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Technology
8 min read
Areas of Expertise :
Data Center, Trade Secret, Breach Of Contract, Economic Damages
Published Date:
Last Modified Date:
Jurisdiction:
Federal. Northern District of California
BladeRoom Group Ltd. and Bripco (UK) Ltd. filed a trade secret and breach of contract lawsuit against Facebook, Inc. and later added Emerson Electric Co. and related Emerson entities as defendants. BladeRoom alleged that confidential modular data center designs disclosed during potential acquisition discussions with Emerson and separate project discussions with Facebook were later used without authorization. The dispute concerned proprietary engineering information associated with modular data center construction and Facebook’s Luleå 2 data center project in Sweden.
The litigation proceeded in the U.S. District Court for the Northern District of California under the California Uniform Trade Secrets Act and contract law. Facebook resolved the claims against it through a confidential settlement during trial, while Emerson remained in the case through a jury verdict, post-trial rulings, and an appeal. On August 30, 2021, the U.S. Court of Appeals for the Ninth Circuit vacated the judgment against Emerson and returned the matter to the district court for a new trial under the appellate court’s interpretation of the Emerson non-disclosure agreement.
BladeRoom Group Ltd. and Bripco (UK) Ltd. sued Facebook in the U.S. District Court for the Northern District of California. The complaint alleged that BladeRoom had disclosed confidential engineering drawings, technical specifications, construction methods, and related proprietary information under a non-disclosure agreement during business discussions with Facebook.
BladeRoom claimed that Facebook later used or disclosed portions of that information without authorization. The causes of action included trade secret misappropriation under California law, breach of contract, and claims under California’s Unfair Competition Law.
BladeRoom amended its complaint to add Emerson Electric Co., Emerson Network Power Solutions, Inc., and Liebert Corporation. BladeRoom alleged that it had disclosed confidential modular data center information during potential acquisition discussions with Emerson under a separate non-disclosure agreement.
BladeRoom claimed that the Emerson defendants later used or disclosed portions of that information without authorization. The claims against Emerson arose from disclosures made during discussions separate from BladeRoom’s project communications with Facebook.
The jury trial began with Facebook and the Emerson entities appearing as defendants. BladeRoom presented technical and contractual evidence concerning information exchanged during the parties’ earlier discussions and compared its modular data center technology with design features associated with Facebook’s Luleå 2 facility.
The proceedings examined whether the disputed materials qualified as trade secrets, whether BladeRoom had taken reasonable measures to preserve confidentiality, and whether the defendants had used the information beyond the limits of the applicable NDAs. The parties also disputed the meaning, duration, and scope of the contractual restrictions.
Facebook reached a confidential settlement with BladeRoom during the trial and ended its participation in the case. The agreement resolved BladeRoom’s claims against Facebook without a court finding that Facebook had misappropriated trade secrets or breached a confidentiality agreement.
The Emerson entities remained as the defendants for the rest of the trial. Facebook’s settlement later became part of the appellate discussion concerning the allocation of damages and the possible treatment of settlement amounts in any future recovery against Emerson.
The jury found the Emerson defendants liable for trade secret misappropriation and breach of contract. It awarded BladeRoom $20 million for unjust enrichment and $10 million for lost profits.
The verdict form divided the award between the two categories of damages but did not allocate either amount between the contract and trade secret claims. The jury also found that Emerson’s misappropriation was willful and malicious, permitting the district court to consider exemplary damages under the California Uniform Trade Secrets Act.
After the verdict, the district court awarded $30 million in exemplary damages and approximately $17.4 million in prejudgment interest. The interest was calculated at a compounded annual rate beginning on October 30, 2012.
Combined with the jury’s $30 million compensatory award, the total monetary judgment reached approximately $77.4 million. The district court entered separate awards for attorneys’ fees and expert witness fees. Emerson appealed rulings involving the interpretation of the NDA, liability, damages, exemplary damages, prejudgment interest, and fees.
The Ninth Circuit vacated the district court’s judgment and remanded the case for a new trial. Applying English law, the appellate court concluded that the district court had incorrectly interpreted the Emerson NDA by finding that its confidentiality obligations continued beyond the agreement’s two-year term.
The jury had not been instructed to exclude information disclosed or used after the NDA expired. Because the verdict did not reveal whether the jury based its findings on conduct that occurred during or after the enforceable contractual period, the appellate court could not determine which portions of the verdict remained unaffected.
The Ninth Circuit therefore vacated the contract and trade secret findings, compensatory and exemplary damages, prejudgment interest, and separate fee awards. The court did not enter judgment in Emerson’s favor. It returned the claims for reconsideration under the correct interpretation of the NDA.
Court:
United States District Court for the Northern District of California
Case Name:
BladeRoom Group Limited, et al. v. Facebook, Inc.
Trade Secret Misappropriation
Theft of Trade Secrets
Confidentiality Agreement
Contract Disputes
Damages Calculations
BladeRoom Group Ltd. and Bripco (UK) Ltd. filed a trade secret and breach of contract lawsuit against Facebook, Inc. and later added Emerson Electric Co. and related Emerson entities as defendants. BladeRoom alleged that confidential modular data center designs disclosed during potential acquisition discussions with Emerson and separate project discussions with Facebook were later used without authorization. The dispute concerned proprietary engineering information associated with modular data center construction and Facebook’s Luleå 2 data center project in Sweden.
The litigation proceeded in the U.S. District Court for the Northern District of California under the California Uniform Trade Secrets Act and contract law. Facebook resolved the claims against it through a confidential settlement during trial, while Emerson remained in the case through a jury verdict, post-trial rulings, and an appeal. On August 30, 2021, the U.S. Court of Appeals for the Ninth Circuit vacated the judgment against Emerson and returned the matter to the district court for a new trial under the appellate court’s interpretation of the Emerson non-disclosure agreement.
BladeRoom Group Ltd. and Bripco (UK) Ltd. sued Facebook in the U.S. District Court for the Northern District of California. The complaint alleged that BladeRoom had disclosed confidential engineering drawings, technical specifications, construction methods, and related proprietary information under a non-disclosure agreement during business discussions with Facebook.
BladeRoom claimed that Facebook later used or disclosed portions of that information without authorization. The causes of action included trade secret misappropriation under California law, breach of contract, and claims under California’s Unfair Competition Law.
BladeRoom amended its complaint to add Emerson Electric Co., Emerson Network Power Solutions, Inc., and Liebert Corporation. BladeRoom alleged that it had disclosed confidential modular data center information during potential acquisition discussions with Emerson under a separate non-disclosure agreement.
BladeRoom claimed that the Emerson defendants later used or disclosed portions of that information without authorization. The claims against Emerson arose from disclosures made during discussions separate from BladeRoom’s project communications with Facebook.
The jury trial began with Facebook and the Emerson entities appearing as defendants. BladeRoom presented technical and contractual evidence concerning information exchanged during the parties’ earlier discussions and compared its modular data center technology with design features associated with Facebook’s Luleå 2 facility.
The proceedings examined whether the disputed materials qualified as trade secrets, whether BladeRoom had taken reasonable measures to preserve confidentiality, and whether the defendants had used the information beyond the limits of the applicable NDAs. The parties also disputed the meaning, duration, and scope of the contractual restrictions.
Facebook reached a confidential settlement with BladeRoom during the trial and ended its participation in the case. The agreement resolved BladeRoom’s claims against Facebook without a court finding that Facebook had misappropriated trade secrets or breached a confidentiality agreement.
The Emerson entities remained as the defendants for the rest of the trial. Facebook’s settlement later became part of the appellate discussion concerning the allocation of damages and the possible treatment of settlement amounts in any future recovery against Emerson.
The jury found the Emerson defendants liable for trade secret misappropriation and breach of contract. It awarded BladeRoom $20 million for unjust enrichment and $10 million for lost profits.
The verdict form divided the award between the two categories of damages but did not allocate either amount between the contract and trade secret claims. The jury also found that Emerson’s misappropriation was willful and malicious, permitting the district court to consider exemplary damages under the California Uniform Trade Secrets Act.
After the verdict, the district court awarded $30 million in exemplary damages and approximately $17.4 million in prejudgment interest. The interest was calculated at a compounded annual rate beginning on October 30, 2012.
Combined with the jury’s $30 million compensatory award, the total monetary judgment reached approximately $77.4 million. The district court entered separate awards for attorneys’ fees and expert witness fees. Emerson appealed rulings involving the interpretation of the NDA, liability, damages, exemplary damages, prejudgment interest, and fees.
The Ninth Circuit vacated the district court’s judgment and remanded the case for a new trial. Applying English law, the appellate court concluded that the district court had incorrectly interpreted the Emerson NDA by finding that its confidentiality obligations continued beyond the agreement’s two-year term.
The jury had not been instructed to exclude information disclosed or used after the NDA expired. Because the verdict did not reveal whether the jury based its findings on conduct that occurred during or after the enforceable contractual period, the appellate court could not determine which portions of the verdict remained unaffected.
The Ninth Circuit therefore vacated the contract and trade secret findings, compensatory and exemplary damages, prejudgment interest, and separate fee awards. The court did not enter judgment in Emerson’s favor. It returned the claims for reconsideration under the correct interpretation of the NDA.
Modular Data Center Engineering Expert Witness
A modular data center engineering expert may compare a claimant’s proprietary designs with an accused facility. The analysis may address cooling systems, electrical infrastructure, prefabricated assemblies, construction sequencing, facility layout, and related engineering features.
Trade Secret Valuation Expert Witness
A trade secret valuation expert may examine development costs, licensing opportunities, avoided research expenses, projected commercial uses, and claimed economic benefits. The analysis may support an assessment of the value assigned to confidential engineering information and any benefit obtained through its alleged unauthorized use.
Confidentiality and Information-Control Expert Witness
An expert addressing confidentiality controls may review document restrictions, access procedures, disclosure practices, confidentiality markings, and information-handling protocols. The review may address whether reasonable measures were used to protect proprietary materials during negotiations and project discussions.
Damages and Forensic Accounting Expert Witness
A damages and forensic accounting expert may calculate lost profits, unjust enrichment, avoided costs, prejudgment interest, and settlement offsets. The analysis may separate claimed amounts by defendant, project, time period, legal claim, or alleged use of confidential information.
Data Center Construction Expert Witness
A data center construction expert may explain how modular facilities are fabricated, delivered, assembled, tested, and commissioned. The review may include contractor responsibilities, project schedules, construction methods, infrastructure systems, and technical records associated with the disputed facility.
Interpretation of the Non-Disclosure Agreement
The Ninth Circuit examined the contractual restrictions governing BladeRoom’s disclosures to Emerson. Applying English law, the appellate court concluded that the NDA and its confidentiality obligations terminated two years after the agreement was signed.
This interpretation affected more than the contract claim. BladeRoom’s trade secret theory against Emerson also relied on the written confidentiality obligations established by the NDA, making the duration of those obligations relevant to both liability findings.
Allocation of Contract and Trade Secret Damages
The jury awarded $10 million in lost profits and $20 million in unjust enrichment but did not divide those amounts between the breach of contract and trade secret claims. The verdict also did not separate past lost profits from future lost profits.
Because exemplary damages were available for willful and malicious trade secret misappropriation but not for breach of contract, the absence of a claim-specific allocation complicated review of the additional $30 million award. The Ninth Circuit stated that a more detailed special-verdict form could be used if liability and damages were reconsidered after remand.
Treatment of Facebook’s Settlement
In a concurring opinion, one Ninth Circuit judge addressed how Facebook’s confidential settlement could affect any later recovery against Emerson. The concurrence stated that Emerson should be permitted to obtain the settlement terms through discovery and that any future damages award should account for amounts attributable to the same injury.
The concurrence did not establish the amount of an offset or disclose the settlement terms. Those issues would depend on the scope of the settlement and the basis of any later damages award.
Calculation of Prejudgment Interest
The district court awarded compounded prejudgment interest beginning on October 30, 2012, when Facebook verbally approved Emerson’s preliminary design concept. Emerson’s proposal, however, was not selected until November 2013, and the design-build agreement was not executed until March 2014.
The Ninth Circuit concluded that the record did not adequately establish that BladeRoom’s lost profits or Emerson’s unjust enrichment began on the earlier date. Any later award of prejudgment interest would need to correspond with the date on which the relevant economic loss or benefit began.
BladeRoom’s lawsuit proceeded from separate disclosures of confidential modular data center information to Facebook and Emerson. Facebook settled during trial without a finding of liability, while the jury found Emerson liable for breach of contract and willful and malicious trade secret misappropriation. The district court combined the jury’s $30 million compensatory award with exemplary damages and prejudgment interest to enter a judgment of approximately $77.4 million, with attorneys’ fees and expert witness fees awarded separately.
The Ninth Circuit vacated those rulings because the jury had considered the claims without the correct two-year limitation governing the Emerson NDA. Since the verdict did not identify whether liability and damages arose from conduct occurring before or after the agreement expired, the appellate court could not preserve individual portions of the award. The remand required any new determination of liability, damages, exemplary damages, and prejudgment interest to follow the appellate court’s interpretation of the NDA.
Was Facebook found liable for trade secret misappropriation?
No. Facebook settled with BladeRoom during trial under confidential terms. The settlement ended the claims against Facebook without a judicial finding of liability.
What information did BladeRoom claim was protected?
BladeRoom identified confidential engineering designs, technical specifications, modular construction methods, and related proprietary materials disclosed during business discussions governed by NDAs.
Which Facebook data center was involved?
The allegations concerned Facebook’s Luleå 2 data center in Sweden.
What damages did the jury award against Emerson?
The jury awarded $20 million for unjust enrichment and $10 million for lost profits. The district court later added exemplary damages and prejudgment interest, but the Ninth Circuit vacated those awards and the underlying liability findings.
Why did the Ninth Circuit vacate the judgment?
The Ninth Circuit concluded that the Emerson NDA expired after two years and that the jury had not been instructed to evaluate the claims within that contractual period. Because the verdict did not identify when the conduct supporting liability occurred, the appellate court ordered a new trial.
Which laws governed BladeRoom’s claims?
BladeRoom asserted trade secret misappropriation under the California Uniform Trade Secrets Act and pursued breach of contract claims based on the applicable non-disclosure agreements. The Emerson NDA was interpreted under English law.
Modular Data Center Engineering Expert Witness
A modular data center engineering expert may compare a claimant’s proprietary designs with an accused facility. The analysis may address cooling systems, electrical infrastructure, prefabricated assemblies, construction sequencing, facility layout, and related engineering features.
Trade Secret Valuation Expert Witness
A trade secret valuation expert may examine development costs, licensing opportunities, avoided research expenses, projected commercial uses, and claimed economic benefits. The analysis may support an assessment of the value assigned to confidential engineering information and any benefit obtained through its alleged unauthorized use.
Confidentiality and Information-Control Expert Witness
An expert addressing confidentiality controls may review document restrictions, access procedures, disclosure practices, confidentiality markings, and information-handling protocols. The review may address whether reasonable measures were used to protect proprietary materials during negotiations and project discussions.
Damages and Forensic Accounting Expert Witness
A damages and forensic accounting expert may calculate lost profits, unjust enrichment, avoided costs, prejudgment interest, and settlement offsets. The analysis may separate claimed amounts by defendant, project, time period, legal claim, or alleged use of confidential information.
Data Center Construction Expert Witness
A data center construction expert may explain how modular facilities are fabricated, delivered, assembled, tested, and commissioned. The review may include contractor responsibilities, project schedules, construction methods, infrastructure systems, and technical records associated with the disputed facility.
Interpretation of the Non-Disclosure Agreement
The Ninth Circuit examined the contractual restrictions governing BladeRoom’s disclosures to Emerson. Applying English law, the appellate court concluded that the NDA and its confidentiality obligations terminated two years after the agreement was signed.
This interpretation affected more than the contract claim. BladeRoom’s trade secret theory against Emerson also relied on the written confidentiality obligations established by the NDA, making the duration of those obligations relevant to both liability findings.
Allocation of Contract and Trade Secret Damages
The jury awarded $10 million in lost profits and $20 million in unjust enrichment but did not divide those amounts between the breach of contract and trade secret claims. The verdict also did not separate past lost profits from future lost profits.
Because exemplary damages were available for willful and malicious trade secret misappropriation but not for breach of contract, the absence of a claim-specific allocation complicated review of the additional $30 million award. The Ninth Circuit stated that a more detailed special-verdict form could be used if liability and damages were reconsidered after remand.
Treatment of Facebook’s Settlement
In a concurring opinion, one Ninth Circuit judge addressed how Facebook’s confidential settlement could affect any later recovery against Emerson. The concurrence stated that Emerson should be permitted to obtain the settlement terms through discovery and that any future damages award should account for amounts attributable to the same injury.
The concurrence did not establish the amount of an offset or disclose the settlement terms. Those issues would depend on the scope of the settlement and the basis of any later damages award.
Calculation of Prejudgment Interest
The district court awarded compounded prejudgment interest beginning on October 30, 2012, when Facebook verbally approved Emerson’s preliminary design concept. Emerson’s proposal, however, was not selected until November 2013, and the design-build agreement was not executed until March 2014.
The Ninth Circuit concluded that the record did not adequately establish that BladeRoom’s lost profits or Emerson’s unjust enrichment began on the earlier date. Any later award of prejudgment interest would need to correspond with the date on which the relevant economic loss or benefit began.
BladeRoom’s lawsuit proceeded from separate disclosures of confidential modular data center information to Facebook and Emerson. Facebook settled during trial without a finding of liability, while the jury found Emerson liable for breach of contract and willful and malicious trade secret misappropriation. The district court combined the jury’s $30 million compensatory award with exemplary damages and prejudgment interest to enter a judgment of approximately $77.4 million, with attorneys’ fees and expert witness fees awarded separately.
The Ninth Circuit vacated those rulings because the jury had considered the claims without the correct two-year limitation governing the Emerson NDA. Since the verdict did not identify whether liability and damages arose from conduct occurring before or after the agreement expired, the appellate court could not preserve individual portions of the award. The remand required any new determination of liability, damages, exemplary damages, and prejudgment interest to follow the appellate court’s interpretation of the NDA.
Was Facebook found liable for trade secret misappropriation?
No. Facebook settled with BladeRoom during trial under confidential terms. The settlement ended the claims against Facebook without a judicial finding of liability.
What information did BladeRoom claim was protected?
BladeRoom identified confidential engineering designs, technical specifications, modular construction methods, and related proprietary materials disclosed during business discussions governed by NDAs.
Which Facebook data center was involved?
The allegations concerned Facebook’s Luleå 2 data center in Sweden.
What damages did the jury award against Emerson?
The jury awarded $20 million for unjust enrichment and $10 million for lost profits. The district court later added exemplary damages and prejudgment interest, but the Ninth Circuit vacated those awards and the underlying liability findings.
Why did the Ninth Circuit vacate the judgment?
The Ninth Circuit concluded that the Emerson NDA expired after two years and that the jury had not been instructed to evaluate the claims within that contractual period. Because the verdict did not identify when the conduct supporting liability occurred, the appellate court ordered a new trial.
Which laws governed BladeRoom’s claims?
BladeRoom asserted trade secret misappropriation under the California Uniform Trade Secrets Act and pursued breach of contract claims based on the applicable non-disclosure agreements. The Emerson NDA was interpreted under English law.
Trade Secret Misappropriation
Theft of Trade Secrets
Confidentiality Agreement
Contract Disputes
Damages Calculations
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