Case Name: ?? Intellisoft, Ltd. v. Acer America Corp., et al.
Case No.: ?????? 2014-1-CV-272381
This is an action for trade secret misappropriation and related claims. Plaintiff Intellisoft, Ltd. alleges that, in 1984, its founder Bruce Bierman developed Bookmark, software which provides computer users with a method to return their computer to a previously saved state after a power failure.? (See Fourth Amended Complaint (?4AC?), ???1, 14.) ?In 1990, Intellisoft asked defendant Acer America Corporation (?AAC?) if it would be interested in an OEM (or ?original equipment manufacturer?) arrangement for the installation of Bookmark software on its personal computers. (Id., ??29.) ?AAC agreed to evaluate the software and executed a technology nondisclosure agreement (the ?1990 NDA?). ?(Ibid.) ?Over the next two years, Intellisoft provided AAC with confidential information about Bookmark. (See id., ?? 41-45.) ?Shortly after Intellisoft provided this information, AAC secretly began drafting an application for a patent (the ?713 patent?) incorporating Bookmark technology. (Id., ??47.)
Following its evaluation, AAC represented to Intellisoft that it wanted to license Bookmark software for factory installation in personal computers that would be released in 1992.? (See 4AC, ? 48.) ?On January 2, 1992, AAC and Intellisoft entered into a licensing agreement (the ?First Acer License?) and a separate nondisclosure agreement (the ?1/92 NDA?). (Id., ??49.) That same day, unbeknownst to Intellisoft, AAC filed its application regarding the 713 patent. (Id., ? 50.)? In August and September of 1992, the parties executed a modified licensing agreement (the ?Modified License?) and a second nondisclosure agreement (the ?9/92 NDA?). (Id., ??52.)? Intellisoft alleges that AAC has disclosed and used its proprietary and confidential information in violation of the nondisclosure and licensing agreements since 1992, including by applying for and obtaining three more patents during 1995-1999. (See id., ??59.) ?The 713 patent was the first to issue on April 25, 1995, and at that time, ?the Confidential Information that Intellisoft provided to Acer under the NDAs and the Acer License was published in the United States.? ?(Id., ??58.) ?Intellisoft and Bierman stopped doing business in software development, and consequently did not learn of the 713 patent and AAC?s trade secret misappropriation generally until 2013. ?(Id., ? 68.)
Intellisoft alleges that defendant Acer Incorporated (?AI?) is the parent company of AAC, as well as of defendants Wistron Corporation (?Wistron?) and Wistron InfoComm Technology (America) Corporation (?InfoComm,? collectively with Wistron, the ?Wistron Defendants?). ?(4AC, ?? 3-5.) ?AI marketed and manufactured PC computer products until about 2000, when Wistron was created and ?spun off? from AI, and InfoComm was also created. ?(Id., ??3.) ?Wistron acquired the rights to the patents at issue in this action. ?(Ibid.)? Intellisoft alleges upon information and belief that the Wistron Defendants have a corporate and/or contractual relationship with AAC and/or AI that results in them being subject to the contracts at issue. ?(Id., ?? 3-4.) ?Also upon information and belief, the Wistron Defendants have a joint interest with AI, AAC, and/or one another in marketing and selling computers manufactured and/or marketed by AAC, AI, and/or one another, including those that incorporated Intellisoft?s misappropriated materials; they shared profits and losses in regard to those activities; and they had a right to joint control over those efforts. ?(Ibid.)? Finally, Intellisoft alleges that the Wistron Defendants knew of information regarding AAC?s use of Intellisoft?s trade secrets that was fraudulently concealed from plaintiff, and of AAC?s breach of the 1990 NDA, but accepted and/or retained the benefit of AAC?s actions and have derived revenue from the trade secret information. ?(Id., ?? 77-80.)
The Court (Hon. Arand) sustained two prior demurrers by the Wistron Defendants to previous versions of the complaint.? On September 25, 2015, Intellisoft filed the 4AC pursuant to the parties? stipulation, asserting the following claims: (1) trade secret misappropriation (against all defendants), (2) intentional misrepresentation and fraudulent concealment (against AAC and AI), (3) breach of the 1990 NDA (against AAC and AI), and (4) accounting (against all defendants).? On May 20, 2016, the Court (Hon. Kirwan) sustained without leave the Wistron Defendants demurrer to the two claims asserted against them.? Intellisoft now moves for leave to amend the operative complaint based on newly discovered evidence.
In connection with the most recent demurrer, the Court found that the allegations of the 4AC showed that the Wistron Defendants did not exist yet at the time of the alleged misappropriation of trade secrets and therefore they could not be liable.? Intellisoft asserts that it has discovered new evidence demonstrating that Wistron was founded in 1976 and began operations within Acer Inc. in 1981 and therefore Wistron did exist at the time of publication of Intellisoft?s trade secrets in April 1995.
Intellisoft sets forth several arguments for why it should be allowed to file an amended pleading notwithstanding the Court?s prior order denying leave to amend following the sustaining of the demurrer to the 4AC.? Intellisoft contends the Court has the discretionary authority to hear and grant the motion to amend the complaint based on the following: (1) Code of Civil Procedure section 473, subdivision (a)(1); (2) Code of Civil Procedure section 1008, subdivision (a); (3) Code of Civil Procedure section 1008, subdivision (b); and (4) the Court?s inherent authority to change its decision at any time prior to entry of judgment.
Code of Civil Procedure section 473, subdivision (a)(1) states:
The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer. The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code.
(Code Civ. Proc., ??473, subd. (a)(1).)
Intellisoft argues that there is a liberal policy of allowing amendments and it now has a reasonable basis to amend its complaint.? In opposition, Wistron argues that Intellisoft?s motion is actually a motion for reconsideration and that it is untimely.? Intellisoft contends its motion is not actually one for reconsideration because it is not seeking to have the Court?s order regarding the demurrer to the 4AC modified or revoked; Intellisoft states it is seeking a new order under new facts and a new legal theory.
In support of its argument that it is not moving for reconsideration, Intellisoft relies on Standard Microsystems Corp. v. Winbond Electronics Corp. (2009) 179 Cal.App.4th 868.)? In Standard Microsystems, the defendants moved for relief from default under the discretionary provision of Code of Civil Procedure section 473, which the trial court denied.? (Id. at p. 873.)? The defendants then moved for mandatory relief under subsection (b) of section 473, which was also denied.? (Ibid.)? On appeal, the plaintiff argued that the second motion was barred as a motion for reconsideration under Code of Civil Procedure section 1008.? The appellate court disagreed.? It stated:
Here, to the extent defendants? second motion relied upon the mandatory provisions of section 473(b), it did not ask the court to reconsider its previous order. For all defendants cared, and all this record shows, that order was entirely correct when made; indeed, on the showing then before the court, it is difficult to see how a different order could have been made. The second motion rested on an entirely different legal theory, invoked a different statutory ground, and relied in very substantial part on markedly different facts. It neither asked for, nor sought by sly evasion, a determination contrary to any determination made on the first order. On the contrary, it cited that order as part of the series of events that entitled defendants to relief from the judgment. We therefore decline to view the later motion as one described in, or regulated by, section 1008(a).
(Standard Microsystems Corp. v. Winbond Electronics Corp., supra, 179 Cal.App.4th at p. 891.)
The instant situation is distinguishable from Standard Microsystems.? As stated by the California Supreme Court (and argued by Wistron), the only clear holding of Standard Microsystems ? was that section 1008 did not apply to the defendant?s application for mandatory relief under section 473(b) because the application did not seek reconsideration or renewal of the defendant?s earlier, failed application for discretionary relief.? (Even Zohar Const. & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 843, emphasis in original.)? In other words, the defendants in Standard Microsystems sought two different types of relief.
In contrast to Standard Microsystems, Intellisoft is now seeking essentially the same relief it was previously denied and the relief requested by Intellisoft is in direct conflict with the Court?s prior ruling on demurrer.? Intellisoft seeks leave to amend its complaint and the Court previously ruled that Intellisoft did not have leave to amend.? Therefore, despite its contrary assertions, Intellisoft is seeking to have the Court?s prior order modified.? Consequently, the Court finds that Intellisoft is in effect a motion for reconsideration of the Court?s prior order denying leave to amend after sustaining the demurrer to the 4AC.
A motion for reconsideration must be made within 10 days after service upon the party of written notice of entry of the order.? (Code Civ. Proc., ??1008, subd. (a).)? The demurrer to the 4AC was sustained on May 20, 2016, and Intellisoft did not file the instant motion for leave to amend until September 6, 2016.? There is no dispute that the motion for reconsideration is untimely.
Intellisoft contends that alternative relief is available pursuant to Code of Civil Procedure section 1008, subdivision (b), which states in relevant 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.?.?.?.?? Intellisoft did not make an application for a prior order; it is not making a renewed motion.? Subdivision (b) of section 1008 is inapplicable.
In sum, Intellisoft does not provide an appropriate basis for the relief it seeks.? Accordingly, Intellisoft?s motion for leave to amend is DENIED.