Nanometrics, Incorporated v. Optical Solutions, Inc.

4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA NANOMETRICS, INCORPORATED, et Lead Case No. 18-cv-00417-BLF al., Case No. 18-cv-03276-BLF Plaintiffs, ORDER GRANTING IN PART AND 9 DENYING IN PART v. ADMINISTRATIVE MOTIONS TO 10 SEAL EXHIBITS TO DEFENDANT OPTICAL SOLUTIONS, INC., et al., NANOMETRICS, INC.’S MOTION 11 FOR SUMMARY JUDGMENT AND Defendants. PLAINTIFF OPTICAL SOLUTIONS, 12 OPTICAL SOLUTIONS INC.’S OPPOSITION TO MOTION INCORPORATED, FOR SUMMARY JUDGMENT Plaintiff, [Re: ECF Nos. 138, 140, 142] v. NANOMETRICS INCORPORATED, Defendant.

Before the Court are (1) Defendant Nanometrics, Inc.’s (“Nanometrics”) administrative motion to file under seal exhibits in support of its motion for summary judgment, ECF No. 138; (2) Plaintiff Optical Solutions, Inc.’s (“Optical”) administrative motion to consider whether to seal exhibits in support of its opposition to Nanometrics’s motion for summary judgment, ECF No. 140; and (3) Nanometrics’s response to Optical’s administrative motion to consider whether to seal exhibits, ECF No. 142.1 Having reviewed the parties’ submissions and applicable sealing law, the Court GRANTS IN PART and DENIES IN PART the administrative motions.

1 Although Nanometrics is the plaintiff and Optical the defendant in the lead case of this consolidated action, the Court refers to Optical as the plaintiff and Nanometrics the defendant in I. LEGAL STANDARD “Historically, courts have recognized a ‘general right to inspect and copy public records and documents, including judicial records and documents.’” Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner Commc’ns, Inc., 435 4 U.S. 589, 597 & n.7 (1978)). Accordingly, when considering a sealing request, “a ‘strong presumption in favor of access’ is the starting point.” Id. (quoting Foltz v. State Farm Mut. Auto.

Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). Parties seeking to seal judicial records relating to motions that are “more than tangentially related to the underlying cause of action,” Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1099 (9th Cir. 2016), bear the burden of overcoming the presumption with “compelling reasons supported by specific factual findings that outweigh the general history of access and the public policies favoring disclosure.” Kamakana, 447 F.3d at 1178–79 (internal quotation marks and citation omitted).

Compelling reasons justifying the sealing of court records generally exist “when such ‘court files might . . . become a vehicle for improper purposes,’” Kamakana, 447 F.3d at 1179 (quoting Nixon, 435 U.S. at 598), such as: “to gratify private spite, promote public scandal, circulate libelous statements,” id.; to “release trade secrets,” id.; or “as sources of business information that might harm a litigant's competitive standing,” Ctr. for Auto Safety, 809 F.3d at 17 1097 (quoting Nixon, 435 U.S. at 598–99). On the other hand, “[t]he mere fact that the production of records may lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will not, without more, compel the court to seal its records.” Kamakana, 447 F.3d at 1179.

“Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning” will not suffice. Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 476 (9th Cir. 1992) (citation omitted). And although a protective order sealing the documents during discovery may reflect a court’s previous determination that good cause—a lower threshold than that required for finding a compelling reason to seal—exists to keep the documents sealed, see Kamakana, 447 F.3d at 1179– 80, but a blanket protective order that allows the parties to designate confidential documents does not provide sufficient judicial scrutiny to determine whether each particular document should remain sealed. See Civ. L.R. 79-5(d)(1)(A) (“Reference to a stipulation or protective order that allows a party to designate certain documents as confidential is not sufficient to establish that a document, or portions thereof, are sealable.”).

3 In addition, the Local Rules of this Court require that all requests to seal be “narrowly tailored to seek sealing only of sealable material.” Civ. L.R. 79-5(a). That is, the sealing motion must include “a specific statement of the applicable legal standard and the reasons for keeping a document under seal, including an explanation of: (i) the legitimate private or public interests that warrant sealing; (ii) the injury that will result if sealing is denied; and (iii) why a less restrictive alternative to sealing is not sufficient.” Id. at 79-5(c)(1).

9 II. DISCUSSION 10 The Court has reviewed the sealing motions. The basis of the parties’ requests is that the information has been designated by Nanometrics as either “Highly Confidential – Attorneys’ Eyes Only” or “Confidential” pursuant to the parties’ protective order. ECF No. 138 at 3; ECF No. 140 at 2; ECF No. 142 at 3. Nanometrics seeks to seal information related to its “research and development, technical designs, and performance testing of its tools and their components.” ECF No. 138-1 ¶ 4; ECF No. 142-1 ¶ 4. The documents at issue contain “valuable and sensitive trade secret information,” including technical documentation and internal communications regarding the performance of tools that Nanometrics asserts are not publicly disclosed or are only disclosed to external entities subject to nondisclosure agreements, and in some instances are not disseminated outside of key personnel within Nanometrics. See id. Nanometrics contends that the public disclosure of this information could reveal to competitors information about its research and development, and related strategic business decisions. ECF No. 138 at 4; ECF No. 142 at 3–4.

22 The Court finds that Nanometrics has established compelling reasons to seal information that would reveal its research and development, technical designs, performance testing, and business strategies. See, e.g., In re Elec. Arts, 298 F. App’x. 568, 569 (9th Cir. 2008) (finding compelling reasons for sealing “business information that might harm a litigant’s competitive strategy”); In re Google Location Hist. Litig., No. 5:18-cv-05062-EJD, 514 F. Supp. 3d 1147, 1162 (N.D. Cal. Jan. 25, 2021) (“Compelling reasons may exist to seal ‘trade secrets, marketing information, internal reports[.]’”) (citation omitted); Simpson Strong-Tie Co. Inc. v. MiTek Inc., No. 20-cv-06957-VKD, 2023 WL 350401, at *2–3 (N.D. Cal. Jan. 20, 2023) (granting sealing request of “confidential business development and internal business strategy documents and intellectual property of MiTek, including internal MiTek research and development information”).

5 However, the Court finds that several of the sealing requests are not narrowly tailored, and grants in part and denies in part those requests. The Court's rulings on the sealing requests are set forth in the table below: Public ECF No. / Document to be Result Reasoning (Sealed ECF No.) Sealed 10 139-2 / (138-2) Ex. 44 to Smith GRANTED. The portions of the document that Declaration in Support Nanometrics seeks to seal contain 11 of Nanometrics’s confidential analyses of the Motion for Summary performance of a product and a 12 Judgment third-party’s optical lens. See ECF (Highlighted portions) No. 138-1 ¶ 4. Public disclosure of this information could cause 14 competitive harm to Nanometrics by giving competitors insight into 15 Nanometrics’s research and development, including proprietary features. See id. ¶¶ 5–6.

17 139-2 / (138-3) Ex. 46 to Smith GRANTED Nanometrics states that it seeks to Declaration in Support IN PART seal “technical documentation” in 18 of Nanometrics’s AND Exhibit 46. ECF No. 138-1 ¶ 4.

Motion for Summary DENIED IN Upon review, the sealable 19 Judgment (Entire PART. technical documentation begins on document) the second page of the exhibit. See ECF No. 138-3. Nanometrics has 21 not provided support for the sealing of the entire first page, 22 which includes email communications that appear to 23 have contents not suitable for sealing, such as (at the least) email fields and introductory email 25 language.

Public ECF No. / Document to be Result Reasoning (Sealed ECF No.) Sealed 139-2 / (138-4) Ex. 47 to Smith GRANTED Nanometrics states that it seeks to Declaration in Support IN PART seal “technical documentation” in 3 of Nanometrics’s AND Exhibit 47. ECF No. 138-1 ¶ 4.

Motion for Summary DENIED IN Upon review, the sealable 4 Judgment (Entire PART. technical documentation begins on document) the second page of the exhibit. See ECF No. 138-4. Nanometrics has 6 not provided support for the sealing of the entire first page, 7 which includes email communications that appear to 8 have contents not suitable for sealing, such as (at the least) email fields and introductory email 10 language.

139-2 / (138-5) Ex. 49 to Smith GRANTED Nanometrics states that it seeks to 11 Declaration in Support IN PART seal internal communications of Nanometrics’s AND regarding performance analysis of Motion for Summary DENIED IN certain products. ECF No. 138-1 ¶ Judgment PART. 4. Although the sealing requests (Highlighted portions) as to this document are for the 14 most part narrowly tailored, the proposed redactions include an 15 entire page of redacted material that includes information, such as email fields, that Nanometrics has 17 not shown to be sealable and that is inconsistent with other sealing 18 requests within the document. See ECF No. 138-5 at 6 19 (NANO_000472308).

139-3 / (138-6) Ex. 50 to Smith GRANTED. The document that Nanometrics Declaration in Support seeks to seal contains a 21 of Nanometrics’s confidential internal analysis of the Motion for Summary performance of a product. See, 22 Judgment (Entire ECF No. 138-1 ¶ 4. Public document) disclosure of this information 23 could cause competitive harm to Nanometrics by giving competitors insight into Nanometrics’s 25 research and development, including proprietary features. See 26 id. ¶¶ 5–6.

Public ECF No. / Document to be Result Reasoning (Sealed ECF No.) Sealed 139-3 / (138-7) Ex. 54 to Smith GRANTED. The document that Nanometrics Declaration in Support seeks to seal contains a 3 of Nanometrics’s confidential internal analysis of the Motion for Summary performance of a product. See 4 Judgment (Entire ECF No. 138-1 ¶ 4. Public document) disclosure of this information could cause competitive harm to 6 Nanometrics by giving competitors insight into Nanometrics’s 7 research and development, including proprietary features. See 8 id. ¶¶ 5–6.

139-3 / (138-8) Ex. 56 to A. Smith GRANTED. The portions of the document that Declaration in Support Nanometrics seeks to seal contain 10 of Nanometrics’s confidential analyses of the Motion for Summary performance of a product and a 11 Judgment third-party’s optical lens. See ECF (Highlighted portions) No. 138-1 ¶ 4. Public disclosure of this information could cause competitive harm to Nanometrics by giving competitors insight into 14 Nanometrics’s research and development, including proprietary 15 features. See id. ¶¶ 5–6.

141-3 / (140-3, Ex. A to M. Johnson GRANTED Nanometrics states that it seeks to 142-2) Declaration in Support IN PART seal “technical documentation” in 17 of Optical’s AND Exhibit A. ECF No. 142-1 ¶ 5.

Opposition to DENIED IN Upon review, the sealable 18 Nanometrics’s Motion PART. technical documentation begins on for Summary the second page of the exhibit. See 19 Judgment (Entire ECF Nos. 140-3, 142-2. document) Nanometrics has not provided support for the sealing of the entire 21 first page, which includes email communications that appear to 22 have contents not suitable for sealing, such as (at the least) email 23 fields and introductory email language.

Public ECF No. / Document to be Result Reasoning (Sealed ECF No.) Sealed 141-4 / (140-4, Ex. B to M. Johnson GRANTED. The document that Nanometrics 142-3) Declaration in Support seeks to seal consists of excerpts of 3 of Optical’s a presentation regarding a Opposition to confidential internal analysis of the 4 Nanometrics’s Motion performance of a product. See for Summary ECF No. 142-1 ¶ 5. Public Judgment (Entire disclosure of this information 6 document) could cause competitive harm to Nanometrics by giving competitors 7 insight into Nanometrics’s research and development, 8 including proprietary features. See id. ¶¶ 6, 10.

141-5 / (140-5, Ex. C to M. Johnson GRANTED The portions of the document that 10 142-5) Declaration in Support as to Nanometrics seeks to seal contain of Optical’s portions highly sensitive and detailed 11 Opposition to highlighted deposition testimony regarding Nanometrics’s Motion in ECF No. Nanometrics’s technical trade for Summary 142-5. secrets and commercially sensitive Judgment business opportunities. See ECF (Highlighted portions) No. 142-1 ¶ 8. Public disclosure 14 of this information could cause competitive harm to Nanometrics 15 by giving competitors insight into Nanometrics’s research and development, as well as strategic 17 business decisions. See id. ¶ 10.

141-12 / (140-6) Ex. J to M. Johnson DENIED. Optical lodged this document 18 Declaration in Support provisionally under seal as of Optical’s containing information designated 19 Opposition to confidential by Nanometrics. See Nanometrics’s Motion ECF No. 140-6. Nanometrics for Summary responds that the document does 21 Judgment (Entire not require sealing. See ECF No. document) 142 at 1–2, 5.

Public ECF No. / Document to be Result Reasoning (Sealed ECF No.) Sealed 141-16 / (140-7, Ex. N to M. Johnson GRANTED. The document that Nanometrics 142-6) Declaration in Support seeks to seal contains only 3 of Optical’s technical documentation, including Opposition to diagrams and handwritten 4 Nanometrics’s Motion annotations, disclosed to Optical for Summary pursuant to a nondisclosure Judgment (Entire agreement between the parties.

6 document) See ECF Nos. 142-1 ¶¶ 5, 10; 142- 6. Public disclosure of this 7 information could cause competitive harm to Nanometrics 8 by giving competitors insight into Nanometrics’s research and development, including proprietary 10 features. See id. ¶¶ 6, 10.

141-17 / (140-8, Ex. O to M. Johnson GRANTED. The document that Nanometrics 11 142-7) Declaration in Support seeks to seal contains only of Optical’s technical documentation, including Opposition to diagrams and handwritten Nanometrics’s Motion annotations, disclosed to Optical for Summary pursuant to a nondisclosure 14 Judgment (Entire agreement between the parties. document) See ECF Nos. 142-1 ¶¶ 5, 10; 142- 15 7. Public disclosure of this information could cause competitive harm to Nanometrics 17 by giving competitors insight into Nanometrics’s research and 18 development, including proprietary features. See id. ¶¶ 6, 10.

19 141-18 / (140-9, Ex. P to M. Johnson GRANTED The portion of the document that 142-9) Declaration in Support as to portion Nanometrics seeks to seal contains of Optical’s highlighted highly sensitive information 21 Opposition to in ECF No. related to discussions between Nanometrics’s Motion 142-9. Optical and Nanometrics regarding 22 for Summary technical details and product Judgment adjustments contemplated during 23 (Highlighted portions) product development. See ECF No. 142-1 ¶¶ 5, 10. Public disclosure of this information 25 could cause competitive harm to Nanometrics by giving competitors 26 insight into Nanometrics’s research and development, as well 27 as strategic business decisions.

Public ECF No. / Document to be Result Reasoning (Sealed ECF No.) Sealed 141-20 / (140-10, Ex. R to M. Johnson GRANTED The portion of the document that 142-11) Declaration in Support as to Nanometrics seeks to seal contains 3 of Optical’s portions highly sensitive information Opposition to highlighted related to discussions between 4 Nanometrics’s Motion in ECF No. Optical and Nanometrics regarding for Summary 142-11. technical details and product Judgment adjustments contemplated during 6 (Highlighted portions) product development. See ECF No. 142-1 ¶¶ 5, 10. Public 7 disclosure of this information could cause competitive harm to 8 Nanometrics by giving competitors insight into Nanometrics’s research and development, as well 10 as strategic business decisions.

See id. ¶¶ 6, 10.

11 141-23 / (140-11, Ex. U to M. Johnson GRANTED Nanometrics states that it seeks to 142-12) Declaration in Support IN PART seal “highly sensitive information of Optical’s AND related to discussions between Opposition to DENIED IN [Optical] and Nanometrics Nanometrics’s Motion PART. regarding technical details and 14 for Summary adjustments” contained in Judgment (Entire “[p]ortions” of Exhibit U. ECF 15 document) No. 142-1 ¶ 5. Upon review, every page of the document contains some information, such as email 17 fields and introductory email language, that Nanometrics has not 18 shown to require sealing, and the request to seal is denied as to those 19 portions of the document.

141-25 / (140-12, Ex. W to M. Johnson GRANTED. The document that Nanometrics 142-13) Declaration in Support seeks to seal consists of excerpts of 21 of Optical’s a presentation regarding a Opposition to confidential internal analysis of the 22 Nanometrics’s Motion performance of a product. See for Summary ECF No. 142-1 ¶ 5. Public 23 Judgment (Entire disclosure of this information document) could cause competitive harm to Nanometrics by giving competitors 25 insight into Nanometrics’s research and development, 26 including proprietary features. See id. ¶¶ 6, 10.

Public ECF No. / Document to be Result Reasoning (Sealed ECF No.) Sealed 141-26 / (140-13, Ex. X to M. Johnson GRANTED. The document that Nanometrics 142-14) Declaration in Support seeks to seal consists of excerpts of 3 of Optical’s a presentation regarding a Opposition to confidential internal analysis of the 4 Nanometrics’s Motion performance of a product. See for Summary ECF No. 142-1 ¶ 5. Public Judgment (Entire disclosure of this information 6 document) could cause competitive harm to Nanometrics by giving competitors 7 insight into Nanometrics’s research and development, 8 including proprietary features. See id. ¶¶ 6, 10.

141-27 / (140-14, Ex. Y to M. Johnson GRANTED The portions of the document that 10 142-16) Declaration in Support as to Nanometrics seeks to seal contain of Optical’s portions highly sensitive and detailed 11 Opposition to highlighted deposition testimony regarding Nanometrics’s Motion in ECF No. Nanometrics’s technical trade for Summary 142-16. secrets and commercially sensitive Judgment business opportunities. See ECF (Highlighted portions) No. 142-1 ¶ 8. Public disclosure 14 of this information could cause competitive harm to Nanometrics 15 by giving competitors insight into Nanometrics’s research and development, as well as strategic 17 business decisions. See id. ¶ 10.

141-28 / (140-15, Ex. Z to M. Johnson GRANTED The portions of the document that 18 142-18) Declaration in Support as to Nanometrics seeks to seal contain of Optical’s portions commercially sensitive 19 Opposition to highlighted descriptions of Nanometrics’s Nanometrics’s Motion in ECF No. internal strategy and business for Summary 142-18. practices, including its business 21 Judgment partnerships with suppliers and (Highlighted portions) certain practices to achieve a 22 competitive advantage in the market. See ECF No. 142-1 ¶ 7.

23 Public disclosure of this information could cause competitive harm to Nanometrics’s 25 business negotiations and reveal strategic business decisions. See 26 id. ¶¶ 7, 10.

Public ECF No. / Document to be Result Reasoning (Sealed ECF No.) Sealed 141-34 / (140-16, Ex. FF to M. Johnson GRANTED. The document Nanometrics seeks 142-19) Declaration in Support to seal constitutes sensitive trade 3 of Optical’s secret information, including Opposition to specifications for a third-party 4 Nanometrics’s Motion vendor’s product. See ECF No. for Summary 142-1 ¶ 5. Public disclosure of this Judgment (Entire information could cause 6 document) competitive harm to Nanometrics by jeopardizing its trade secret 7 information and revealing strategic decision-making processes. Id. ¶¶ 8 6, 10.

141-36 / (140-17, Ex. HH to M. Johnson GRANTED Nanometrics states that it seeks to 142-20) Declaration in Support IN PART seal “commercially sensitive 10 of Optical’s AND information including . . .

Opposition to DENIED IN descriptions of business 11 Nanometrics’s Motion PART. partnerships with various suppliers for Summary and Nanometrics’ business Judgment (Entire practices to achieve a competitive document) advantage.” ECF No. 142-1 ¶ 7.

Upon review, the document 14 contains some information, such as email fields and introductory email 15 language, that Nanometrics has not shown to require sealing. The request to seal is denied as to those 17 portions.

141-39 / (140-18, Ex. KK to M. Johnson GRANTED. The document that Nanometrics 18 142-21) Declaration in Support seeks to seal consists of technical of Optical’s documentation and performance 19 Opposition to analyses of its products. See ECF Nanometrics’s Motion No. 142-1 ¶ 9. Public disclosure for Summary of this information could cause 21 Judgment (Entire competitive harm to Nanometrics document) by giving competitors insight into 22 Nanometrics’s research and development and strategic business 23 decisions. See id. ¶ 10.

1 Public ECF No./ Document to be Result Reasoning (Sealed ECF No.) _ Sealed 2 141-44 / (140-19, | Ex. PP toM. Johnson | GRANTED | The portions of the document that 142-23) Declaration in Support | as to Nanometrics seeks to seal contain 3 of Optical’s portions highly sensitive and detailed Opposition to highlighted | deposition testimony regarding 4 Nanometrics’s Motion | in ECF No. | Nanometrics’s technical trade 5 for Summary 142-23. secrets and commercially sensitive Judgment business opportunities. See ECF 6 (Highlighted portions) No. 142-1 48. Public disclosure of this information could cause 7 competitive harm to Nanometrics by giving competitors insight into 8 Nanometrics’s research and 9 development, as well as strategic business decisions. See id. □ 10.

Il. ORDER For the foregoing reasons, the Court orders as follows: 12 1. Within seven days of the entry of this order, Nanometrics SHALL refile Exhibits © = 13 46, 47, and 49 to its Motion for Summary Judgment, redacted in accordance with 14 the guidance provided for each of the three exhibits; Is 2. Within seven days of the entry of this order, Nanometrics SHALL provide Optical a 16 with copies of Exhibits A, C, J, P, R, U, Y, Z, HH, and PP to Optical’s Opposition vo 7 to Nanometrics’s Motion for Summary Judgment, having redacted those exhibits in a 18 accordance with this order; and 19 3. Within five days of Optical’s receipt from Nanometrics of the redacted versions of 20 Exhibits A, C, J, P, R, U, Y, Z, HH, and PP, Optical SHALL refile those exhibits to 21 its Opposition to Nanometrics’s Motion for Summary Judgment.

IT IS SO ORDERED.

24 || Dated: June 21, 2023 7 BETH LABSON FREEMAN United States District Judge