Facebook Can’t Duck Design-Theft Claims

SAN JOSE, Calif. (CN) – A federal judge on Monday refused to toss most of British engineering firm BladeRoom Group’s lawsuit against Facebook on claims the social media giant stole the design for its data center.

BladeRoom Group and co-plaintiff Bripco sued Facebook in March 2015, claiming in a heavily redacted complaint the Menlo Park, California-based company ripped off its design and construction techniques for modular data centers called “Blade Rooms” after a meeting in 2012.

Facebook had requested a proposal for BRG to provide a modular, prefabricated Blade Room for a data center in North Carolina. BRG representatives took Facebook’s emissaries on a tour of an operating Blade Room in England, and provided them with confidential information.

BRG claims Facebook then hired a company called Emerson Network Power to take BRG’s technique and use it in a data center it built in Lulea, Sweden.

U.S. District Judge Edward Davila was unconvinced by Facebook’s assertion that BRG, which licenses its intellectual property from Bripco, doesn’t own the trade secrets Facebook supposedly stole because it doesn’t meet definition of a trade secret owner under California Uniform Trade Secrets Act.

“Here, though plaintiffs allege that Bripco owns the trade secrets  and BRG is a licensee,  they also allege that plaintiffs’ licensing arrangement obligates BRG to maintain the confidentiality of the secrets,” Davila wrote in his partially redacted ruling. “In addition, plaintiffs have allegedly employed several mechanisms to limit the public disclosure of confidential information. The court finds these allegations sufficiently demonstrate that BRG possesses non-disclosed knowledge and may therefore ‘demand remedies as provided by [California Uniform Trade Secrets Act] against those who ‘misappropriate the knowledge,’ even though it is a licensee.”

Facebook also said BRG didn’t do enough to keep its Blade Room technology a secret, an argument Davila rejected based on BRG’s claim that it was “essentially enticed” to meet with Facebook under false pretenses back in 2012.

“Thus, though Facebook’s argument regarding voluntary disclosure is certainly appealing and may ultimately prevail depending on what is revealed through an investigation of the facts, plaintiffs’ theory that its efforts at secrecy were reasonable under the circumstances is plausible enough to overcome a motion to dismiss,” he said.

Davila did side with Facebook on BRG’s Lanham Act claim for sharing its designs with the world, noting that the Lanham Act trademark infringement law only applies in cases where a trademark is being used to confuse potential consumers.

“Though they argue the claim is based on a misrepresentation about the origin of the services needed to create the BladeRoom technology rather than the technology itself, plaintiffs fail to allege or convincingly argue exactly how Facebook is offering those services in a commercial transaction, such that there is opportunity for consumers to make ‘mistaken purchasing decisions’ of those services,” Davila wrote. “The conclusory allegation that Facebook ‘competes with BRG as a data center design provider and innovator’ does not provide that explanation and, in any event, is not entitled to a presumption of truth.”

Neither Facebook nor BRG’s lead attorney responded to email requests seeking comment.