technical journal, filing patent applications
on the trade secrets and representing that [LLNS’s] personnel had invented the
trade secrets, and continuing to use the trade secrets for their own purposes
other than the ‘sole purpose’ permitted under the NDA.” In the fraud claim, Kley alleges four
separate misrepresentations by Cook:
(1) Cook misrepresented that LLNS was not pursuing, and would not
pursue, diamond ICF shell technology independently of appellants, (2) Cook
misrepresented that LLNS did not have adequate funds available to pursue
diamond ICF shell technology at any reasonable level, (3) Cook
misrepresented that diamond ICF shells were not important or worthy of further
investigation, and (4) Cook misrepresented that appellants would be
granted a contract to make diamond ICF shells if they satisfied LLNS’s
contractual formalities. Appellants’
breach of contract claim alleged that LLNS had breached the NDA by disclosing
proprietary information and using it for a purpose other than the sole purpose
identified in the NDA.
Summary
Adjudication
LLNS moved for summary
adjudication, arguing that the fraud, misappropriation, and breach of
covenant of good faith claims were barred by the statute of limitations. As we discuss in further detail post, the trial court granted the motion with respect to
appellants’ fraud and misappropriation claims, but denied the motion as to the
cause of action for breach of the implied covenant
of good faith and fair dealing.
Appellants filed a petition for
writ of mandate (No. A126768) seeking review of the order deeming their
fraud and misappropriation claims time-barred and granting summary
adjudication. After requesting and receiving opposition from LLNS,
we denied appellants’ petition for writ of mandate.
The parties proceeded to trial on appellants’ breach of
contract and breach of the covenant of good faith claims.
Kley
contended that he “invented” diamond ICF capsules. LLNS’s position was that the concept of
diamond capsules for ICF was “quite old.”
Although no one had attempted to fabricate a diamond ICF shell before
March 2004, the ICF group was interested in the potential for making shells
from diamond, which is “low-Z carbon,” and had been for years. In 1976, an article was published showing the
experimental results of simulating diamond ICF shell implosions on a
computer. As early as 1998, a panel of
outside experts recommended that LLNS investigate fabricating diamond shells
via chemical vapor deposition (CVD). CVD
is a chemical process that deposits gaseous precursors on a substrate to
produce a thin film of solid material.
For making shells or tubes, the substrate is typically a spherical
object, often referred to as a mandrel.
To create a hollow shell, once the CVD produces the film around the
mandrel, the mandrel is removed by chemically dissolving it inside the
shell. The latter process is known as
etching. In 1999, scientists at General
Electric patented a method for producing diamond tubes by CVD over a mandrel
that is etched away.
In
December 1998, in response to the outside experts’ recommendation, ICF program
leader Dr. Bruce Hammel recommended that various LLNS directorates engage in a
“strategic initiative” to investigate CVD diamond for ICF purposes. In 1999, LLNS scientist Dr. Thomas Dittrich
designed a diamond ICF capsule. Based on
this design, Dittrich performed computer simulations of ICF implosions, and
demonstrated that diamond was “a very promising material.” However, Dittrich’s work did not address the
methods for actually fabricating a diamond ICF shell.
Between
2000 and early 2003, LLNS scientists maintained interest in diamond ICF
shells. Nonetheless, the ICF program did
not attempt diamond shell fabrication because they could not resolve how to
transfer nuclear fuel into a diamond shell, a problem that would not be solved
until March 24, 2004, when it was discovered that they could use a “fill tube.”
Introduction of Kley
On
February 23, 2004, Kley approached LLNS cryogenics scientist Dr. Bernard
Kozioziemski. Kley told Kozioziemski
about Kley’s nanomachine technology, which could function at very low
temperatures and might be helpful in preparing the hydrogen samples that serve
as ICF fuel. Although not interested in
this proposal, Kozioziemski asked if Kley could machine (or polish) ICF shells,
whether beryllium, plastic, or diamond.
Kozioziemski provided Kley with a series of publicly available articles
disclosing the specifications that ICF capsules must meet, and asked Kley to
look them over. With respect to diamond
shells, Kozioziemski wrote: “The diamond
capsule[s] are not described anywhere yet.
They will have specifications on roughness, dimensions, and grain sizes
similar to the beryllium and plastic capsules.”
Kley responded that he could not work with plastic or beryllium, but
that he thought he could make a diamond capsule.
Kozioziemski
contacted Cook and told him that Kley had ideas for making diamond
capsules. Cook found the concept
interesting because “theoretically, diamond would be a better material than
beryllium or plastic . . . because it’s harder and contains the
hydrogen material better.” Cook’s
supervisor, Tom Bernat, asked Cook to get more information from Kley.
On
March 4, 2004, Kley had an introductory meeting with various LLNS scientists in
the ICF program, during which Kley provided a “basic proposal” for making
diamond ICF shells. Kley testified that
the proposal was a general overview only, and did not contain proprietary
information, because there was no NDA in place.
The NDA
On March 15, 2004, at Kley’s
insistence, the parties entered into the NDA, which was drafted by LLNS.
to exchange certain confidential and proprietary information relating to [GN’s
and Metadigm’s] methods for making, measuring, and modifying 2-3 mm diamond
hollow spheres and related matters (‘PROPRIETARY INFORMATION’
, this Agreementwill govern the conditions of mutual disclosure of PROPRIETARY INFORMATION
. . . .” To be considered
“Proprietary Information,” and thus covered by the NDA, the parties were
required to disclose information in writing and clearly mark it “PROPRIETARY
INFORMATION” or the equivalent. If
proprietary information was disclosed orally or by demonstration, to invoke the
NDA’s protections, the parties were required to reduce such information to
writing or other tangible form, within 30 days, and mark it as
proprietary. Paragraph (4) of the
NDA made clear that LLNS assumed no liability as to any “PROPIETARY
INFORMATION” that:
“(a) the receiving
PARTIES can demonstrate by written record was previously known to them;
“(b) is, or
becomes, available to the public through no fault of the PARTIES;
“(c) is lawfully
obtained by the PARTIES from a third party and is not subject to an obligation
of confidentiality owed to the third party; or
“(d) is
independently developed by or for the PARTIES independent of any disclosure
hereunder.”
The NDA designated Cook as LLNS’s technical contact.
After
execution of the NDA, appellants provided three written documents to LLNS that
were marked as confidential or proprietary:
(1) an April 9, 2004 presentation (April Presentation); (2) a
September 7, 2004 proposal (September Proposal); and (3) September 2004
clarifications (Clarifications) to the September Proposal.
April Presentation
On
April 9, 2004, Kley made a presentation in which he proposed making a diamond
ICF capsule for $785,000. The
presentation lasted about an hour.
Bernat testified that Kley’s April Presentation lacked “any type of
technical detail.” The presentation
suggested “a starting point for pursuing a technical idea.”
On the other hand, Kley believed that the presentation
contained his “proprietary information, [which] was the combination of elements
that made the invention of a [nanocrystalline] diamond, hollow diamond
sphere.” The April Presentation
described three methods. First, Kley
disclosed a “pedestal and plug” method which involved placing a mandrel on a
pedestal and growing a layer of diamond with a portion of the surface missing
where the pedestal contacts the mandrel. Subsequent steps in the method
included: growing a diamond “plug” to
fill the missing portion; removing the plug and etching away the mandrel; and
replacing the plug over the missing portion and growing a subsequent layer of
diamond.
This
“pedestal and plug” concept was a unique idea that temporarily intrigued
scientists in the ICF program, even though they “didn’t know if it would
work.” Kley conceded at trial that he
knows of no instance in which LLNS has actually used this “pedestal and plug”
method. Kley’s second and third concepts
were a “wafer carrier method” and a “valve method.” Kley also conceded that he knew of no
evidence that LLNS ever used either of these methods.
After
the April Presentation, Cook advised Kley that they were interested in the
concept, but needed “to get . . . buy-in . . . from the
folks with the money.” LLNS introduced
an email, dated May 12, 2004, in which Kley claimed that he “invent[ed] diamond
[ICF] capsules.” Cook responded: “The concept of diamond capsules for NIF is
certainly quite old, there were partial designs done I believe years ago, and
certainly there has been discussion of the possibility of diamond capsules both
in and out of the National Lab arena long before our interaction with
[GN]. But these have always been
discussions rather than implementations, in part because we didn’t have a good
idea on how to proceed. I believe that
what you brought to the table is a possible method for creating diamond
capsules, and your methods are certainly protected under the NDA.” Specifically, Cook believed that Kley’s
process for removing the mandrel was novel.
In July 2004, Cook indicated to Kley that he was trying “to sole source
this contract.”
Creation of DiaMEMS
Kley
formed a new company, called DiaMEMS, to handle the diamond ICF capsule
project. He hired Jeff Renaud to serve
as DiaMEMS’s chief executive officer and negotiate a contract with LLNS.
September Proposal
On September 7, 2004,
DiaMEMS submitted a written proposal in response to an LLNS request for
proposal (RFP). DiaMEMS proposed
fabricating polished diamond ICF shells for $1,417,570. Kley intended to use a 10-step procedure,
which—as is clear from Kley’s use of the same pictorial diagrams—is based on
the same pedestal-and-plug method he described in the April presentation. The 10 steps were described in general
terms. Kley represented that he would
give a “more detailed description . . . during the execution of the
project,” admitting that “[s]uch
detailed process information is not known at this point.”
Although
the NDA protected only Kley’s methods for making ICF shells, Kley did
not contend at trial that LLNS misused his 10-step pedestal-and-plug
method. Rather, Kley took the position
that he invented the concept of
diamond shells. Kley also claimed that
LLNS’s use of deposition, etching, and polishing techniques violated the NDA
because they can be found in three steps from the September Proposal: Steps Three, Six, and Eight.
disclosed in the September Proposal eliminated the pedestal and plug, disclosed
a rotating track, and the use of a laser to make a hole for removal of the
mandrel.
September Proposal Step
Three
Step
Three disclosed that “[a] 25 to 35 micron diamond shell is grown on [a]
polished sphere.” But, as discussed
above, the evidence showed that growing diamond via CVD had been known to the
scientific community “for at least 20 years.”
Kley
also asserted at trial that Step Three, as outlined in the September Proposal,
eliminated the pedestal and disclosed placing the mandrel on a rotating track
(a continuously-moving plate that ensures even deposition). But, Kley’s proposal said nothing about a
rotating track. And, Kley eventually
admitted as much. Kley claimed that LLNS
representatives, including Bernat and Cook, saw a rotating track when they
visited appellants’ facility, in April or May 2004.
September Proposal Step Six
In
Step Six, the September Proposal provided:
“[t]he plug or cap is removed and the exposed silicon nitride inner
shell etched, followed by a chemical etch of the innermost alumina core.” Again, however, Kley claimed that “[t]he
method of etching here is of certain terms that are well-known and well understood.” He likewise acknowledged that the LLNS
scientists “really understood” etching, and were “really experienced
. . . and were familiar with it.”
September Proposal Step
Eight
Step
Eight explained that “[t]he out-of-round diamond shell is placed in an
ultra-precision collet (Levin lathe) or bonded to a precision mandrel and its
out-of-round portion is oriented by the stub plug handle. [¶] It is then
ground, lapped, chemically lapped or LASER machined to run within 1 or 2
microns concentric and spherical to the rest of the spherical shell.” But Kley himself again admitted that the
technique for polishing an ICF shell was “well-known” and therefore not
proprietary.
Instead,
Kley testified that Step Eight also proposed “using a laser to machine, in this
case, to drill a hole in the diamond shell.”
But, the September Proposal itself said nothing about drilling a hole
with a laser or any other tool. Indeed,
Kley proposed etching the mandrel at Step Six, before Step Eight even
mentions a laser.
Clarifications to the
September Proposal
Around
September 20, 2004, DiaMEMS submitted a document entitled
“CLARIFICATIONS.” This document
explained why the estimated cost rose from $785,000 in April 2004, to $1.4
million in September 2004.
LLNS’s Ongoing Work on
Diamond ICF Technology
Meanwhile,
LLNS scientists in a different group—the Nano Science Characterization
Laboratory (NSCL), a subgroup of the Chemistry and Material Sciences Department
(Chemistry)—were also working on a method for making diamond ICF shells. In late March 2004—after Kley signed the NDA
but before he
disclosed any information under its terms—LLNS scientist Dittrich made a
discovery that dramatically increased LLNS’s interest in diamond ICF
capsules. As discussed above, the
principal barrier to LLNS using diamond shells for nuclear fusion had been the
difficulty of filling a diamond shell with fuel. On March 24, 2004, Dittrich successfully
simulated fusion burn after using a “fill tube” as the method for filling an
ICF capsule with fuel. Dittrich’s
discovery renewed ICF’s interest in developing a diamond shell because now
“there was a way to fill it” with nuclear fuel.
Around
the same time, NSCL director Dr. Alex Hamza was working on a strategic
initiative focusing on high-strength nanostructured materials, which he had
planned since 2003. On March 29, 2004,
senior lab officials held a meeting to discuss this initiative. Hammel, who was aware of Dittrich’s fill-tube
discovery and the now-potential feasibility of diamond ICF shells, suggested
Hamza consider working on diamond shells.
Hammel provided specifications for the capsules, but never indicated
that he had information about diamond shells from any disclosure made by
Kley—indeed, Kley had not yet made any disclosures under the NDA.
working on diamond capsules.
In May 2004, NSCL received
funding to work on diamond shells from a “[c]ompletely different funding
line[]” than the ICF program funding that Kley was seeking. Hamza assigned his colleague, Dr. Juergen
Biener, to work on the project. Biener
enlisted Dr. Christoph Wild, who had over 22 years of experience growing
diamond using CVD. Wild worked at
Germany’s Fraunhofer Institute (Fraunhofer), which did work in the field of
nanodiamond deposition.
name="_ftnref9" title="">[9]
In
July 2004, Wild sent NSCL a 90 micron thick flat sample of diamond strong
enough to maintain its shape under the high pressures exerted by ICF. Biener told Wild he was interested in working
together to fabricate a diamond shell for ICF purposes. On July 9, 2004, Wild responded that he
believed it was possible to make diamond ICF shells that satisfied LLNS’s
specifications and he described four steps he believed necessary to do so: (1) coating silicon mandrels with
diamond by constantly moving the mandrels during the coating;
(2) polishing the diamond to obtain as smooth and spherical a surface as
possible; (3) laser-drilling a hole in the diamond; and (4) removing
the silicon mandrel with a wet chemical etch through the drilled hole.
The
four steps Wild proposed (deposition, polishing, laser drilling, and etching)
are the steps LLNS ultimately adopted as its method for fabricating diamond
shells. They were proposed in writing two months before
Kley’s September disclosure of Steps Three, Six, and Eight.
Fraunhofer and NSCL
Collaboration
In
the first week of October 2004, Biener and Hamza went to Germany, where they
visited Fraunhofer and working together, refined their process for fabricating
diamond ICF shells. The method these
scientists developed was documented in a technical paper in June 2005, and
eventually published (see Biener et al., Diamond Ablators for Inertial
Confinement Fusion (May 2006) 49 Fusion Sci. & Tech. 737), and fully
disclosed in a provisional patent application published May 10, 2007.
exploratory work.
name="_ftnref11" title="">[11]
The process developed by NSCL and Fraunhofer involved
(a) coating with diamond multiple mandrels on a beveled rotating disk
placed within a CVD chamber. To ensure that
the mandrel is evenly coated with diamond, the group proposed using a “kicker”
on a rotating track, which randomizes the portion of the mandrel facing the
deposition source. Next, (b) the
diamond coated mandrels are polished in a special apparatus that utilizes a
diamond grinding disk; (c) a hole is laser drilled in each structure that
penetrates the diamond coating and through which the mandrel can be exposed to
chemical etchant; and (d) the mandrels are then “etched” out, aided by
ultrasonic agitation, to create a hollow diamond shell.
Decision Not to Fund
DiaMEMS’s Proposal
In October 2004, Bernat told Cook there would be no funding
of the DiaMEMS proposal. Bernat
concluded that the September Proposal posed substantial risk for the estimated
cost. On October 13, 2004, Cook told
Kley that ICF could not fund the project, but that they were thinking about
having Chemistry build the shells.
On
October 15, 2004, Hammel asked Kass when Chemistry first began work on diamond
shells. On October 21, 2004, Bernat sent
an email to those in his group, in an attempt to recreate an attendance list
for the April 9, 2004 meeting. Bernat
testified: “I wanted to establish who
was at that meeting because this was after e-mail exchanges that were between
[Kley] and [Cook], and I thought we need to know who was at that meeting
. . . [¶] . . . [¶] [t]o make sure I had a record of who
. . . had been exposed to the proprietary information . . .
.”
In
July 2007, Kley attended a trade conference at which he was directed to Biener
and Hamza’s paper regarding diamond ablators.
Kley read the paper and testified:
“I read about my invention. [¶] . . . [¶] Even some of
the words and terms were part of things I had said in presentations.” In the paper, the authors thanked Cook “for
helpful discussions.”
name="_ftnref12" title="">[12] Kley then located Hamza’s patent
application. Kley testified: “[T]his is an invention for making hollow
diamond shells and diamond ball bearings and that is [my] invention
. . . .”
Comparison of the Two
Methods
LLNS’s expert witness, Dr. John Carlisle,
conceptual process formulated by NSCL and Fraunhofer was substantially
different at every stage from appellants’ proposed method. Kley himself admitted, with respect to the
first step, that he did not disclose to the ICF program a rotating substrate
holder with a beveled disk and kicker.
LLNS’s expert confirmed that “[t]here is nothing in the [appellants’]
proposal that is even remotely proposing to do that.” As to the second step, Kley admitted that, although
he proposed the idea of polishing, he did not offer any particular method for
doing so. Moreover, Kley’s process
proposed polishing the diamond after the mandrel had been
etched out. According to LLNS’s expert,
Kley’s idea of etching first and polishing second was “dangerous”; without the
mandrel to absorb the force of polishing, the diamond shell could be crushed by
the process. Third, as discussed, Kley’s
proposal did not disclose laser drilling.
Instead, Kley proposed leaving a hole for etching through a “pedestal
and plug” method. Fourth, the NSCL and
Fraunhofer scientists realized that, because the laser-drilled hole was so
small, a normal chemical etch would take an inordinate amount of time. Accordingly, they conceived of using
ultrasonic agitation, which would speed up the etching process. Kley admitted that he never disclosed
ultrasonic etching.
After
examining the two methods side-by-side, Carlisle opined that: (1) the portions of Kley’s proposed
process alleged to be proprietary under the NDA are “obvious and known in the
field”; (2) the fabrication process proposed by Kley is not the same
process conceived by NSCL; and (3) Kley’s proposed method “presented
significant scientific technical and developmental risk.” In sum, Carlisle found no evidence suggesting
that the Fraunhofer/NSCL team used any proprietary information disclosed by
Kley.
Direct Evidence of
Disclosures in Violation of NDA
Although many of the ICF program scientists never saw a copy
of the NDA, they were informed of its existence. The testimony at trial was uniform; the ICF
program scientists who had access to appellants’ proprietary information never
disclosed any of it to the NSCL scientists.
In fact, in 2004, Cook believed that the NDA prevented him from disclosing
appellants’ proprietary information to anyone at LLNS outside of his group.
Appellants
did not present any contradictory testimony.
They presented testimony from former LLNS scientist Dr. Michael
McElfresh, who was a member of the Chemistry group and had regular meetings
with Hamza, but had been assigned to Cook’s capsules group. Part of McElfresh’s job was to promote
cooperation between the groups.
McElfresh’s office was down the hall from Cook’s and he heard about “a
guy from Berkeley” who was working on diamond ICF capsules. However, McElfresh (who, at the time of
trial, was represented by appellants’ trial counsel in employment litigation
against LLNS) never went to any of Kley’s presentations and therefore “didn’t
have any information” about his proposal.
The only thing that McElfresh communicated to Hamza in the NSCL group
was that “there was a person who claimed . . . he could make diamond
capsules.” McElfresh did not know there
was a NDA with Kley. On questioning from
the court, McElfresh testified: “I
wasn’t at the presentations. I never saw
the presentations. The only information
I had was the discussions that came up in the beryllium target group meetings
about issues related to things like removing mandrel and drilling holes.” These concepts were not attributed to anyone.
Appellants
also suggested the possibility that their proposed methods were shared with
NSCL scientists in September 2004. On
September 1, 2004, Paul Mirkarimi, who worked for Hamza in NSCL, and Bernat
exchanged emails. Bernat wrote: “[B]y all means, let’s get together. Diamond capsules are of great interest to us
and I’d love to be caught up. [¶] As you mentioned, we have been trying to
get a project with a small, outside firm going but the contract has been hard
to put together. We do have a
nondisclosure agreement with the company. . . . Please propose a time
on meeting maker . . . .”
There was a September 10, 2004 meeting between scientists from NSCL and
the ICF program. At that meeting,
Biener, from NSCL, gave a presentation to ICF scientists about his group’s
progress with diamonds. But Biener
testified that the meeting “was a pure one way communication.” Biener presented his results, the ICF
scientists “listened and that was basically it.” The ICF scientists did not tell Biener or
other representatives from NSCL about ICF’s work with Kley. After the meeting, Mirkarimi sent Cook an
email asking for a diamond film sample “from the company.” Cook could not remember if he asked Kley for
a sample.
The jury deliberated for less than
an hour before rendering a unanimous defense verdict. According to the special verdict forms, the
jury rejected appellants’ breach of contract claim because Kley’s disclosure of
information in the April Presentation, September Proposal, and Clarifications
did not constitute “a disclosure of Proprietary Information under the
NDA.” The jury rejected appellants’
breach of covenant claim, concluding that LLNS did not unfairly interfere with
appellants’ right to receive benefits under the NDA. The trial court entered judgment in LLNS’s
favor. Appellants filed a timely notice
of appeal from the judgment (Appeal No. A129016). The court thereafter denied appellants’
motion for a new trial.
On
LLNS’s motion, the trial court awarded LLNS $189,565.50 in attorney fees it
incurred in defending the misappropriation claim, pursuant to
section 3426.4. Statutory costs
were also awarded, in the amount of $121,706.49. Appellants filed a timely notice of appeal
from this postjudgment order (Appeal No. A129428). The two appeals were consolidated.
II.
Appellants contend the trial court
erred by granting summary adjudication with respect to their misappropriation
and fraud causes of action. Appellants
also argue that, regardless of whether we uphold the trial court’s summary
adjudication ruling, the
trial court’s award of attorney fees constituted an abuse of discretion. Finally, appellants argue that the jury
verdict must be reversed because the trial court committed instructional and
evidentiary errors. We address each
argument in turn.
A. Summary
Adjudication
Appellants
concede that their fraud and misappropriation claims are subject to three-year
statutes of limitation. (See Code Civ.
Proc., § 338, subd. (d) [“action for relief on the ground of fraud or mistake” to be
brought within three years, but “[t]he cause of action in that case is not
deemed to have accrued until the discovery, by the aggrieved party, of the
facts constituting the fraud or mistake”]; § 3426.6 [“[a]n action for
misappropriation must be brought within three years after the misappropriation
is discovered or by the exercise of reasonable diligence should have been
discovered”].) The issue is when
Kley had the requisite actual or constructive notice to start the three-year
clock. Appellants filed suit in April 2008. Thus, their misappropriation and fraud causes
of action are time-barred if they accrued before April 2005.
“[T]he
party moving for summary judgment [or summary adjudication] bears the burden of
persuasion that there is no triable issue of material fact and that he is
entitled to judgment as a matter of law.”
(Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal.4th 826, 850, fn. omitted; accord Code Civ. Proc.,
§ 437c, subd. (c).)
Ordinarily, on review of an order granting summary adjudication, “we independently
examine the record in order to determine whether triable issues of fact exist
. . . .” (
(2004) 32 Cal.4th 1138, 1142.) “On appeal, we determine de
novo whether there is a triable issue of material fact and whether the moving
party is entitled to summary [adjudication] as a matter of law. [Citations.]”
(Republic Indemnity Co. v.
Schofield (1996) 47 Cal.App.4th 220, 225.) We resolve any doubts in favor of the party
opposing the motion and are not bound by the trial court’s reasons for its
ruling. (Conte v. Wyeth, Inc. (2008) 168 Cal.App.4th 89, 97;
76, 85.) We will affirm an order granting
summary adjudication if it was correct on any ground that the parties had an
adequate opportunity to address in the trial court. (Securitas
Security Services USA, Inc. v. Superior Court (2011) 197 Cal.App.4th 115,
120.)
1.
In
moving for summary adjudication, LLNS argued that “[appellants] knew of their
alleged causes of action for fraud and misappropriation as early as October 13,
2004, and certainly no later than November 12, 2004.” But, appellants’ original complaint was filed
on April 29, 2008, more than three years later.
With
respect to appellants’ misappropriation cause of action, LLNS presented
evidence suggesting that appellants should have been suspicious of any
misappropriation by October or November 2004.
Specifically, LLNS relied on emails exchanged between Kley and Cook in
October 2004. For example, on October
14, 2004, Kley sent an email to Cook stating:
“Thank you for your email of 10/14/04, 10:14 a.m. We take this email to mean that neither the
Chemical Division, [LLNS] nor anyone in or associated with [LLNS] or the ICF
Program will proceed with the diamond capsule approach. . . . Since
no one at or associated with [LLNS] will be proceeding, the issues we discussed
by phone yesterday about [LLNS] rights/obligations are moot. We do remind you that our detailed process
flow description and other info disclosed under a [NDA] must be held strictly
confidential and not be used in any way.
Respond by email if [LLNS] disagrees with any of the foregoing.”
In
response, Cook wrote an email to Kley (apparently also on Oct. 14, 2004)
stating: “I don’t have the authority to
speak for [LLNS] in general, and certainly not for the Chemi[c]al Sciences
Division. [¶] Further I can not say that no-one at [LLNS] or elsewhere
will pursue diamond deposition technologies aimed at ICF shells. What I have said is that the ICF Program has
decided not to fund your proposal at this time, in large part because of
limited resources. As we have discussed
I don’t think that the concept of diamond shells for ICF purposes belongs to
DiaMems. But clearly I don’t have the
authority to make that statement for [LLNS].
What I will also say is that I
will honor our non-disclosure agreement and will not reveal your methodology to
anyone at this time.”
In
an October 15, 2004 email responding to the above email from Cook, Kley
wrote: “We should also get straight now
whether [LLNS] is not proceeding with us ‘because of limited resources’ in
whole or just ‘in part’ and whether this is really just a ruse to try to
misappropriate our technology for free and deceive us. It is too late in the game, after the NDA and
after disclosure of our detailed process flow and other confidential
information to large numbers of people at [LLNS] to claim any clean room
invention at [LLNS]. [¶] I am the inventor of the Diamond Capsule and the
concepts/processes involved for ICF use.
As you have said many times, you do not understand the IP issues.
. . . [¶] When you and [LLNS] committed to the NDA it was expected
and required that the concept of a polycrystaline diamond capsule and
development processes not be discussed with anyone not party to the NDA. Anyone
who is a party to the NDA or their agent is prohibited from using the knowledge
including the concept of a polycrystalline diamond capsule in any way without
compensation to Metadigm and DiaMems and is responsible for use by third
parties to whom any disclosure was made. [¶] You were earlier concerned
about being able to make small quantities of capsules at [LLNS]. Did you not discuss polycrystalline (CVD)
diamond capsules (including the concept of one at all) with the Chemical
Division at that time Are you claiming
that the concept of a diamond capsule was somehow totally independently
developed there despite the large attendance at the two presentations I gave
the lab Do you claim no one ever talked
to anyone at the Chemical Division This
would not be credible. [¶] Either no
one at [LLNS] nor anyone in or associated with [LLNS] or the ICF Program will
proceed with the diamond capsule approach or we will have to be fairly
compensated for our IP rights being used.”
(Italics added.)
LLNS
also relied on Kley’s deposition testimony.
Kley testified that Cook’s statement that “I cannot say that no-one at
[LLNS] or elsewhere will pursue diamond technologies aimed at ICF shells” was
false, because “[t]he truth is they were already working on it.” Defendants’ counsel immediately asked, “And
when did you suspect that that was the case”
Kley replied: “I suspected from
this e-mail and the one before that I was dealing with someone who wasn’t
honest, who had misrepresented it all along the way. [¶] I said it here,
okay. We made a large investment, it’s
true, we did. We got promises, they were
ignored. [¶] And then at the end, . . . we’re told—you know, we
are going down the road and we are told the funds are there, the funds are
there, then we finish the process and the funds aren’t there. Imagine that. [¶] So, Mr. Cook didn’t
know about that Is that what you
contend He’s the—he’s the honest
soldier in this [¶] Look, I’m telling you, this smelled and looked and
was a lie. . . .” When
asked, “[w]hy would you believe Dr. Cook’s statement that diamond ICF shells were
not important or worthy, if you also knew that [LLNS] was continuing to pursue
ICF diamond shell technology,” Kley’s counsel objected “Misstates—okay,” and
Kley replied, “I only suspected that.”
Finally,
LLNS pointed to events that transpired in November 2004. At Kley’s deposition, Kley admitted approaching LLNS’s partner
General Atomics (GA), in November 2004, in hopes of entering into a contract to
develop diamond ICF shells. On November
12, 2004, while Kley was visiting GA, Kley was handed a LLNS document, dated
October 14, 2004, showing an apparent timeline for future development of
diamond ICF shells. Kley was told that
the LLNS document had been provided to GA by Cook. At the time of Kley’s deposition and
appellants’ response to interrogatories, Kley believed that LLNS’s sharing of
this document with GA was a breach of the NDA and act of trade secret
misappropriation.
Appellants
opposed the motion for summary adjudication, asserting that they had no
knowledge or suspicion of actual wrongdoing before April 29, 2005. Appellants argued that LLNS had failed to
meet their burden to show appellants had knowledge or suspicion, before that
date, of each element of fraud or misappropriation. Appellants submitted their own separate
statement of undisputed facts, which conceded that Kley was suspicious in October
2004. However, in reliance on a
declaration from Kley, appellants asserted that Kley “did not believe that
[LLNS] had committed fraud or misappropriated his proprietary information,” but
“was concerned about a future event—that, if in the future [LLNS] were to go
with diamond ICF shells, Metadigm and or DiaMEMS would be entitled to
compensation for the use of [his] invention.”
Appellants also relied on Cook’s deposition testimony, wherein
Cook testified that, at the time he wrote the October 14 email, he “had no
information” that anyone at LLNS was going to work on diamond ICF shells.
Appellants
asserted that Kley first obtained knowledge that LLNS was doing something improper in
July 2007. While attending a trade show
in San Francisco, Kley learned that LLNS had sought a vendor to make diamond
ICF shells, and was informed of the technical paper, written by Biener, Hamza,
and Wild, which disclosed LLNS’s method for fabricating diamond shells. Kley believed that “some of the words and
terms” he used in presentations to the ICF group found their way into the
paper.
Appellants’
opposition conceded that “Mr. Kley suspected,
in November 2004, that [LLNS] had disclosed [appellants’] proprietary
information to GA in violation of the NDA,” but asserted that Kley’s
“investigation of that claim revealed that no such misappropriation had
occurred . . . under the terms of the NDA between the
parties . . . .”
(Italics added.) In his declaration, Kley
stated that he later realized that LLNS was entitled to share the information
with GA.
In
its order, the trial court stated: “In
light of Kley’s deposition admissions that he knew or suspected the falsity of
each of [the] alleged misrepresentations by October 2004, the Court finds
that Kley’s subsequently proffered declaration to the effect that he ‘did not
believe that [LLNS] had committed fraud’ or that he ‘believed, based on Dr.
Cook’s representations, that [LLNS] would not pursue diamond ICF shells’
. . . do not give rise to a triable issue as to Kley’s suspicion of
the elements of his fraud cause of action against Cook by October 2004 (See, e.g., D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 22 [(
by Woodland Hills Residents Assn., Inc.
v. City Council (1979) 23 Cal.3d 917, 944].) [¶] As discussed above,
it is not necessary that Kley know or have solid evidence of the falsity of the
alleged misrepresentations, or to have actual knowledge of each of the
remaining elements of a cause of action, for such cause of action to
accrue. Instead, it is sufficient if the
plaintiff has ‘reason to at least suspect that a type of wrongdoing has
injured’ him. (Fox [v. Ethicon Endo-Surgery,
Inc. (2005)] 35 Cal.4th [797,] 807 [(Fox).]) Kley admitted in his deposition that he had a
suspicion of wrongdoing as of October 2004 . . . . While not all harm arising therefrom may have
been known at the time . . . [t]here is no dispute that at least some
of such alleged harm and detrimental reliance occurred by the end of 2004.”
With
respect to appellants’ misappropriation claim, the trial court’s order
provided: “As [appellants] acknowledge,
‘[t]he unanimous conclusion of courts considering the issue . . . is
that it is the first discovered (or discoverable) misappropriation of a trade secret
which commences the limitation period.’
(Glue-Fold, Inc. v. Slautterback
Corp. (2000) 82 Cal.App.4th 1018, 1026 . . . .) ‘Misappropriation’ includes not just
‘disclosure’ but also ‘use’ of a trade secret of another without consent by one
who ‘had reason to know that [its] knowledge of the trade secret was
. . . [a]cquired under circumstances giving rise to a duty to
maintain its secrecy or limit its use . . . .’ ( . . . § 3426.1[,
subd. ](b)(2)(B)(ii).) [¶] In this case, based on [appellants’] allegations
and the evidence presented on this motion, such ‘use’ includes [LLNS’s] ‘use’
of [appellants’] diamond ICF shell technology in pursuing development of such
technology for its own purposes. As
discussed in section (1), above, Kley—who is GN’s and Metadigm’s
agent—admitted that he suspected such use as early as October 2004, even if he
didn’t ‘know’ of such use at that time.”
The trial court also stated that its ruling was “not based on the
evidence regarding [appellants’] contention in discovery that the disclosure of
information to [GA] was an instance of misappropriation” because it was “not
persuaded that [appellants] are bound by this previous contention.”
2. Analysis
Appellants
argue that the trial court erred by “concluding that [LLNS] had met [its]
initial burden of introducing evidence that both statutes of limitation began
to run in October 2004.” Appellants
contend that Kley’s deposition testimony was ambiguous and that the trial court
misapplied D’Amico,
supra, 11 Cal.3d 1, erroneously concluding that
they had not established triable issues of material fact. Appellants also complain that the trial court erred by
“refusing to consider whether [appellants] had raised a triable issue regarding
what, if any, additional evidence would have been disclosed by a reasonable
investigation.” Appellants argue that
“[t]he [trial court] further erred in failing to consider whether [LLNS’s]
statements constituted fraudulent concealment of the causes of action.” Appellants ask this court to focus solely on
October 2004. But, as we discuss below,
appellants’ arguments miss the mark when taking into consideration what Kley
suspected, or should have suspected, in November 2004.
Generally, a cause of action
accrues for purposes of the statute of limitations, and the applicable
limitations period begins to run, when the plaintiff has suffered damages from
a wrongful act. (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 397 (Norgart).)
However, this rule has an important exception, referred to as the discovery
rule, that “postpones accrual of a cause of action until the plaintiff
discovers, or has reason to discover, the cause of action. [Citations.]”
(Ibid.) “[U]nder the
delayed discovery rule, a cause of action accrues and the statute of
limitations begins to run when the plaintiff has reason to suspect an injury
and some wrongful cause, unless the plaintiff . . . proves that a
reasonable investigation at that time would not have revealed a factual basis
for that particular cause of action.” (
p. 803.) “[T]he discovery rule may
extend the statute of limitations, but it cannot decrease it, and a statute of
limitations does not accrue until a cause of action is ‘complete with all of
its elements,’ including injury.
[Citation.]” (
(2009) 171 Cal.App.4th 24, 32 (Cleveland).) “Under the discovery rule, suspicion of one
or more of the elements of a cause of action, coupled with knowledge of any
remaining elements, will generally trigger the statute of limitations
period. [Citations.] . . . In so using the term
‘elements,’ we do not take a hypertechnical approach to the application of the
discovery rule. Rather than examining
whether the plaintiffs suspect facts supporting each specific legal element of
a particular cause of action, we look to whether the plaintiffs have reason to
at least suspect that a type of wrongdoing has injured them.” (Fox,
at p. 807.)
“The
discovery rule only delays accrual until the plaintiff has, or should have, inquiry
notice of the cause of action. The
discovery rule does not encourage dilatory tactics because plaintiffs are
charged with presumptive knowledge of an injury if they have
‘ “ ‘information of circumstances to put [them] on
inquiry’ ” ’ or if they have ‘ “ ‘the opportunity to obtain
knowledge from sources open to [their] investigation.’ ” ’ [Citations.]
In other words, plaintiffs are required to conduct a reasonable
investigation after becoming aware of an injury, and are charged with knowledge
of the information that would have been revealed by such an
investigation.” (Fox, supra, 35 Cal.4th at pp. 807–808, fn. & italics
omitted.) “A plaintiff need not be aware of the specific ‘facts’ necessary to
establish the claim; that is a process contemplated by pretrial
discovery. Once the plaintiff has a
suspicion of wrongdoing, and therefore an incentive to sue, [he] must decide
whether to file suit or sit on [his] rights.
So long as a suspicion exists, it is clear that the plaintiff must go
find the facts; [he] cannot wait for the facts to find [him].” (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1111.) “[I]gnorance of the legal significance of
known facts or the identity of the wrongdoer will not delay the running of the
statute.” (Id. at p. 1112,
fn. 8.)
“Resolution
of the statute of limitations issue is normally a question of fact.” (Fox,
supra, 35 Cal.4th at p. 810.)
In a summary adjudication case, we consider whether the only reasonable
inference to be drawn from the undisputed facts is that the plaintiff should
have learned the facts essential to his claims by some date within the
limitations period. (
31.) It is the plaintiffs’ burden to
produce evidence supporting the assertion that they could not have reasonably
discovered the wrongful conduct at an earlier point. (See Investors
Equity Life Holding Co. v. Schmidt (2011) 195 Cal.App.4th 1519, 1533;
107 Cal.App.4th 1, 6.)
a.
We
begin with some background on the scope of appellants’ misappropriation cause
of action. “[A] prima facie claim for
misappropriation of trade secrets requires the plaintiff to demonstrate: (1) the plaintiff owned a trade secret,
(2) the defendant acquired, disclosed, or used the plaintiff’s trade
secret through improper means, and (3) the defendant’s actions damaged the
plaintiff. [Citations.]” (Sargent
Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1665, fn. omitted
(Sargent Fletcher), citing
§ 3426.1.) Appellants’ FAC stated
that they “were in possession of trade secrets including diamond ball bearings
and diamond ICF shells and methods of making and using diamond ball bearings
and diamond ICF shells and related know-how.”
Appellants’ FAC alleged that LLNS misappropriated appellants’ trade
secrets by various acts, including “unauthorized disclosure of the trade
secrets to others including the
Fraunhofer Institute . . . [and] continuing to use the trade secrets
for their own purposes and for purposes other than the ‘sole purpose’ permitted
under the NDA.” (Italics added.) The gravamen of appellants’
misappropriation claim is that LLNS continued to pursue development of diamond
ICF shells without paying appellants.
The
Legislature has incorporated the discovery rule directly into the statute of
limitations for such a cause of action.
Section 3426.6 provides: “An
action for misappropriation must be brought within three years after the
misappropriation is discovered or by the exercise of reasonable diligence
should have been discovered. For the
purposes of this section, a continuing misappropriation constitutes a single
claim.” The effect of the second
sentence of section 3426.6 is that “the first discovered (or discoverable)
misappropriation of a trade secret commences the limitations period. (Glue-Fold,
Inc. v. Slautterback Corp.[, supra,
82 Cal.App.4th at p. 1026].)” (
Court (2008) 163 Cal.App.4th 575, 582.)
“[A] claim for
misappropriation of a trade secret arises for a given plaintiff against a given
defendant only once, at the time of the initial misappropriation, subject to
the discovery rule provided in section 3426.6. Each new misuse or wrongful disclosure is
viewed as augmenting a single claim of continuing misappropriation rather than
as giving rise to a separate claim.” (
(2002) 29 Cal.4th 215, 223, italics omitted.) Thus, in this case, we review the undisputed
facts to see whether the only reasonable inference is that appellants suspected
or had reason to suspect, before April 2005, at least one instance of
LLNS’s disclosure of, or continued use of, the diamond ICF shell concept.
We
first address whether LLNS carried its burden, under Code of Civil Procedure section 437c,
subdivision (p)(2), in moving for summary adjudication.
that a reasonable investigation by Kley, at any time before April 2005, would
have put him on notice that LLNS was using or disclosing appellants’ trade
secrets. Although the trial court
focused on October 2004, we think the better reference point is
November 2004. For purposes of
analyzing this issue on appeal, we assume, as appellants suggest, that, in
October 2004, Kley could have only suspected LLNS might use his diamond ICF
shell technology in the future
without compensation.
name="_ftnref15" title="">[15] But, regardless of what Kley suspected or
should have suspected in October 2004, LLNS met its burden to show that
the misappropriation cause of action accrued no later than November 2004.
LLNS
presented Kley’s deposition testimony, in which Kley admitted approaching
LLNS’s partner GA, in November 2004, in hopes of entering into a contract to
develop diamond ICF shells. On
November 12, 2004, while Kley was visiting GA, Kley was handed a LLNS
document, dated October 14, 2004, showing an apparent timeline for future
development of diamond ICF shells. Kley
was told that the LLNS document had been provided to GA by Cook. At the time of Kley’s deposition and
appellants’ response to interrogatories, Kley believed that LLNS’s sharing of
this document with GA was a breach of the NDA and an act of trade secret
misappropriation.
name="_ftnref16" title="">[16] Kley even sent a “cease and desist” letter to
GA—accusing them of being “material witnesses” to LLNS’s actions in violation
of the parties’ NDA.
If
Kley believed, as he apparently did, that, after contract negotiations fell
apart, any continued pursuit of diamond ICF shell technology by LLNS was
misappropriation, Kley had notice no later than November 2004 that he had
been injured. Thus, LLNS met its burden of showing
that, by November 2004, appellants suspected, or should have suspected,
both wrongdoing and injury.
The
trial court correctly granted summary adjudication because appellants did not
show the existence of a triable issue of material fact. The only evidence they presented was the Kley
declaration, which provided: “The
document [provided to GA] was [LLNS’s] timeline planner to show when
shells. . . . [¶] . . . When I was presented with the
document [by GA], I initially was concerned that it might be a violation of the
NDA. However, when I reviewed the NDA, I
realized that [LLNS] had the right to provide this document to GA, and it was
not a violation of the NDA.” (Italics
added.) Kley’s declaration attempts to
recast his prior admission of actual suspicion.
But, it cannot establish a triable issue regarding what a reasonable
person would have suspected because it rests on an unreasonable reading of both
the NDA and the LLNS timeline that was in GA’s possession. In their reply brief, appellants suggest that
Kley thought LLNS was merely discussing diamond ICF shell work with
DiaMEMS. But, the document, dated
October 14, 2004, discussed diamond shell development in future years. By October 14, 2004, it was clear that there
would be no contract or collaboration between LLNS and DiaMEMS. For the same reason, we cannot agree with
Kley’s belated suggestion that LLNS’s disclosure to GA did not breach the NDA
because the parties were only prohibited from disclosing “to others except to
their employees, agents, consultants, subcontractors having a need to know in
order to accomplish the sole purpose [of the NDA].” (Italics added.) The trial court properly disregarded Kley’s
implicit self-serving description of the two documents. (Evid. Code, § 1523.) Kley’s purported ignorance of the legal
significance of the facts does not delay accrual of the cause of action. (Jolly
v. Eli Lilly & Co, supra, 44 Cal.3d at p. 1112, fn. 8.)
Kley’s
declaration does not defeat the only reasonable inference from his receipt of
the LLNS document from GA—Kley suspected, or should have suspected, that LLNS
had disclosed the diamond shell concept and was continuing to pursue the
concept for its own purposes. Even if appellants are not
and Kley’s deposition testimony, it remains undisputed that Kley
obtained information, in November 2004, from which he could only
reasonably suspect that LLNS continued to pursue the use of ICF diamond target
shells and was purportedly using appellants’ trade secrets in doing so. Thus, appellants had notice of their
misappropriation cause of action no later than November 2004. (See Fox,
supra, 35 Cal.4th at pp. 806–809.)
It is
irrelevant that, at that time, Kley did not have all the details
regarding Fraunhofer’s involvement. (See
Cal.3d at p. 1111; Cypress Semiconductor
Corp. v. Superior Court, supra, 163 Cal.App.4th at p. 582;
Corp., supra, 29 Cal.4th at p. 223.)
Our
analysis explicitly considers what a reasonable investigation would have
uncovered in November 2004. Simply put, the undisputed
facts showed that a reasonable reading of the documents available to Kley in
November 2004 revealed a factual basis for appellants’ misappropriation
cause of action. (See
p. 803.)
b.
Appellants also suggest that they established a triable
issue of material fact with respect to whether LLNS had fraudulently concealed
the misappropriation cause of action until at least April 2005. Appellants point to Cook’s statements that
LLNS would not pursue diamond ICF shells, LLNS had insufficient funding to do
so, and that LLNS did not consider diamond ICF shells to be important. The FAC
| Description | Lawrence Livermore National Security LLC (LLNS) manages and operates the Lawrence Livermore National Laboratory under contract with the U.S. Department of Energy. Victor Kley, and companies which he owned and controlled (General Nanotechnology LLC (GN) & Metadigm LLC (Metadigm)[1]; collectively, appellants), claimed that LLNS misappropriated trade secrets which he developed and owned. Appellants filed suit, additionally alleging breach of a nondisclosure agreement and the implied covenant of good faith and fair dealing, and fraud against LLNS.[2] The trial court found the misappropriation and fraud claims time-barred and granted summary adjudication of those causes of action. A jury returned a verdict in favor of LLNS on the remaining breach of contract claims. LLNS was awarded the attorney fees it incurred in defending the time-barred misappropriation claim under Civil Code section 3426.4,[3] after the trial court found that appellants pursued the claim in bad faith. Appellants challenge the jury verdict, the trial court’s rulings on summary adjudication, and the award of attorney fees. We affirm in all respects. |
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