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Nos. 2013-1210, -1234 IN THE

United States Court of Appeals for the Federal Circuit

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BROCADE COMMUNICATIONS, INC., and FOUNDRY NETWORKS, LLC, Plaintiffs-Appellees, v. A10 NETWORKS, INC., Defendant-Appellant, and LEE CHEN, RAJKUMAR JALAN, RON SZETO, and STEVE HWANG, Defendants.
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Appeal from the United States District Court for the Northern District of California Case No. 2:06-cv-13936, Magistrate Judge Paul Grewal
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BRIEF FOR APPELLEES

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Annette L. Hurst Denise M. Mingrone Bas de Blank ORRICK, HERRINGTON & SUTCLIFFE, LLP 1000 Marsh Rd. Menlo Park, CA 94025 Fabio E. Marino MCDERMOTT, WILL & EMERY 275 Middlefield Rd. Menlo Park, CA 94025 March 26, 2013

Neal Kumar Katyal Jessica L. Ellsworth Judith Coleman David M. Ginn HOGAN LOVELLS US LLP 555 Thirteenth Street, N.W. Washington, D.C. 20004 Tel.: (202) 637-5600 Fax: (202) 637-5910

Counsel for Appellees

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CERTIFICATE OF INTEREST Counsel for appellees Brocade Communications Systems, Inc. and Foundry Networks, LLC certifies the following: 1. The full name of every party or amicus represented by me is:

Brocade Communications Systems, Inc. and Foundry Networks, LLC. 2. The name of the real party in interest represented by me is: Brocade

Communications Systems, Inc. and Foundry Networks, LLC. 3. All parent corporations and any publicly held companies that own 10

percent or more of the stock of the party or amicus curiae represented by me are: None. 4. The names of all law firms and the partners or associates that

appeared for the party or amicus now represented by me in the trial court or agency or are expected to appear in this court are: Hogan Lovells US LLP (Neal Katyal, Jessica Ellsworth, Judith Coleman, David Ginn); Orrick Herrington & Sutcliffe LLP (Matthew Poppe, Annette Hurst, Bas de Blank, Christina Marie Von Der Ahe, Denise Mingrone, Elizabeth McBride, Gary Weiss, Siddhartha Venkatesan); Skadden Arps Slate Meagher & Flom, LLP (Allen Ruby); McDermott Will & Emery (Fabio Marino, Nitin Gambhir, Teri Nguyen).

Dated: March 26, 2013

/s/ Neal Kumar Katyal i

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TABLE OF CONTENTS Page CERTIFICATE OF INTEREST .................................................................................i TABLE OF AUTHORITIES ..................................................................................... v STATEMENT OF RELATED CASES .................................................................. xii COUNTERSTATEMENT OF THE ISSUES............................................................ 3 COUNTERSTATEMENT OF THE FACTS ............................................................ 3 A. B. C. Foundry Develops Innovative Technologies And Captures A High End Market Niche .................................................................... 3 A10 Steals Foundrys Intellectual Property And Develops Competing Products .............................................................................. 5 Brocade Files Suit, The Jury Finds A10 Liable, And The District Court Enjoins A10 From Continuing To Infringe And Misappropriate Brocades Intellectual Property ........................... 8

SUMMARY OF ARGUMENT ............................................................................... 13 ARGUMENT ........................................................................................................... 15 I. II. STANDARD OF REVIEW ........................................................................... 15 THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY ENTERING A PERMANENT PATENT INJUNCTION ...................... 16 A. The District Court Did Not Abuse Its Discretion In Holding That Brocade Would Be Irreparably Harmed Absent An Injunction............................................................................................. 17 1. Brocade established that it would be irreparably harmed and that there was a causal nexus between the harm it faced and A10s infringement ...................................... 18

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TABLE OF CONTENTS Continued Page 2. In the alternative, it is not necessary to establish a causal nexus in the context of a narrowly tailored permanent injunction that does not cover an entire product ...................................................................................... 26

B. C. D. III.

Brocades Remedies At Law Are Inadequate ..................................... 29 The Balance Of Hardships Favors Brocade ........................................ 32 The Injunction Serves The Public Interest .......................................... 34

THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY ENTERING A PERMANENT TRADE SECRET INJUNCTION................................................................................................ 38 A. Substantial Evidence Supports The District Courts Finding That Brocade Is Entitled To An Injunction To Prevent A10s Continuing Misappropriation Of Brocades Trade Secrets................. 38 1. 2. The District Court did not clearly err in finding that Brocades trade secrets remain confidential ............................. 40 The District Court correctly rejected A10s head-start argument in finding that the evidence in this case supported entry of a trade secret injunction .............................. 44 a. The commercial-advantage period does not limit the scope of an injunction on a trade secret that remains confidential ...................................... 46 Even if it were relevant, the commercial advantage associated with Brocades trade secrets has not expired .................................................... 48

b.

B.

The Equitable Factors Also Favor Injunctive Relief .......................... 51 1. A10s ongoing use of Brocades trade secrets irreparably injures Brocade ....................................................... 51

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TABLE OF CONTENTS Continued Page 2. C. The other equitable considerations also favor relief ................. 57

There Is No Basis To Award A10 A Reasonable Royalty.................. 58

CONCLUSION ........................................................................................................ 59 CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE

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TABLE OF AUTHORITIES Page(s) CASES: ActiveVideo Networks, Inc. v. Verizon Commcns, Inc., 694 F.3d 1312 (Fed. Cir. 2012) .......................................................................... 25 Acumed LLC v. Stryker Corp., 551 F.3d 1323 (Fed. Cir. 2008) .................................................................... 20, 30 Agency Solutions.Com, LLC v. TriZetto Group, Inc., 819 F. Supp. 2d 1001 (E.D. Cal. 2011) .............................................................. 54 Ajaxo, Inc. v. e*Trade Group, Inc., 2003 WL 25778061 (Cal. Super. Ct. Aug. 15, 2003) ......................................... 47 Ajaxo, Inc. v. e*Trade Group, Inc., 135 Cal. App. 4th 21 (2005) ............................................................................... 55 Am. Paper & Packaging Prods. v. Kirgan, 183 Cal. App. 3d 1318 (1986) ......................................................................46, 47 Apple, Inc. v. Motorola, Inc., 869 F. Supp. 2d 901 (N.D. Ill. 2012) ................................................10, 31, 32, 34 Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314 (Fed. Cir. 2012) ..............................................................19, 27, 28 Apple, Inc. v. Samsung Elecs. Co., 695 F.3d 1370 (Fed. Cir. 2012) ...................................................................passim Apple, Inc. v. Samsung Elecs. Co., 2012 WL 6569786 (N.D. Cal. Dec. 17, 2012)..............................................24, 25 Apple, Inc. v. Samsung Elecs. Co., 877 F. Supp. 2d 838 (N.D. Cal. 2012) ................................................................ 26 Bard Peripheral Vascular v. W.L. Gore & Assocs., 670 F.3d 1171 (Fed. Cir. 2012), modified in part on other grounds, 682 F.3d 1003 (Fed. Cir. 2012) .......................................................................... 31 v

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TABLE OF AUTHORITIES Continued Page(s) BBA Nonwovens Simpsonville, Inc. v. Superior Nonwovens, LLC, 303 F.3d 1332 (Fed. Cir. 2002) .......................................................................... 39 Beckman Instruments, Inc. v. Cincom Sys., Inc., 165 F.3d 914 (9th Cir. 1998) .............................................................................. 51 Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683 (Fed. Cir. 2008) ................................................................25, 28, 29 Cacique, Inc. v. Robert Reiser & Co., Inc., 169 F.3d 619 (9th Cir. 1999) .............................................................................. 58 Cadence Design Sys., Inc. v. Avant! Corp., 57 P.3d 647 (Cal. 2002) ..........................................................................38, 55, 56 Celsis In Vitro, Inc. v. CellzDirect, Inc., 664 F.3d 922 (Fed. Cir. 2012) ...................................................................... 20, 54 Central Valley Gen. Hosp. v. Smith, 162 Cal. App. 4th 501 (2008) ............................................................................. 52 ClearOne Commns, Inc. v. Bowers, 643 F.3d 735 (10th Cir. 2011) ............................................................................ 45 Coca-Cola Co. v. Reed Indus., 864 F.2d 850 (Fed. Cir. 1988) ............................................................................ 54 Contl Paper Bag Co. v. E. Paper Bag Co., 210 U.S. 405 (1908) ............................................................................................ 29 Convolve, Inc. v. Compaq Computer Corp., 2011 WL 7144803 (S.D.N.Y. Oct. 6, 2011) ....................................................... 47 Dun v. Lumbermens Credit Assn, 209 U.S. 20 (1908) .............................................................................................. 31 DVD Copy Control Assn, Inc. v. Bunner, 75 P.3d 1 (Cal. 2003) ....................................................................................52, 57

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TABLE OF AUTHORITIES Continued Page(s) eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006) .....................................................................................passim Edwards Lifesciences AG v. Corevalve, Inc., 699 F.3d 1305 (Fed. Cir. 2012) .................................................................... 23, 30 E.I. du Pont de Nemours & Co. v. MacDermid Printing Solutions, LLC, 525 F.3d 1353 (Fed. Cir. 2008) .......................................................................... 15 Fantasy Sports Properties v. Sportsline.com, 287 F.3d 1108 (Fed. Cir. 2002) .......................................................................... 37 Fid. Brokerage Servs. LLC v. McNamara, 2011 WL 2117546 (S.D. Cal. May 27, 2011) .................................................... 52 Fresenius Med. Care Holdings, Inc. v. Baxter Intl, Inc., 2008 WL 928496 (N.D. Cal. Apr. 4, 2008) ........................................................ 23 Fresenius USA, Inc. v. Baxter Intl, Inc., 582 F.3d 1288 (Fed. Cir. 2009) .......................................................................... 23 Helifix Ltd. v. Blok-Lok, Ltd., 208 F.3d 1339 (Fed. Cir. 2000) .......................................................................... 16 i4i Ltd. Pship v. Microsoft Corp., 598 F.3d 831 (Fed. Cir. 2010), affd, 131 S. Ct. 2238 (2011) ................15, 34, 35 In re Oracle Corp. Sec. Litig., 627 F.3d 376 (9th Cir. 2010) .............................................................................. 42 Johnson & Johnson Vision Care, Inc., v. CIBA Vision Corp., 712 F. Supp. 2d 1285 (M.D. Fla. 2010).............................................................. 31 Key Pharms. v. Hercon Labs. Corp., 161 F.3d 709 (Fed. Cir. 1998) ............................................................................ 42 Lermer Germany GmbH v. Lermer Corp., 94 F.3d 1575 (Fed. Cir. 1996) ............................................................................ 27

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TABLE OF AUTHORITIES Continued Page(s) Lillge v. Verity, 2007 WL 2900568 (N.D. Cal. Oct. 2, 2007) ...................................................... 54 Litton Systems, Inc. v. Sundstrand Corp., 750 F.2d 952 (Fed. Cir. 1984) ............................................................................ 57 Maynard v. City of San Jose, 37 F.3d 1396 (9th Cir. 1994) .............................................................................. 42 Microsoft Corp. v. i4i Ltd. Pship, 131 S. Ct. 2238 (2011) ........................................................................................ 35 Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012) .............................................................................. 31 Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891 (Fed. Cir. 1998) ............................................................................ 15 Morlife, Inc. v. Perry, 56 Cal. App. 4th 1514 (1997) ...........................................................39, 45, 50, 51 Novozymes A/S v. Genencor Intl, Inc., 474 F. Supp. 2d 592 (D. Del. 2007).................................................................... 22 Presidio Components, Inc. v. Am. Technical Ceramics Corp., 702 F.3d 1351 (Fed. Cir. 2012) .................................................................... 29, 30 ReadyLink Healthcare v. Cotton, 126 Cal. App. 4th 1006 (2005) ........................................................................... 52 Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302 (Fed. Cir. 2002) .......................................................................... 19 Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142 (Fed. Cir. 2011) ..............................................................21, 22, 25 Ruckelhaus v. Monsanto Co., 467 U.S. 986 (1984) ............................................................................................ 52

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TABLE OF AUTHORITIES Continued Page(s) Stanley v. Univ. of S. Cal., 13 F.3d 1313 (9th Cir. 1994) .............................................................................. 43 SynQor, Inc. v. Artesyn Technologies, Inc., __ F.3d __, 2013 WL 950743 (Fed. Cir. Mar. 13, 2013) ................................... 36 Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372 (Fed. Cir. 2009) .......................................................................... 16 United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) .............................................................................. 42 Vacco Indus., Inc. v. Van Den Berg, 5 Cal. App. 4th 34 (1992) ................................................................................... 51 Web Graphics, Inc. v. Jos. Hunkeler, 682 F.2d 59 (2d Cir. 1982) ................................................................................. 46 Western Directories, Inc. v. Golden Guide Directories, Inc., 2009 WL 1625945 (N.D. Cal. June 8, 2009) ...................................................... 51 Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443 (2002) ........................................................................... 47 Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) ................................................................................................ 28 Wyndham Resort Dev. Co. v. Bingham, 2010 WL2720920 (E.D. Cal. Jul. 8, 2010) ......................................................... 54 STATUTES: 28 U.S.C. 2111 ...................................................................................................... 42 35 U.S.C. 282 ........................................................................................................ 35 35 U.S.C. 307(a) ................................................................................................... 36 Cal. Civ. Code 3246.2(a) ...................................................................................... 40

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TABLE OF AUTHORITIES Continued Page(s) Cal. Civ. Code 3426 .............................................................................................. 45 Cal. Civ. Code 3426.1 ........................................................................................... 39 Cal. Civ. Code 3426.2 .....................................................................................39, 51 Cal. Civ. Code 3426.2(a) ..........................................................................45, 46, 52 Cal. Civ. Code 3426.2(b) ...................................................................................... 58 Cal. Civ. Code 3426.3 ........................................................................................... 58 RULES: Fed. R. App. P. 10(a) ................................................................................................. 3 Fed. R. Civ. P. 8(a)(3) .............................................................................................. 32 OTHER AUTHORITIES: 2 John Norton Pomeroy, A Treatise on Equitable Remedies 1979 (2d ed. 1919) ........................................................................................... 29 C. Chien & M. Lemley, Patent Holdup, the ITC, and the Public Interest, 98 Cornell L. Rev. 1 (2012) ................................................................................ 24 Oxford English Dictionary (online ed. 2013) .......................................................... 36 Restatement (Third) of Unfair Competition 44 cmt. b (1995) ........................52, 53

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STATEMENT OF RELATED CASES No appeal in or from the same proceeding in the lower court was previously before this Court or any other appellate court. The same parties are involved in a different lawsuit, the appeal from which is currently pending before this Court: A10 Networks, Inc. v. Brocade Communications Systems, Inc., No. 2012-1542 (Fed. Cir.).

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IN THE

United States Court of Appeals for the Federal Circuit

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BROCADE COMMUNICATIONS SYSTEMS, INC., and FOUNDRY NETWORKS, LLC, Plaintiffs-Appellees, v. A10 NETWORKS, INC., Defendant-Appellant. and LEE CHEN, RAJKUMAR JALAN, RON SZETO, and STEVE HWANG, Defendants.
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Appeal from the United States District Court for the Northern District of California Case No. 2:06-cv-13936 Magistrate Judge Paul S. Grewal
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BRIEF FOR APPELLEES

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This appeal arises from a textbook case of intellectual property theft, found by a properly instructed jury after an extensive trial. Appellee Brocade Communications Systems and its subsidiary, Foundry Networks, design and manufacture advanced network components. Beginning in 2004, several highlevel employees left Foundry and later started a competing businessA10 Networks, the defendant below and appellant here. Rather than developing a new product from scratch, the former employees stole the technology they had worked on while at Foundry and used it to build competing products. Brocade later

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discovered the theft and sued A10 for misappropriation of trade secrets, patent infringement, copyright infringement, and other business torts. After a three-week trial, a jury found A10 liable on all theories tried. The District Court, after considering the trial record and additional evidence submitted by A10, then entered two narrow permanent injunctionsone enjoining A10s ongoing use of Brocades trade secrets and the other enjoining A10s patent infringement. A10 now appeals entry of both injunctions in an effort to continue its misappropriation, claiming that the District Court erred in its careful application of the traditional equitable factors. None of the complaints A10 raises has merit, let alone demonstrates that the District Court abused its discretion. To the contrary, the District Court properly concluded that Brocade will be irreparably injured if A10 is allowed to continue using the intellectual property that it stole, and the court properly concluded that the equities favored an injunction. The facts of this case fall within the heartland of the Patent Acts domain. If these facts do not justify an injunction (particularly the narrowly crafted injunction the District Court entered), it is hard to imagine facts that would. Similarly, the District Courts trade secret injunction is supported by substantial evidenceespecially the District Courts well-supported factual finding that Brocades trade secrets remain just that, secret. This Court should affirm the District Courts entry of both injunctions.

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COUNTERSTATEMENT OF THE ISSUES The issues presented are: 1. Whether the District Court abused its discretion by entering a

permanent patent injunction after the jury found that A10 had infringed four claims in three Brocade patents and the District Court found that all the traditional equitable factors favored an injunction. 2. Whether the District Court abused its discretion by entering a

permanent trade secrets injunction after the jury found that A10 had misappropriated four Brocade trade secrets, the District Court found that the trade secrets remained confidential, and A10 failed to provide any evidence that it had independently developed the secrets. COUNTERSTATEMENT OF THE FACTS1 A. Foundry Develops Innovative Technologies And Captures A High-End Market Niche.

Foundry is a classic Silicon Valley success story. Founded in 1996 by four engineers, including defendant Lee Chen, Foundry invented and sold networking communications equipment. JA12089; JA31070-71. With its introduction of

The joint appendix materials cited in this brief are all part of the record on appeal. Just before this brief was filed, A10 acknowledged that its brief cites to documents that were not filed in the district court. Those documents are not part of the record on appeal, see Fed. R. App. P. 10(a), and are not properly included in the joint appendix. Brocade reserves the right to seek appropriate relief from this Court once it is able to determine the extent of the problem. 3

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ServerIron, Foundry created the market for a new type of networking device known as an application delivery controller, or ADC. ADCs accelerate large, geographically dispersed networks by ensuring that content is delivered as efficiently and reliably as possible. Foundrys ServerIron became known for its speed and availability, JA10448, and met with great success in the marketplace. The product captured a high-end niche of customers with stringent performance needs, including financial institutions, hospitals, and internet service providers. JA10444. ServerIrons success was due in substantial part to the inventionsboth patents and trade secretsat issue in this lawsuit. Foundrys patents covering Global Server Load Balancing (GSLB) and High Availability (HA) techniques proved to be market differentiators, and were the result of substantial research and development expense. JA10443; JA10373-94; JA10395-401. The GSLB patents at issue in this case (numbers 7,454,500 and 7,581,009) differentiated the ServerIron product line by permitting more intelligent handling of incoming network requests, leading to more efficient server usage and an improved user experience. JA10385; JA10387. The HA patent (number 7,558,195) successfully reduced lost data and interruptions in serviceextremely important attributes for Foundrys high-end customers. See, e.g., JA10395-97; JA10449. Foundry and Brocade developed their entire product marketing strategy around these high

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performance features, positioning ServerIron for the high performance niche in the markets. JA10444; JA10467. Brocades customers continue to seek out ServerIron for its patented features today. JA10385; JA10387; see also JA1040001; JA10816-17; JA10829-30; JA10846; JA10855; JA10862; JA10873; JA11373, JA11414-16. Foundrys trade secrets also substantially improve the speed, security, reliability, and other critical aspects of ServerIron. JA10641; JA10646-48; JA10661. The trade secrets at issue here differentiate Foundrys technology from that of its competitors and were created over the course of many years. See, e.g., JA10659; JA10674; JA10619. B. A10 Steals Foundrys Intellectual Property And Develops Competing Products.

Chen and another defendantRajkumar Jalanwere the lead architects who developed ServerIron for Foundry. JA11213; JA12093-95. After working on ServerIron for many years, Chen decided in 2004 to go out and have [his] own business. JA12109. He told Foundrys CEO that he planned to build a security product that would not compete with ServerIron. Id. But only a few months later, Chen and the new company he founded upon leaving Foundrynow called A10 Networks2were covertly developing a product called the AX Series to compete directly with ServerIron. Indeed, A10s internal sales plan for the AX
2

A10 was originally called Raksha Networks. 5

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Series described [t]arget[ing] Foundry customers and attacking ServerIron accounts. JA31066-67; see JA12039-40. The security product that Chen had referenced as his reason for leaving Foundry was a commercial failure. JA12020. To develop the AX Series as a competing product to ServerIron, Chen recruited other Foundry employees to join him at A10. All of the other individual defendants in this case were hired by A10 in the months after Chen left Foundry. See JA31533-34. This team of alumni built the AX Series for A10 using intellectual property they took with them from Foundry. JA31540-43. A10 hired Ron Szeto, for example, to work as the Director of Software Engineering. JA11600. While at Foundry, Szeto had unbridled access to Foundrys source code repository. JA11570. Two days before leaving Foundry for A10, he downloaded thousands of source code filesincluding files containing Foundrys trade secretsto his work computer and apparently transferred them to a USB drive. JA11718-19; see also JA11594. There were still Foundry source code files on his laptop while he was using it at A10 to develop the AX Series. JA11572-76; JA11594-95. In a similar fashion, Liang Han checked out hundreds of source code files from Foundrys repository just days before leaving Foundry for A10. The downloaded files contained both trade secrets and copyrighted source code. JA11733-34; see JA10583; JA10594; JA10639-40; JA10674. Han later accessed

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his personal e-mail account from the Foundry computer where he had downloaded the files. JA11734. And he testified at trial that he had copied and pasted a large portion of one of those downloaded files (containing copyrighted code) directly into the source code of the AX Series. JA10974. As these examples and others presented at trial show, A10 did not develop the AX Series on its own. It was able to cobble together a passable competitor to Foundrys ServerIron products quickly only because it stole Foundrys patented inventions, copyrighted source code, and trade secrets. A10 then used Foundrys intellectual property to invade the high-end market niche Foundry had created. A10 [t]arget[ed] * * * Foundry customers and attack[ed] both ServerIron accounts and Foundry. J31066-67. Chen agreed that A10s plan was to attack Foundry and target its customers who have the Foundry ServerIron. JA12039-40; see also JA31066-67; JA10467; JA12456; JA31226-27. Foundrys inventions covered (in A10s words) key features that allowed A10 to appeal to that market segment. See JA30048; JA30462; See, e.g., JA10844-45; JA10871; JA12356-58; JA12373; JA12461-62. All told, A10 sold tens of millions of dollars in AX Series products to existing Foundry customers. See JA31429-39; see also JA31228-345. In addition to cutting into Brocades sales of ServerIron, that unfair competition has caused enormousbut difficult to quantifydownstream harm by depriving Brocade of sales opportunities for

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complementary products, service contracts, replacements, upgrades, and parts. See, e.g., JA122; JA10453; JA12039-41; JA30009-10. C. Brocade Files Suit, The Jury Finds A10 Liable, And The District Court Enjoins A10 From Continuing To Infringe And Misappropriate Brocades Intellectual Property.

After the AX Series was released, Brocade sued A10 and the individual defendants for (among other things) patent infringement, copyright infringement, trade secret misappropriation, and intentional interference with contract. The case went to trial on these claims. After a three-week trial, the jury found that A10 had directly infringed four claims from three patents and awarded Brocade millions of dollars in compensatory damages. JA121-22. (The exact amount is disputed and is set for a retrial.) The jury also found that A10 had infringed Brocades copyrighted source code and awarded $60,000,000 in damages. JA122-23. In addition to finding copyright and patent infringement, the jury found that A10 had misappropriated four of Brocades trade secrets. JA124-25. It awarded one dollar in damages for that misappropriationevidently in adherence to the District Courts instruction not to award duplicative damages (JA13492), which Brocade highlighted in closing argument (JA13382-83). Finally, the jury found both A10 and Chen liable for intentional interference with contract. It awarded one dollar in compensatory damages, and, finding that both A10 and Chen had

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acted with malice, oppression, despicable conduct or fraud, awarded $500,000 in punitive damages against each of them. JA127. A10 moved for judgment as a matter of law or a new trial. The District Court affirmed all the jurys findings with respect to copyright and trade secrets. JA56-68; JA85-94. And it agreed with Brocade that there was substantial evidence supporting the jurys verdict of patent infringement. JA68-75. The District Court concluded, however, that a new trial on patent damages was necessary because the jurys verdict form was inconsistent and it was unclear how the jury had apportioned damages between reasonable royalties and lost profits. JA85. The District Court also ordered a new trial on punitive damages against A10 and Chen, becauseeven though Brocade produced substantial evidence that a punitive damages award is warrantedthe ratio between the jurys compensatory damages award and its punitive damages award was too high to sustain it. JA102. The new jury trial on patent and punitive damages is set to begin on May 20, 2013. The District Court then entered two permanent injunctions: one to protect against further patent infringement and one to protect against further trade secret misappropriation. The patent injunction was a narrowly tailored injunction to protect [Brocades] rights to exclusivity against A10s infringement. JA120. Noting that there is no presumption in favor of an injunction in patent

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infringement cases, the court carefully applied the four factors enumerated by the Supreme Court in eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006). JA106. In addressing the irreparable harm factor, the court expressed doubt that the causal nexus standard articulated by this Court in Apple, Inc. v. Samsung Electronics Company (Apple II), 695 F.3d 1370, 1376 (Fed. Cir. 2012), applied to every request for a permanent injunction in every context. JA108. But the court concluded that it did not need to decide whether that standard should apply here. The court assumed it applied, and then held that Brocade had proven a sufficient nexus between the established infringement and irreparable harm from the loss of its exclusive right to practice its patents. JA109. The court explained how, in the specific circumstances of this case, Brocades loss of exclusivity constituted irreparable harm: In a situation such as this, where Brocade has shown that it practices its patent, that A10 is a direct competitor, and that Brocade does not license its patents, Brocade has shown that it suffers the type of irreparable harm that a permanent injunction is intended to remedy. JA111. The District Court also found that all of the other eBay factors favored a permanent injunction. JA111-15. In determining the appropriate scope of the patent injunction, the District Court found that a narrow injunction was warranted. JA116. In particular, the court opted not to indiscriminately bar sales of the AX Series, reasoning that a

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patentee may exercise her exclusivity rights only over her patented invention. JA117. The court therefore only enjoined sales of AX series devices that include the software and hardware * * * that the jury found infringes claim 25 of the 500 Patent, claims 13 and 24 of the 009 Patent, and claim 1 of the 195 patent. Id. The court also clarifie[d] that the injunction applies only to future sales and use, so that existing customers who already owned infringing AX Series devices would not be affected. JA118. The second permanent injunction the District Court entered was to prevent further use and misappropriation of Brocades trade secrets. In considering whether this injunction should issue, the court employ[ed] California law because the injunction would affect[ ] the substantive rights of the parties. JA26. Though arguably not mandated, the court required Brocade to demonstrate irreparable harm under California law by showing that remedies at law are inadequate, and that other equitable considerations warrant entry of an injunction. JA28. It found that Brocade satisfied this standard. Surveying the trial evidence, the court found that Brocade showed that the trade secrets improve performance of the ServerIron product and thus aid in Brocades pursuit of sales to customers. JA44. Under California law, [c]ommercial advantage is grounds for finding irreparable harm. Id. In addition, A10s continued use of the trade secrets effectively dissolve[ed] the trade secret status of Brocades features, a harm that

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money damages alone could not remedy. Id. Based on these and other equitable considerations, the court entered a narrowly tailored injunction that would not prohibit A10 from reverse engineering the trade secrets in a clean room. The District Court considered and rejected the two arguments A10 offered against a trade secrets injunction: that the trade secrets had become public and that A10 could have independently developed the trade secrets by now if it had tried. As to the first argument, the court exhaustively considered the evidence A10 submitted in opposing the injunction, but concluded that it did not prove the trade secrets were now public. Just the opposite, Brocades trade secrets remain confidential and have not become generally known. JA41. The court rejected the second argument as well. Even granting the legally incorrect premisethat evidence a party could have developed a trade secret independently, rather than evidence it actually did so, is a basis to refuse an injunctionthe court explained that A10 did not even show that it could have developed the trade secrets at issue. A10 pointed only to the testimony of Brocades damages expert. But, as the court explained, A10 conflates [the experts] head start testimony regarding the minimum amount of time it would have taken A10 to independently develop the trade secrets with evidence that A10 could have developed them in the same amount of time. JA42 (emphasis added). In other words, A10 was treating the minimum like a maximum. The District Court thus entered a narrowly tailored

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injunction to prevent A10s continuing use of the misappropriated trade secrets. JA49. A10 moved to stay or modify both injunctions. The District Court denied A10s motions to stay, but it modified the trade secret injunction to allow A10 to continue possession and use of the trade secrets for the sole purpose of providing service to its current customers. JA18. The court also clarified that the trade secret injunction did not apply to A10s attorneys and litigation counsel, and provided a more specific description of Trade Secret 11. JA19-21. This appeal followed. SUMMARY OF ARGUMENT The District Courts thorough opinions explain why the narrowly tailored injunctions it crafted to fit the facts of this case are justified. Brocades former employees stole their employers intellectual property and used it to develop competing products. The jury found their new company, A10, liable for both patent infringement and trade secret misappropriation. And the District Court found that A10s continued infringement and misappropriation would irreparably injure Brocade. After carefully assessing these facts in light of the traditional equitable factors, the District Court concluded that injunctive relief was warranted to restore Brocades control over its intellectual property.

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A10s scattershot efforts in this Court to cast doubt on the District Courts reasoning are wholly unavailing. The District Court did not ignore Apple II, as A10 suggests; to the contrary, it applied the decision and properly found a causal nexus between A10s infringement and the harm targeted by the injunction: Brocades loss of its exclusive right to practice its patents. This Court need not, therefore, address whether the causal nexus standard applies in this case. If, however, the Court decides to reach the question, it should find that the causal nexus test does not apply because (1) the District Court entered a narrowly tailored injunction that does not cover an entire product, and (2) the case involves a permanent, rather than a preliminary, injunction. The District Court also correctly concluded that the equities favor an injunction. A10 has represented to the public and this Court that it has already redesigned its products to remove the infringing features. Because the District Courts injunction targets only those features, A10 is free to sell its redesigned products without them. The substantial harm that continued infringement would cause Brocade in the absence of an injunction heavily outweighs whatever minimal harm the injunction may cause A10. And the public interest favors an injunction too. The District Courts carefully circumscribed injunction protects Brocades intellectual property rights and fosters innovation without unduly burdening third parties.

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A10s challenge to the trade secret injunction is likewise flawed. The District Court found that Brocades trade secrets remain secret, and A10 has not cast doubt on that finding. Brocade thus has a continuing interest in preventing A10 from using its intellectual property. That continuing interest will not expire until the trade secrets become public. A10s contrary argument is based on a fundamental misreading of settled California law. Finally, for reasons similar to those justifying the patent injunction, the equities favor an injunction to halt A10s continued misappropriation of Brocades trade secrets. Both of the District Courts injunctions should be affirmed. ARGUMENT I. STANDARD OF REVIEW The District Courts two injunctions are reviewed only for abuse of discretion. i4i Ltd. Pship v. Microsoft Corp., 598 F.3d 831, 861 (Fed. Cir. 2010), affd, 131 S. Ct. 2238 (2011). Within that overall rubric, underlying findings of fact must be upheld unless they are clearly erroneous, E.I. du Pont de Nemours & Co. v. MacDermid Printing Solutions, LLC, 525 F.3d 1353, 1358 (Fed. Cir. 2008); pure questions of law are reviewed de novo, id.; and judgment calls are entitled to substantial deference, Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 895 (Fed. Cir. 1998). Ultimately, abuse of discretion is a deferential standard of review that requires a showing that the court made a clear error of judgment in

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weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings. Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1375 (Fed. Cir. 2009) (citation omitted). Each injunction must be reviewed separately; the invalidity of one would not affect the validity of the other. II. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY ENTERING A PERMANENT PATENT INJUNCTION The Supreme Court held in eBay that the decision to grant injunctive relief in patent cases rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity. 547 U.S. at 394. The Court gave the traditional four-factor framework that governs equitable relief: A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. Id. at 391. In this case, after affirming the jurys verdict of infringement,3 the District Court carefully considered each of these four factors, and found that each favored the injunctive relief sought by Brocade. The Courts analysis was not affected by

In this appeal, A10 could have challenged the merits of the infringement finding as a basis for overturning the injunction. See Helifix Ltd. v. Blok-Lok, Ltd., 208 F.3d 1339, 1345 (Fed. Cir. 2000). It elected not to do so, and as a result, no merits issues related to infringement or validity are presently before this Court. 16

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any error, clear or otherwise. Its faithful application of the eBay factors and this Courts post-eBay precedents to the facts of this case should be affirmed. A. The District Court Did Not Abuse Its Discretion In Holding That Brocade Would Be Irreparably Harmed Absent An Injunction.

The District Courts irreparable harm analysis principally focused on three facts. First, Brocades own ServerIron products practice the four claims of the three patents that A10 was found to infringe. JA110. There was ample testimony at trial to substantiate that fact. E.g., JA10384-85; JA10816-17; JA10846; JA11373. Second, there was no evidence that Brocade licenses any of the technology in the patents to other parties. JA110. Brocades business model is to develop and practice its intellectual property, not to license it. Third, Brocade and A10 are in direct competition. JA111. Indeed, Chen himself testified that A10 and Brocade are definitely competitors. JA12039. And the District Court credited the testimony of a Brocade employee that the high performance products Brocade and A10 offer should be distinguished from products offered by companies with a larger market share. JA111 (citing JA10444). Brocades expert identified 165 customers who purchased the infringing product after having been Brocade customers. JA111 (citing JA12337; JA12363). Thus, Brocade and A10 were not just competitorsthey were fierce competitors within a niche market.

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In light of these three facts, the District Court concluded that Brocade has suffered irreparable harm from the loss of its exclusive right to practice its patents. JA109. The Court explained: In a situation such as this, where Brocade has shown that it practices its patent, that A10 is its direct competitor, and that Brocade does not license its patents, Brocade has shown that it suffers the type of irreparable harm that a permanent injunction is intended to remedy. JA111; see also JA12. The District Court acted well within its discretion in determining that these circumstances warranted a narrowly tailored injunction, JA120, and A10s challenges to the injunction are meritless. 1. Brocade established that it would be irreparably harmed and that there was a causal nexus between the harm it faced and A10s infringement.

A10 first contends that it was legal error for the district court not to apply the causal nexus test. A10 Br. 31. The premise of that argument is false: Although the court did register doubt that a causal nexus should be required for all irreparable harms, it expressly stated that it did not have to decide this broader question. JA108-09. That was because, as the District Court explained, Brocade had satisfied the causal nexus requirement by establishing a link between A10s infringement and the particular harm targeted by the injunctionthat is, Brocades loss of its right to exclude a direct competitor from using its patents, patents that Brocade practices and does not license. See JA109-10. A10 is

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therefore flat wrong to assert that the District Court directly ignore[d] this Courts mandate. A10 Br. 31. To the contrary, the Court applied that mandate to the circumstances of this case and, finding the standard satisfied, entered an injunction accordingly. A10s argument does not improve from this first misstep. Instead, it continues with a series of mistaken assertions about what the causal nexus requirement is and how it applies. In Apple I and Apple II, this Court explained that a patentee of a product component is only entitled to injunctive relief if the patentee shows that it will be irreparably harmed absent an injunction and that the injury it would incur is causally related to infringement of its patent by the defendant. Apple, Inc. v. Samsung Elecs. Co. (Apple I), 678 F.3d 1314, 1324 (Fed. Cir. 2012); Apple II, 695 F.3d at 1374. Although framed as a causal nexus requirement in Apple I and Apple II, the underlying principle appears to be a longstanding one: that injunctions must be narrowly tailored to fit the specific adjudged violations. Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1311 (Fed. Cir. 2002). For instance, if a patentee claims an injunction is necessary to prevent irreparable harm in the form of a loss of market share, it makes sense for a court to ask whether the patentee will lose market share as a result of the defendants illegal conduct (in which case an injunction is appropriate) or as a result of some other factor, like poor management (in which case it is not).

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The only irreparable harm that Apple asserted was lost sales, see Apple Br. 19-24, Apple, Inc. v. Samsung Elecs. Co., No. 2012-1507, 2012 WL 3875603 (Fed. Cir. July 20, 2012), and so the Court addressed how a causal nexus inquiry applied to that particular context. The Court held that, when the alleged harm is [s]ales lost to an infringing product, the patentee must show that the infringing feature drives consumer demand. Apple II, 695 F.3d at 1374-75 (citation omitted). This requirement follows from the nature of the lost sales inquiry: To prove that the patentee would have made a sale but for the infringement, it generally is necessary to show that the patented features motivated the consumers decision to buy from the infringer. If the consumer would have purchased the product regardless of the infringing features, it can hardly be said that the infringement caused the patentee to lose the sale. But lost sales are not the only kind of irreparable harm that a patentee may face. This Court has routinely recognized that injunctions are appropriate to prevent many types of irreparable harm, such as loss of goodwill, injury to reputation, loss of brand-name recognition, loss of exclusivity, and market saturation. See, e.g., Celsis In Vitro, Inc. v. CellzDirect, Inc., 664 F.3d 922, 930 (Fed. Cir. 2012); Acumed LLC v. Stryker Corp., 551 F.3d 1323, 1328 (Fed. Cir. 2008). Here, for example, the harm the District Court identified was Brocades loss of exclusivity in connection with practicing its patents. The District Court

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imposed the permanent injunction for purposes of preventing that harm, not for the purpose of preventing lost sales, as was the case in Apple II.4 That fact makes Apple IIs discussion of how the causal nexus test applies to a lost-sales injury irrelevant. When the irreparable injury is something other than lost sales, the particulars of how the causal nexus test was applied in Apple II will not apply. And so, for example, if the harm at issue is loss of goodwill, a patentee would have to show some causal nexus between its goodwill loss and the infringement to get an injunction; if the harm is loss of brand-name recognition, the causal nexus would have to be between that recognition and the infringement. In each of these cases, the question whether the infringing feature drives consumer demand for the accused product will not be relevant to establishing the particular causal nexus.

Although the District Court did not rely on lost sales to issue the injunction, Brocade also showed that it was losing sales and needed an injunction to prevent that harm. The features that customers demanded in the AX devices were the very same features that A10 had stolen from Brocade. As A10 itself explained, HA was a very critical feature of the AX Series, and A10 would be shut out of the market for the bigger fish without GSLB. JA31104; JA31158; see JA31006-7 (GSLB is a key strategic product of A10). A10 implemented these [k]ey features of the AX Series, JA30048, by infringing Brocades patents. A10 then sold tens of millions of dollars in AX Series products with the infringing features to existing Foundry customers. See JA31429-39; see also JA31228-345. Though not necessary for this Court to reach, an injunction would be warranted for this reason, too. See Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1156-57 (Fed. Cir. 2011). 21

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So too here. The harm to which the injunction is addressed is Brocades loss of exclusivity. As the District Court explained, that harm flows from the fact that Brocade practices its patents, does not license its patents, and competes directly against A10. JA12; JA111. Because those findings were amply supported, see, e.g., JA10384-85; JA10444; JA10816-17; JA10846; JA11373; JA12039; JA12337; JA12363, it was not an abuse of discretion for the District Court to find that Brocades loss of its exclusive right to practice its own patents was irreparable harm. And the causal nexus between that harm and the infringement, as that court found, is direct and unmistakable. A10s chief response is to claim that loss of exclusivity can never qualify as irreparable harm to a patentee. A10 Br. 28-30. But that contention is exactly the sort of categorical rule that the Supreme Court rejected in eBay, a case that A10 cites (at 28-29) but does not heed. As courts have recognized when faced with similar arguments, eBay d[oes] not state that loss of the right to exclude could not be irreparable harm. Novozymes A/S v. Genencor Intl, Inc., 474 F. Supp. 2d 592, 612 (D. Del. 2007). In fact, this Court has repeatedly emphasized that it does not follow [from eBay] that courts should entirely ignore the fundamental nature of patents as property rights granting the owner the right to exclude. Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1149 (Fed. Cir. 2011). Rather, [a] patentees right to exclude is a fundamental tenet of patent

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law. Edwards Lifesciences AG v. Corevalve, Inc., 699 F.3d 1305, 1314 (Fed. Cir. 2012). That is why, [a]bsent adverse equitable considerations, the winner of a judgment of validity and infringement may normally expect to regain the exclusivity that was lost with the infringement. Id. Given this legal landscape, the District Court did not abuse its discretion by finding that Brocades loss of its exclusive right to practice its patents was irreparable harm. This Court has already held as much. In Fresenius Medical Care Holdings, Inc. v. Baxter International, Inc., 2008 WL 928496 (N.D. Cal. Apr. 4, 2008), the district court had held that the loss of the legal right to exclude, including the right to control the terms of any licensing arrangement, is an irreparable injury that favors an injunction. Id. The infringer appealed the grant of the permanent injunction, claiming that the district courts opinion did not comport with eBay. The Federal Circuit rejected this argument: The district court performed the appropriate analysis required by eBay. Fresenius USA, Inc. v. Baxter Intl, Inc., 582 F.3d 1288, 1302 (Fed. Cir. 2009). The same is true here. A10 responds with the argument that loss of exclusivity can be shown whenever infringement is found, and so the District Courts analysis in this case revert[s] back to the pre-eBay days. A10 Br. 29. This argument entirely ignores what the District Court actually did: The District Court did not say that loss of the right to exclude would qualify as irreparable harm in every case. Its holding was

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much narrower: In a situation such as this, the District Court statedwhere (1) Brocade has shown that it practices its patent, (2) A10 is a direct competitor in a niche market, and (3) Brocade does not license its patentsBrocade has suffered an irreparable injury, because A10s infringement prevents it from practicing its patents exclusively. JA110-11. This is exactly the sort of casespecific, discretionary decision that eBay authorizes district courts to make. In many patent cases, one or more of those three conditions will not be met. For example, loss of exclusivity might not qualify as irreparable harm to a patent assertion entity. See C. Chien & M. Lemley, Patent Holdup, the ITC, and the Public Interest, 98 Cornell L. Rev. 1, 10 (2012) (since eBay was decided, patent assertion entities have been denied injunctions in over 90 percent of cases when the injunctions are contested). And loss of exclusivity may not qualify if the infringer is not a direct competitor, or if the patentee has a licensing program. That last fact distinguishes this case from the situation in Apple v. Samsung. As the district court noted in that case, Apples licensing activity suggests that Apple does not believe that these patents are priceless. Apple, Inc. v. Samsung Elecs. Co., 2012 WL 6569786, at *10 (N.D. Cal. Dec. 17, 2012). Apple had licensed, to competitors such as Nokia and IBM, the exact patents it sought to enjoin Samsung from infringing. Id. It had even licensed patents to Samsung before. Id. Indeed, Apples top licensing executive testified that Apple had

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licensed intellectual property covering its unique user experience. Id. These facts demonstrated that Apple felt that money was a fair trade for the right to practice its patents, and that Apple has in the past been willing to extend license offers to Samsung. Id. Brocade feels and acts differently, and those differences matter. This Court recognized as much in Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683 (Fed. Cir. 2008), where it held that the district court had not abused its discretion when it considered [the patentees] general policy of not licensing its patents and the harm that would ensue from a compulsory license to its most significant competitor. Id. at 702. That same principle applies with force here. A10s claim, at bottom, is simply an argument for a broad, categorical rule that the loss of the exclusive right to practice a patent, even by a practicing patent owner, can never qualify as irreparable harm in any circumstances. That sweeping claim would require this Court to ignore the fundamental nature of patents as property rights granting the owner the right to exclude. Bosch, 659 F.3d at 1149, and to forget that the right to exclude is the heart of the patent grant. ActiveVideo Networks, Inc. v. Verizon Commns, Inc., 694 F.3d 1312, 1341 (Fed. Cir. 2012). As a result, A10s request is directly foreclosed by eBay and this Courts cases. To deny an injunction here would effectively amount to a compelled license from Brocade to an adjudged infringerand the companys

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main competitoreven though Brocades business model is based on developing and practicing its intellectual property, not licensing it. Indeed, the extensive trial record contains no evidence of a Brocade licensing program of any kind. It would be hard to see what is left of the Patent Acts promised right to exclude if an injunction were not appropriate in these circumstances. The patent injunction should be affirmed. 2. In the alternative, it is not necessary to establish a causal nexus in the context of a narrowly tailored permanent injunction that does not cover an entire product.

The District Court properly sidestepped the question of whether the causal nexus standard even applies to this case, because the standard was met here. This Court likewise has no need to examine the issue. If, however, it does reach the question, it should affirm the injunction on the ground that the causal nexus test is simply inapplicable under the circumstances of this case. This Courts decision in Apple II is distinguishable in two crucial respects. First, the injunction in Apple II was much broader than the injunction against A10. The district court had enjoined Samsung from making, using, or selling the Galaxy Nexus phone. Apple, Inc. v. Samsung Elecs. Co., 877 F. Supp. 2d 838, 918 (N.D. Cal. 2012). Its injunction banned the entire product, not just the features of that product that infringed Apples patents. Samsungs brief in the Federal Circuit opened with a discussion about the (over)breadth of the injunction, Appellant Br.

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at 1, Apple Inc. v. Samsung Elecs. Co., No. 2012-1507, 2012 WL 3134431 (Fed. Cir. July 16, 2012), and the Courts opinion highlighted this point as well. Apple II, 695 F.3d at 1373. The Courts discussion of the need for a causal nexus was designed to ensure that the scope of the injunction was appropriately tailored to the scope of the patented claimsand accordingly, to prevent the harm that flowed from infringement of those claims. That same concern does not arise here, where the District Courts narrow and well-tailored injunction does not ban sales of the AX Series device altogether. JA115-19. The Court enjoined only sales of any AX Series device that includes features that infringe the relevant patent claims. JA120. Indeed, the Court specifically narrowed the injunction to ensure that Brocades exclusivity would not extend[] to features that are not covered by [the] patent, thereby addressing the underlying concern animating the Courts decisions in Apple I and Apple II. JA117. The narrowness of the injunction ensures that Brocade is not attempting to leverage its patent for competitive gain. Apple II, 695 F.3d at 1375. And it renders the causal nexus test both unnecessary and irrelevant. Second, the causal nexus requirement was articulated in the context of a preliminary injunction. But preliminary and permanent injunctions are distinct forms of equitable relief that have different prerequisites and serve entirely different purposes. Lermer Germany GmbH v. Lermer Corp., 94 F.3d 1575, 1577

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(Fed. Cir. 1996). A preliminary injunction is an extraordinary remedy never awarded as of right. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22, 24 (2008). It issues before the merits are definitively resolved. A permanent injunction, in contrast, follows a full adjudication on the merits and a finding of patent infringement. Even if the causal nexus requirement is an appropriate safeguard in the preliminary injunction context,5 it is unwarranted in the permanent injunction context. A10 has already had an opportunity to present its case to a jury, and the jury found that its products contained features that infringe Brocades patents. Given the prevalence of complex products encompassing multiple patents, if the Federal Circuit were to extend the causal nexus requirement to permanent injunctions it would fundamentally alter the availability of equitable relief in patent cases, and the Patent Acts right to exclude would become illusory. Indeed, for Although this panel is bound by Apple II, and this Courtlike the District Court belowhas no need to reach the question, Apple II was wrongly decided. The decision is inconsistent with this Courts precedents, which have never rigidly insisted on proof of a causal nexus between lost sales and infringement as a prerequisite to injunctive relief. See, e.g., Broadcom, 543 F.3d at 702-03. It is also inconsistent with eBay, which rejected categorical rule[s] and expansive principles suggesting that injunctive relief could not issue in a broad swath of cases. 547 U.S. at 398. At most, a causal nexus requirement may be appropriate in the context of design patents, where it was first articulated, see Apple I, 678 F.3d at 1323-24. Extending that requirement to utility patents was a major departure from the long tradition of equity practice and should be corrected. eBay, 547 U.S. at 395 (Roberts, C.J., concurring). Brocade preserves these arguments for further review. 28
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more than a century, the Federal Circuit and Supreme Court have often affirmed permanent injunctions for patents that do not cover every feature of an accused product. E.g., Presidio Components, Inc. v. Am. Technical Ceramics Corp., 702 F.3d 1351 (Fed. Cir. 2012) (abuse of discretion to refuse permanent injunction where patent covered only features of a capacitor); Broadcom, 543 F.3d at 701-702 (affirming permanent injunction where patents covered features of chipsets used in mobile radio devices); Contl Paper Bag Co. v. E. Paper Bag Co., 210 U.S. 405, 406, 430 (1908) (affirming permanent injunction where patent covered only an improvement in paper bag machines). Such a major departure from the long tradition of equity practice should be rejected. eBay, 547 U.S. at 391. B. Brocades Remedies At Law Are Inadequate.

The District Court also correctly found that Brocades loss of the right to exclude A10 from using its inventions cannot be remedied by money damages. The right granted by a patent is not to practice the invention, but to exclude others from practicing it. 2 John Norton Pomeroy, A Treatise on Equitable Remedies 1979, p. 4495 (2d ed. 1919). And that right can only retain its attribute of exclusiveness by a prevention of its violation. Anything but prevention takes away the privilege which the law confers upon the patentee. Contl Paper Bag Co., 210 U.S. at 430. That is why it has been long recognized that the obvious method of

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protecting the right to exclusivity is by an injunction. Pomeroy, supra, 1979, p. 4495. A number of this Courts recent decisions underscore that money damages often cannot adequately compensate a patent holder for a loss of the right to exclude. In Edwards Lifesciences, for example, the Court characterized the right to exclude as a fundamental tenet of patent law and held that, absent countervailing equitable considerations, the winner of a judgment of validity and infringement may normally expect to regain the exclusivity that was lost with the infringement. 699 F.3d at 1314. The Court echoed this point in Presidio, where it observed that the historical practice of protecting the right to exclude through injunctive relief is not surprising given the difficulties of protecting this right solely with monetary relief. 702 F.3d at 1362. Simply put, it is difficult to protect the statutory right to exclude through monetary remedies that allow an infringer to use an invention against the patentees wishes. eBay, 547 U.S. at 395 (Roberts, C.J., concurring) (emphases in original); see also Acumed, 551 F.3d at 1328 (in light of patentees right to exclude, infringement may cause a patentee irreparable harm not remediable by a reasonable royalty). The Courts recognition of this basic point in those cases (and others) does not mean that an injunction will automatically issue after a judgment of infringement. In many cases, the balance of harms or the public interest will weigh

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against an injunction. See, e.g., Dun v. Lumbermens Credit Assn, 209 U.S. 20, 23-24 (1908) (affirming denial of copyright injunction based on balance of harms); Bard Peripheral Vascular v. W.L. Gore & Assocs., 670 F.3d 1171, 1192-93 (Fed. Cir. 2012) (affirming denial of patent injunction based on public interest), modified on other grounds, 682 F.3d 1003 (Fed. Cir. 2012); Johnson & Johnson Vision Care, Inc., v. CIBA Vision Corp., 712 F. Supp. 2d 1285, 1293 (M.D. Fla. 2010) (denying patent injunction based in part on public interest). Nor does this mean that courts should inevitably presume irreparable harm based solely on the loss of exclusivity, regardless of the circumstances. Some patentees place little value on the right to exclude others from using their inventions, and so would have little room to complain when that right is diminished. For example, a patentee who has promised to license his invention to all comers on reasonable and non-discriminatory terms (e.g., Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 875-77 (9th Cir. 2012)) would have difficulty arguing that a reasonable royalty is insufficient to make him whole. This last point distinguishes the District Courts injunction from the situation in Apple, Inc. v. Motorola, Inc., 869 F. Supp. 2d 901 (N.D. Ill. 2012) (cited at A10 Br. 34, 35, 36, 37). There, Motorola had committed to license its patents on fair, reasonable, and non-discriminatory terms. Id. at 914. The court treated that commitment as an implicit acknowledgement that a royalty is adequate

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compensation for a license to use that patent. Id. Brocade, of course, has made no such commitment; on the contrary, it has never licensed the intellectual property at issue in exchange for a royalty. A10s other arguments are equally unavailing. The fact that Brocade requested damages for past harm does not bar it from also seeking an injunction to prevent future harm. See Fed. R. Civ. P. 8(a)(3) (a party may request relief in the alternative or different types of relief). And the injunction covers harms that cannot be remedied or undone by a money judgmentparticularly the loss of Brocades right to practice its patent exclusively and the accompanying loss of product differentiation. JA112. A10s argument that other types of harm (lost market share, lost downstream sales) can be remedied by a money judgment is simply beside the point. The parties are still litigating the extent of those harms, and the District Courts injunction accordingly did not rest on that basis. C. The Balance Of Hardships Favors Brocade.

The balance of hardships tips heavily in Brocades favor. As the District Court explained, Brocade would be substantially injured without an injunction. The technology covered by the patents is a critical component of Brocades overall marketing strategy. Yet without an injunction, Brocade cannot exclusively practice its patents and preclude a direct competitor from infringing. JA113. If

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Brocade continues to be denied its exclusive right to use that technology, its entire business model will be undermined. A10, by contrast, is caused no harm by the narrowly tailored injunction. A10 has crowed to the public in press releases that the ruling will have no material negative impact on [its] business or financial strength because it claims to have completed development and testing of applicable, non-infringing elements, and will ship AX Series products with the redesigned software immediately. JA30003; JA30005 (emphasis added). It has thus assured the public that it has removed the infringing features from its products. Assuming those assurances are true, the injunction will not impede A10s sales or imperil its business, as A10 claim below, because the injunction covers only those removed features. A10 says it must bear the cost of deploying the redesign and explaining to customers what impact the injunction would have. A10 Br. 35. But it has never attempted to quantify or substantiate those costs (the majority of which have already been incurred), leaving the District Court and this Court with no basis for determining how they should weigh in the balance of equities. A10s complaint about the looming threat of contempt proceedings, A10 Br. 35, is likewise entitled to no weight. The threat of contempt is a necessary incident of every injunction. If it were enough to tip the balance of hardships, injunctions could never issue.

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Finally, A10 contends that the patents cover only a few minor features of its devices, suggesting that the injunction imposes costs on A10 that are disproportionate both to the benefits to [A10] of having infringed and to the harm to Brocade. A10 Br. 36 (quoting Apple, 869 F. Supp. 2d at 917). But that argument merely highlights the minimal impact of the injunction on A10: Because of the patents narrow scope, A10 states that it was able to design around them quickly and easily. JA10; JA13. That distinguishes this case from Apple v. Motorola, where the court worried that a preliminary injunction would force Motorola to remove lucrative products from the market for as long as it took to remove the infringing features * * * from its products, or to invent around the infringing features. 869 F. Supp. 2d at 917. Whether or not such a worry was justified in Apple v. Motorola, it is unjustified here because A10 claims to have already designed around the patented features. The harm Brocade would suffer in the absence of an injunction thus far outweighs any negligible harm the injunctions may cause A10. D. The Injunction Serves The Public Interest.

The District Court correctly concluded that an injunction was in the public interest, too. The key question here is whether an injunction, both in scope and effect, strikes a workable balance between protecting the patentees rights and protecting the public from the injunctions adverse effects. i4i Ltd. Pship, 598

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F.3d at 863. And there can be no doubt that the patent injunction does just that. As the District Court explained, the public will still have access to A10s products because the injunction does not cover existing customers and because A10 has allegedly developed non-infringing software to sell to new customers. JA13; JA117-118. The public will also continue to have access to the patented inventions through Brocades own products. The injunction thus protects Brocades intellectual property rights and fosters innovation without unduly burdening third parties. Just as in i4i, the narrow scope of the injunction[s] and the publics general interest in upholding patent rights favor injunctive relief. 598 F.3d at 863. A10 offers several reasons why it believes the injunction is contrary to the public interest, but none has merit. It first contends that Brocades patents are of dubious validity, implying that it will prevail in various pending reexamination proceedings before the Patent and Trademark Office. A10 Br. 38. In A10s view, the possibility that the PTO will declare Brocades patents invalid weighs against an injunction. But that argument is foreclosed at this stage. Brocades patents must be presumed valid in the absence of clear and convincing evidence to the contrary, 35 U.S.C. 282; Microsoft Corp. v. i4i Ltd. Pship, 131 S. Ct. 2238, 2242 (2011); and moreover, the District Court held that A10 is barred from presenting such evidence under the doctrine of assignor estoppel. JA114 n.55. A10 does not dispute the District Courts ruling on that point, and it is

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consequently precluded from claiming invalidity or assigning weight to that argument as part of the public interest analysis.6 A10 next tries to smuggle a merits argument into the public interest analysis, claiming that its devices did not infringe Brocades patents at all. According to A10, the AX devices were not configured to perform the specified functions (as the patent claims require) because the end user can choose whether to enable the accused functionality. A10 Br. 38-39. It is the customers, in A10s view, who configure the devices to perform the various functions outlined in the claims. The District Court properly rejected that cramped interpretation of the patent claims. JA5-8; JA69-73. In ordinary speech, a product is configured to perform a function if it is designed to do soeven if additional steps are necessary before the function can actually be performed. See, e.g., Oxford English Dictionary (online ed. 2013) (defining configure in the computing context to mean [t]o choose or design a configuration for; to combine (a program or device) with other

In any event, A10 paints a misleading picture of the reexamination proceedings. It is true, as A10 says, that staff members within the PTO have rejected each of the patent claims at least once. But they have also upheld three of the four claims at least once. Given the early stage of the reexamination proceedings and the many levels of review that lie ahead, see 35 U.S.C. 307(a), it is improper to suggest that any inferences should be drawn from these conflicting results. It certainly was not an abuse of discretion for the District Court to disregard these conflicting results. Cf. SynQor, Inc. v. Artesyn Technologies, Inc., __ F.3d __, 2013 WL 950743, at *10 (Fed. Cir. Mar. 13, 2013) (district court properly excluded evidence of reexamination proceedings that were not yet final). 36

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elements to perform a certain task or provide a certain capability). A new hair dryer, for instance, is configured to dry hair even though the end user must enable that functionality by connecting the device to a power source, choosing the appropriate mode, and so forth. A10s narrower interpretation robs the patent claims of meaning, for all software must to some degree be activated by the end user. The phrase configured to must therefore be read naturally and in context as the District Court recognizedto cover software that is designed to perform the accused functions. It is irrelevant whether the end users must enable the patented features before using them; either way, A10 has infringed the patents by manufacturing and selling protected software. Activating and deactivating certain features does not change the underlying configuration of the software. See Fantasy Sports Properties v. Sportsline.com, 287 F.3d 1108, 1118 (Fed. Cir. 2002) (although a user must activate the functions programmed into a piece of software by selecting those options, the user is only activating means that are already present in the underlying software). Finally, A10 claims that the injunction amounts to holdup because Brocades patents cover only minor features in the AX devices that do not drive demand. A10 Br. 40. But this case between direct competitors is a far cry from a patent trolls use of injunctions to gain undue leverage in negotiations. A10 Br.

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41 (quoting eBay, 547 U.S. at 396 (Kennedy, J., concurring)). The public interest is served here by rewarding Brocades innovation and deterring A10s theft. In any event, nothing is actually being held up in this case. The District Courts injunction does not target all AX devices; it excludes devices owned by A10s current customers and targets only the infringing features of other devices. A10 says it has removed those infringing features and is already shipping redesigned products. Assuming those representations are true, A10s customers and potential customers will not be denied any highly desirable products. A10 Br. 41-42. The injunction merely holds A10 to its representations and legal obligations. III. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION BY ENTERING A PERMANENT TRADE SECRET INJUNCTION A. Substantial Evidence Supports The District Courts Finding That Brocade Is Entitled To An Injunction To Prevent A10s Continuing Misappropriation Of Brocades Trade Secrets.

Under the California Uniform Trade Secrets Act (CUTSA), a successful trade secret plaintiff is entitled to the full panoply of remedies, including injunctive relief against further misappropriation of its trade secrets. Cadence Design Sys., Inc. v. Avant! Corp., 57 P.3d 647, 653 (Cal. 2002). Specifically, a prevailing plaintiff is entitled to a permanent injunction against actual or threatened misappropriation of its trade secrets, and, even if the trade secrets cease[ ] to exist at some point, the injunction may be continued for an additional period of time in order to eliminate commercial advantage that otherwise would be derived

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from the misappropriation. Cal. Civ. Code 3426.2; see Morlife, Inc. v. Perry, 56 Cal. App. 4th 1514, 1528 (1997). Decisions regarding the propriety and scope of injunctions are firmly within the discretion of the district court. BBA Nonwovens Simpsonville, Inc. v. Superior Nonwovens, LLC, 303 F.3d 1332, 1346 (Fed. Cir. 2002) (reviewing injunction granted under identical provision of South Carolina trade secret law). Here, the District Court properly exercised its discretion and reached the result compelled by California law. After the jury found that A10 had misappropriated four Brocade trade secrets, the District Court carefully reviewed the trial record and the additional evidence submitted by the parties and determined that those trade secrets remain confidential. JA23; JA41. Accordingly, the District Court entered an injunction barring A10 from using Brocades stillconfidential trade secrets until A10 could show it had independently derived or reverse-engineered those trade secrets for itself. JA21-22. See also Cal. Civ. Code 3426.1 (misappropriation includes any unauthorized use of trade secrets). Because substantial evidence supports the District Courts findings and the resulting injunction precisely follows California law, there was no abuse of discretion.

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1.

The District Court did not clearly err in finding that Brocades trade secrets remain confidential.

The CUTSA authorizes a court to enjoin actual or threatened misappropriation of a trade secret, although a court must terminate or modify the injunction when the trade secret has ceased to exist. Cal. Civ. Code 3246.2(a). A10 argued to the District Court that Brocades trade secrets ceased to exist as trade secrets because they had been made public. A10 submitted, by its own account, voluminous documentary evidence purportedly demonstrating as much. A10 Br. 57. The District Court, after reviewing this evidence (which totaled in the hundreds of pages) and the trial record, rejected A10s argument that Brocades trade secrets had been made public: In light of Brocades evidence at trial that the trade secrets were confidential and that it employed numerous strategies to retain that confidentiality and the courts determination here that the evidence before it does not suggest any subsequent publicity of the trade secrets, the court finds that Brocades trade secrets remain confidential and have not become generally known. JA41. The court enjoined A10 from using Brocades trade secrets, consistent with the CUTSA, until A10 can show that it has independently developed or reverseengineered them. JA21-22; see also JA47 & n.122 (noting that under CUTSA information that has been independently developed or reverse-engineered does not qualify for trade-secret protection). The District Court thus, in effect, entered an injunction that lasts as long as the trade secrets continue to exist as trade secrets

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under California law. See JA20 n.93 (holding that injunctions terminate when the trade secrets no longer retain their confidential status). The District Courts finding that Brocades trade secrets are non-public was supported by substantial evidence. A10 does not point to any errorlet alone clear errorin the District Courts analysis of the evidence presented at trial and submitted with the post-trial briefing. Instead, A10 raises two complaints about the District Courts process: that the court erred by not granting A10s request for an evidentiary hearing, and that the court did not conduct an obviousness-type analysis of the evidence. A10 Br. 55-57. Neither of these arguments has merit. A10s criticism of the District Court for not holding a trial-like evidentiary hearing (A10 Br. 58) is unavailing. A10 never moved for an evidentiary hearing or informed the District Court that it wanted to present live testimony. In fact, the only reference A10 made to an evidentiary hearing was a qualified, passing comment tucked away in its opposition to Brocades motion to strike A10s documentary evidence. There, A10 stated that there was a sufficient written record to enable the Court to conclude that the alleged trade secrets have become public but that the District Court should hold an evidentiary hearing if the Court were to determine that this is a disputed factual issue that cannot be resolved on the papers. JA20299. The District Court denied Brocades motion to strike, fully considered the evidence A10 had submitted, and concluded that it could resolve the

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issues on the papers. Thus, the court was not faced with the circumstance in which A10 had (passingly) suggested an evidentiary hearing should be held. Accordingly, A10 has waived the issue. See Maynard v. City of San Jose, 37 F.3d 1396, 1401 (9th Cir. 1994) (appellants waived right to challenge trial courts failure to hold evidentiary hearing where they had suggested that motion could be decided on the papers, made only passing reference to potential hearing, and at oral argument on motion never indicated that they wanted a full evidentiary hearing with an opportunity to cross-examine witnesses.).7 Furthermore, even if A10 had properly requested a hearing, it has never explained what testimony it would have presented, what a live hearing would have accomplished, or how the failure to hold one prejudiced its case. Because A10 has failed to point to any clear error in the district courts factfinding, or shown how a hearing conducted on its own terms would have yielded a different result, there is no basis for overturning the District Courts findings that Brocades trade secrets remain confidential. See 28 U.S.C. 2111 (harmless errors must be disregarded); United States v. Microsoft Corp., 253 F.3d 34, 102 (D.C. Cir. 2001) (evidentiary hearing would not be warranted if parties failed to explain to the district court

The invited error doctrine also appears to apply, since A10 encouraged the District Court to decide the issues on the paper record. See, e.g., Key Pharmaceuticals v. Hercon Laboratories Corp., 161 F.3d 709, 714-716 (Fed. Cir. 1998); In re Oracle Corp. Sec. Litig., 627 F.3d 376, 386 (9th Cir. 2010). 42

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what new proof they would present at the hearing (citation omitted)). Cf. Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1326 (9th Cir. 1994) (In this circuit, the refusal to hear oral testimony at a preliminary injunction hearing is not an abuse of discretion if the parties have a full opportunity to submit written testimony and to argue the matter.). A10s newly minted fallback position that the District Court should have conducted an additional obviousness-type analysis to consider whether Brocades trade secrets would have been obvious to its competitors is just as lacking. A10 Br. 58. In opposing entry of an injunction, A10 never presented an obviousness-type theory. Instead, A10 relied exclusively on the theory that Brocade (and its affiliates) had publicly disclosed the trade secrets. JA20436-39. A10 thus forfeited any argument that the injunction should have been denied because the trade secrets were obvious. Wholly apart from forfeiture, this argument fails for a separate reason: A10 does not demonstrateor even attempt to demonstratethat if it had presented an argument based on an obviousness-type analysis of the evidence, the District Court would have reached a different conclusion. And that failure is readily explainable because any argument to the contrary would have required persuading the District Court to contradict the jurys verdict. A finding that any of Brocades trade secrets had been readily ascertainable or obvious at any of the times A10

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alleged them to have been so would have conflicted with the jurys finding that Brocades trade secrets remained trade secrets as of the date they were misappropriated. See, e.g., JA35 (rejecting testimony that TS 5 was ascertainable in 2000 because that evidence already has been rejected by the jury); JA40 (rejecting testimony that TS 10 was part of industry standard in 1996 because it undermines the jurys determination that at least as of A10s creation in 2004, TS [10] was a trade secret).8 Because A10 has failed to point to any clear error in the district courts factfinding, or shown how a hearing conducted on A10s terms would have yielded a different result, there is no basis for overturning the district courts findings that Brocades trade secrets remain confidential. 2. The District Court correctly rejected A10s head-start argument in finding that the evidence in this case supported entry of a trade secret injunction.

The CUTSA authorizes a court to terminate a misappropriation injunction when the covered trade secret has ceased to exist, but provides that the injunction may be continued for an additional period of time in order to eliminate In a footnote, A10 claims that Trade Secret 5 is painfully obvious to a person in the ADC industry. A10 Br. 59 n.17. But A10 offers no support for that claim, which happens to expressly contradict the jurys findings that Trade Secret 5 was a protectable trade secret. See JA35. With respect to Trade Secrets 8, 10, and 11, A10 makes no argument whatsoever, except to claim that [s]imilar errors exist. A10 Br. 59 n.17. This vague assertion provides no reason to second-guess the District Courts finding that Brocades trade secrets remain confidential. 44
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commercial advantage that otherwise would be derived from the misappropriation. Cal. Civ. Code 3426. Thus, a CUTSA injunction properly extends for the life of the trade secreti.e., the time until the secret cease[s] to existplus any additional period necessary to compensate the plaintiff for the commercial advantage wrongly obtained by the defendant. See Morlife, 56 Cal. App. 4th at 1528 (explaining that the CUTSA allows for extension of injunction even after the trade secret has been lawfully disclosed); see also ClearOne Commcns, Inc. v. Bowers, 643 F.3d 735, 753 (10th Cir. 2011) (explaining that Utah statutory provision identical to 3426.2(a) expressly provides for the imposition of injunctive relief during the life of the trade secret at issue). Because the District Court correctly found that Brocades trade secrets remain confidential (JA41) and accordingly have not ceased to exist, the court properly enjoined A10 from future misappropriation of the trade secrets. A10s argument on appeal is that the duration of an injunction is limited to whatever commercial advantage (or head start) the plaintiff could have had absent the misappropriation. A10 Br. 48-56. This argument is simply wrong: the plain language of the statute makes the period of commercial advantage relevant only to determining how long an injunction extends after a trade secret cease[s] to exist. Cal. Civ. Code 3426.2(a). Whereas herethe trade secrets continue to

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exist, the commercial-advantage period has no relevance whatsoever. All of A10s arguments about head-start periods are simply beside the point. a. The commercial-advantage period does not limit the scope of an injunction on a trade secret that remains confidential.

A10 contends that a CUTSA injunction should last only for so long as it would have taken the defendant to independently develop the misappropriated technology, and, here, according to A10, that period has ended. A10 Br. 51. A10s argument ignores that, under the CUTSA, the period of commercial advantage determines the length of the injunction only when the trade secret has ceased to exist. Cal. Civ. Code 3426.2(a). And here, the district court correctly found that Brocadess trade secrets do exist and remain confidential. See supra 4044. A10 cites several decisions that it says support its view of the statute, A10 Br. 45, but none of them does. For example, in American Paper & Packaging Products v. Kirgan, 183 Cal. App. 3d 1318, 1326 (1986), the court held that the plaintiff was not entitled to preliminary injunction because its customer list was not a protectable trade secret. Similarly, in Web Graphics, Inc. v. Jos. Hunkeler, 682 F.2d 59, 60 (2d Cir. 1982), the plaintiff was not entitled to a preliminary injunction because it had disclosed the trade secret in a patent application, and the head start period had expired. (The expiration of the head start period was relevant in Web

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Graphics because even if a trade secret ceases to exist, an injunction may extend for the duration of the commercial advantage or head start period.) A10s other citations are similarly off-base. Ajaxo, Inc. v. e*Trade Group, Inc., 2003 WL 25778061, slip op. 6-7 (Cal. Super. Ct. Aug. 15, 2003) (trade secrets had been publicly disclosed in court hearings and the head-start periods had expired); Convolve, Inc. v. Compaq Computer Corp., 2011 WL 7144803, at *25-*26 (S.D.N.Y. Oct. 6, 2011) (injunction was sought to protect former trade secrets where head-start periods had expired); Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443, 1451-52 (2002) (reviewing claim that appeal had become moot). A10s reliance on American Paper & Packaging Products is especially misleading. In that case, the appellate court affirmed the district courts finding that the customer list at issue was not a protectable trade secret. See 183 Cal. App. 3d at 1326. The court observed, in dicta (because there was no injunction to review), that injunctive relief generally should only last as long as is necessary to preserve the rights of the parties, and only as long as is necessary to eliminate the commercial advantage that a person would obtain through misappropriation. Id. at 1326. Thus, the court continued, an injunction should terminate when what once might have been a trade secret becomes known to good faith competitors, because at that point it is not a protectable trade secret. Id. A10 conveniently omits this context, even though it shows exactly why American

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Paper is not applicable to this case: Brocade has four trade secrets that continue to be secret and are not known to good faith competitors. b. Even if it were relevant, the commercial advantage associated with Brocades trade secrets has not expired.

Even under A10s tortured reading of the statute to limit a CUTSA injunction to the length of the plaintiffs hypothetical head start, the District Courts injunction would have to be upheld here because A10 has not demonstrated that Brocades head-start over A10 has ended. A10 did not submit direct evidence showing that it had developed Brocades trade secrets independently or reverse-engineered them, and A10 has not shown by circumstantial evidence that it necessarily must have done so. A10 has therefore failed to show that Brocade has lost its commercial advantage over A10 or that the District Court abused its discretion in enjoining A10 until it could prove that it had independently developed the trade secrets. In other words, the District Court was well within its discretion to enjoin A10 from using Brocades trade secrets until A10 can show that it has, through its own research and development work, dissolved Brocades commercial advantage. A10s argument to the contrary rests on a thin reed: it repeatedly insists that Brocade and its expert witness admitted or conceded that Brocades period of commercial advantage has ended. See, e.g., A10 Br. 48, 52, 60. That is not a

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remotely accurate characterization, as the District Court recognized in rejecting this argument. JA41-43. This Court should reject it as well. According to A10, Brocades damages expert calculated the period of head start A10 gained by misappropriating Brocades trade secrets and these head-start periods conclusively determine the extent of Brocades commercial advantage. That is not the case. Brocades expert calculated the minimum time he believed it would have taken A10 to develop the trade secrets. JA41-42 (emphasis added). That estimate was in turn based on the amount of time it had taken Foundry to develop them in reality. Id. As the District Court correctly noted, Brocades expert never asserted how much time A10 actually would need to develop the trade secrets or that A10 inevitably would have developed them before trial. JA43 (emphasis added). Brocades expert evidence showed that A10 saved at a minimum many years of research and development expenses, and that this amount of saved time could serve as an appropriate measure of A10s unjust enrichment for purposes of a compensatory damages award. The evidence does not include a concession that Brocades advantage over A10 would have ended prior to trial. Other than this non-existent Brocade concession, A10 cites only to testimony from its trial witnessesincluding two of the individual defendants who claimed that A10 had independently developed the technologies in one of

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Brocades trade secrets and otherwise would have had to include the same features that Brocade offered in order to stay competitive in the market. A10 Br. 54-56. A10s reliance on this testimony is misplaced, for multiple reasons, including that A10 did not rely on this testimony in the District Court, see JA20431-35, that the jury necessarily rejected the testimony claiming A10 independently developed Brocades trade secrets, and that general allegations about competition in the market and what is key for a successful start-up, A10 Br. 55, do not prove that A10 developed the specific trade secrets at issue in this case. A10s belated invocation of this testimony cannot salvage its argument. The District Court reviewed the evidence and found that Brocades trade secrets remain confidential and that A10 has not independently derived those secrets for itself. That finding was not clearly erroneous. The District Court went on to emphasize that if A10 does ever independently develop the trade secrets, such that Brocades commercial advantage has ended, A10 may apply for termination of the injunction and submit evidence to support that showing. A10 has failed to demonstrate that the District Court abused its discretion in enjoining A10 from misappropriating Brocades trade secrets until A10 derives those secrets for itself, if it ever does. See Morlife, 56 Cal. App. 4th at 1528 (holding that injunction allowing for termination after disclosure of trade secret conformed to California law and was not an abuse of discretion).

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B.

The Equitable Factors Also Favor Injunctive Relief.

Although the CUTSA does not require a plaintiff to satisfy the traditional four-factor test for injunctive relief, see Cal. Civ. Code 3426.2, the District Court applied that test anyway and concluded that it supported entry of an injunction.9 There is no basis to disturb that conclusion. 1. A10s ongoing use of Brocades trade secrets irreparably injures Brocade.

The District Court found that Brocade is irreparably injured by A10s continued use of Brocades trade secrets and that [m]oney damages alone cannot protect against [that loss of trade secret status.] JA44. Those findings are not clearly erroneous and should be affirmed. For starters, it is well-established that the ongoing, unlawful use of a trade secretstanding aloneconstitutes irreparable injury. See Beckman Instruments, Inc. v. Cincom Sys., Inc., 165 F.3d 914 (9th Cir. 1998) (Once lost, [a trade secret] is lost forever. The harm is irreparable.); Western Directories, Inc. v. Golden Guide Directories, Inc., 2009 WL 1625945 (N.D. Cal. June 8, 2009) (presuming that Plaintiff will suffer irreparable harm if its proprietary information is misappropriated). Indeed, the CUTSA authorizes injunctive relief merely on the In evaluating these factors, the District Court cited cases arising at the preliminary injunction stage or in other inapposite contexts. When reviewing permanent injunctions, by contrast, California courts appear not to conduct a separate review of the equities. See, e.g., Morlife, 56 Cal. App. 4th at 1528; Vacco Indus., Inc. v. Van Den Berg, 5 Cal. App. 4th 34, 53 (1992). 51
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threat of misappropriation. Cal. Civ. Code 3426.2(a); see also ReadyLink Healthcare v. Cotton, 126 Cal. App. 4th 1006, 1023-26 (2005) (defendants continuing possession and future use of trade secret threatened irreparable injury); Central Valley Gen. Hosp. v. Smith, 162 Cal. App. 4th 501, 527 (2008) (actual possession [of trade secrets] by someone who misused the information in the past * * * justif[ies] injunctive relief); Fid. Brokerage Servs. LLC v. McNamara, 2011 WL 2117546, at *5-*6 (S.D. Cal. May 27, 2011) (injunction warranted where defendant possessed protected client information, misused that information in the past, and refused to return it). Moreover, it is a firmly established principle of trade-secret law that ongoing use of a trade secret vitiates the property interest in its entirety, because a trade secrets value flows directly from the right to exclude others. See DVD Copy Control Assn, Inc. v. Bunner, 75 P.3d 1, 84 (Cal. 2003) ([P]rohibiting the disclosure of trade secrets acquired by improper means is the only way to preserve the property interest created by trade secret law.); Ruckelhaus v. Monsanto Co., 467 U.S. 986, 1011 (1984) (Once the data that constitute a trade secret are disclosed to others, or others are allowed to use those data, the holder of the trade secret has lost his property interest in the data.). That is why the continuing or threatened use or disclosure of a trade secret normally justifies an award of injunctive relief. Restatement (Third) of Unfair Competition 44 cmt. b (1995).

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Brocades actual loss of its trade secrets to A10, and A10s ability to continue to use those trade secrets in its products, was more than sufficient proof of irreparable injury for the District Court to enter injunctive relief. It was not all the District Court relied on, however. Brocade also demonstrated that it would be irreparably injured by A10s ongoing use of its trade secrets insofar as they directly advance its business and provide other intangible benefits that cannot be compensated with money damages. The District Court found that Brocades trade secrets enhance the performance of ServerIron and help to promote Brocades sales. JA44. And Brocades trade secrets allow it to differentiate itself in a competitive market and contribute to its reputation as an innovator. Id. In addition, sales of ServerIron create additional opportunities for Brocade to sell attendant products and services and establish lasting relationships with customers. See, e.g., JA10453; JA10463-64; JA12039-41; JA30009-10. Based on all of this evidence, the District Court found that A10s misappropriation of Brocades trade secrets hurts Brocades commercial advantage and ability to differentiate itself. A10 does not dispute that loss of sales, goodwill, and reputation constitute irreparable harm, and it offers no evidence countering Brocades experts trial testimony proving that Brocade will suffer these unquantifiable injuries as a result of A10s misappropriation. The injunction can be upheld on these theories of

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irreparable harm as well. Indeed, courts have often done so. See Celsis In Vitro, 664 F.3d at 930 (There is no effective way to measure the loss of sales or potential growthto ascertain the people who do not knock on the door or to identify the specific persons who do not reorder because of the [wrongdoer].); Agency Solutions.Com, LLC v. TriZetto Group, Inc., 819 F. Supp. 2d 1001, 1031 (E.D. Cal. 2011) (With regard to competitive advantage and loss of market status and goodwill, there is no dispute that such harms, where they occur or threaten to occur, do warrant injunctive relief because such harms are inestimable.). See also, e.g., Coca-Cola Co. v. Reed Indus., 864 F.2d 150, at *2 (Fed. Cir. 1988) (unpublished); Wyndham Resort Development Co. v. Bingham, 2010 WL2720920, at *6 (E.D. Cal. Jul. 8, 2010); Lillge v. Verity, 2007 WL 2900568 (N.D. Cal. Oct. 2, 2007). A10 raises three objections to the District Courts finding of irreparable harm. All three boil down to the same flawed claim that Brocades trade secrets are no longer secret. First, as described above, A10 argues that Brocade is not irreparably injured by A10s use of its trade secrets because Brocades trade secrets have been publicly disclosed. A10 Br. 57-59. For the reasons explained above, that argument fails because the district court did not clearly err in concluding that Brocades trade secrets remain confidential. See supra pp. 40-44.

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Second, based on the flawed premise that Brocades secrets are now public, A10 argues that Brocade was fully compensated for A10s prior misappropriation. A10 Br. 46-48. Indeed, A10 seems to suggest that Brocade is barred from seeking injunctive relief because Brocade asked for damages. A10 Br. 47. But nothing in the text of CUTSA indicates that its remedies are mutually exclusive, and California courts have repeatedly confirmed that plaintiffs are entitled to the full panoply of remedies the statute makes available. Cadence, 29 Cal.4th at 226.10 Furthermore, Brocade was awarded money damages through 2011 only, as A10 had not provided its 2012 sales records at the time of trial. And the California Supreme Court has recognized that damages from ongoing trade secret misappropriation are not fixed and finite: rather, [t]he potential damages encompassed by a continuing misappropriation claim may expand with each illicit use or disclosure of the trade secret. Id. Therefore, A10s position that a single jury award for past damages somehow adequately compensates Brocade for all future damages lacks any foundation.

10

In Ajaxo v. e*Trade Group, Inc., cited at A10 Br. 60, a California court of appeals remanded a case for retrial with the instruction that a damages award would moot the need for injunctive relief. 135 Cal. App. 4th 21, 64 n.44 (2005). However, there is a crucial distinction: the trade secrets in that case had been publicly disclosed. Therefore, the plaintiff would have had no basis on remand to seek an injunction against future misappropriation. 55

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Third, A10 argues that Brocade is not irreparably injured because Brocade allegedly conceded that the commercial advantage associated with its trade secrets dissipated long before trial. A10 Br. 48. As explained above, Brocade made no such concession, see supra pp. 48-49, and the District Correctly found that A10 has not independently developed or reverse-engineered Brocades trade secrets. As the District Court explained, even if A10 theoretically could have developed the trade secrets before trial, A10 would have to show that it actually did develop those trade secrets in order to show that it was no longer misappropriating Brocades trade secrets and causing Brocade irreparable injury with each use. JA43. Accordingly, A10 has no basis to claim that the District Court erred in finding that Brocades trade secrets provided the company an ongoing commercial advantage. Of course, the fact that Brocade sought unjust enrichment damages did not in any way cede Brocades right to injunctive relief against further misappropriation. Cadence, 29 Cal. 4th at 224. Nor does the jurys $1 award foreclose Brocade from asking for an injunction.11 To accept that view would

11

The jury did not give an explanation for its $1 award. However, the District Court instructed the jury not to award duplicative relief (JA13492), Brocade emphasized that the jury should not award double damages in its closing statement (JA13382-83), and the trade secret verdict followed patent and copyright on the verdict form (JA121-127). It is more reasonable to assume that the jury was following the courts instruction than to assume (as A10 does) that the jury 56

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unlawfully convert the jurys award into a compulsory licensea result the California Supreme Court has expressly forbidden. See id. at 226 (under the CUTSA, a trade secret infringer is by no means rewarded for its infringement with a license to the misappropriated technology). 2. The other equitable considerations also favor relief.

A10 does not present any other equitable basis for overturning the trade secret injunction. It does not raise or argue that the balance of the hardships favors A10, and it does not raise or argue that the public interest does either. It has therefore waived any right to do so. In any event, however, these factors also favor Brocade. See Litton Systems, Inc. v. Sundstrand Corp., 750 F.2d 952, 959 (Fed. Cir. 1984) ([a]n injunction against use and disclosure of a trade secret that has been shown to have been misappropriated * * * preserve[s] * * * the proper status quo under the law); DVD Copy Control Assn, 75 P.3d at 13-14 (explaining that trade secret injunctions under the CUTSA serve significant government interests in promoting fair competition and commercial ethics).

believed $1 was appropriate compensation for trade secret misappropriation spanning six years. 57

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C.

There Is No Basis To Award A10 A Reasonable Royalty.

A10 intimates that the District Court should have h[e]ld an evidentiary hearing on an appropriate royalty. A10 Br. 19. To the extent A10 presents that claim as a ground for reversal, it should be rejected. As a general matter, appellate courts are not in the business of blue-penciling the terms of an injunction, and certainly not when the injunction entered by the District Court was not an abuse of discretion. Moreover, a reasonable royalty is only available under California law when an injunction would be unreasonable and when damages and unjust enrichment are unprovable. Cal. Civ. Code 3426.2(b); see Cacique, Inc. v. Robert Reiser & Co., Inc., 169 F.3d 619, 624 (9th Cir. 1999). Brocade demonstrated to the District Court that an injunction was reasonable, and necessary, to protect its trade secrets. A10 fails to demonstrate that the District Court abused its discretion in entering an injunction on A10s use of the trade secrets it misappropriated rather than forcing Brocade to effectively grant a compulsory license and accept a reasonable royalty.12
12

The District Court suggested that a reasonable royalty might be more appropriate than an injunction because it believed an unqualified permanent injunction against A10 could be overly broad. JA47 n.124. The District Court correctly held, however, that California law precluded a reasonable royalty and instead modified the injunction. In so holding, the District Court mistakenly cited Cal. Civ. Code 3426.3, which authorizes retrospective royalties (a substitute for past damages), instead of citing 3426.2, which authorizes ongoing future royalties (a substitute for an injunction); but the court reached the correct result. See Cacique,169 F.3d at 624. 58

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CONCLUSION For these reasons, the district courts entry of the two permanent injunctions should be affirmed.

Respectfully submitted,

Annette L. Hurst Denise M. Mingrone Bas de Blank ORRICK, HERRINGTON & SUTCLIFFE, LLP 1000 Marsh Rd. Menlo Park, CA 94025 Fabio E. Marino MCDERMOTT, WILL & EMERY 275 Middlefield Rd. Menlo Park, CA 94025 March 26, 2013

/s/ Neal Kumar Katyal Neal Kumar Katyal Jessica L. Ellsworth Judith Coleman David M. Ginn HOGAN LOVELLS US LLP 555 Thirteenth Street, N.W. Washington, D.C. 20004 Tel.: (202) 637-5600 Fax: (202) 637-5910

Counsel for Appellees

59

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CERTIFICATE OF COMPLIANCE 1. This brief complies with the type-volume limitations of Federal Rule

of Appellate Procedure 32(a)(7)(B) because it contains 13,954 words. 2. This brief complies with the typeface requirements of Federal Rule of

Appellate Procedure 32(a)(5) and the typestyle requirements of Federal Rule of Appellate Procedure 32(a)(6) because it has been prepared in a proportionally spaced typeface using Microsoft Office Word in Times New Roman 14-point font.

/s/ Neal Kumar Katyal

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CERTIFICATE OF SERVICE I hereby certify that on this 26th day of March 2013, I caused a copy of the foregoing Brief for Appellees to be served by electronic means via the Courts CM/ECF system on all counsel registered to receive electronic notices.

/s/ Neal Kumar Katyal