Legal Journals

Trade Secrets Circulated Under NDAs, and False Advertising Claims Survive Summary Judgment.

Silicon Image v. Analogix, 3:07-CV-0653-JCS (N.D. Cal. 11/21/2008).

Competitors in the HDMI interface market got into suit when Silicon tried to enjoin Analogix? chips that allegedly embodied trade secrets and infringed copyrighted source code. In January, the injunction was denied, and early trial date was set. After Silicon amended to add business interference and false advertising claims in May, Analogix sued separately for antitrust violations (5:08CV2917 N.D. Cal.). Most recently, the Court dissected some remaining claims, and entered a redacted form of its summary judgment ruling.
Comparing the Jan. and Nov. rulings suggests some gaps between initial beliefs about copying by Analogix. Early-filed affidavits averred that Analogix chips ?mimic? plaintiff?s, and that circumstances let ?one deduce that? those chips were ?at least derivative in part,? but copying was not ?blatant and obvious.? In the recent motion papers, Silicon Image conceded that its source code and that of Analogix were ?not substantially similar.?
That copyright ruling does not foreclose Silicon?s trade secret claims about the ?register map? in Analogix? chips. Hotly disputed was whether the trade secret protection was lost due to disclosure. Note that the ?strict? NDAs with Silicon?s customers expired after a few years, and that recipients of trade secrets had to maintain the information with only that ?same degree of care ?as it use[d for] its own information.? This enabled arguments about the trade secrets entering the public domain at the expiry date of the NDAs, and about some recipients? ?own? degree of care, or the HDMI industry standard, being fairly low.
The stronger claim was that Analogix false advertised its chips as ?compatible? with or as ?drop in replacements? for the Silicon chips, when the two were not ?software compatible.? The Court followed precedent allowing anecdotal evidence to prove the ad copy was misleading. One point underlying this claim is the possibility of an ad injury claim, like that in the recently-filed Intel v. ICOP, 5:08CV3238 (N.D. Cal.) that seeks insurance reimbursement for class actions alleging the Pentium 4 processor speed was falsely advertised.
With the ruling that Silicon sought only an injunction against copyright violations, and the stronger false advertising claim requiring trial, plus Analogix? separate monopolistic conduct suit in regard to the HDMI interface standards, the dispute may be prolonged.

Full post as published by Tech Law Forum on November 26, 2008 (boomark / email).