Case 5:20-cv-09341-EJD Document 125 Filed 01/28/22 Page 1 of 5
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`January 27, 2022
`Honorable Magistrate Judge Nathaniel M. Cousins
`United States District Court Northern District of California
`San Jose Courthouse, Courtroom 7, 4th Floor
`280 South 1st Street, San Jose, CA 95113
`Re:
`Applied Materials, Inc. v. Demaray LLC, 20-cv-09341-EJD (N.D. Cal.)
`Dear Judge Cousins,
`Applied Materials, Inc. (“Applied”) and Demaray LLC (“Demaray”) submit this joint letter to
`resolve a disputed provision in the parties’ proposed protective order. Yesterday, the parties filed
`a joint motion for entry of the proposed protective order subject to Your Honor resolving one
`disputed provision. Dkt. No. 123. The parties met and conferred, were unable to resolve their
`dispute, and are available for a hearing on February 3 or at the Court’s earliest convenience
`Applied’s Statement
`The parties dispute whether the categories of material a party may designate for heightened
`protections provided in the protective order should include design files (e.g., files that show the
`design of Applied’s proprietary equipment for the manufacturing of semiconductor products), such
`as schematics. See Dkt. No. 123, Ex. A at ¶ 5. Those heightened protections include, for example,
`requiring review on a secure stand-alone or remote review computer and additional safeguards on
`number of produced copies and how they must be stored. For a semiconductor manufacturing
`equipment company like Applied, design files such as schematics are akin to a software company’s
`proprietary source code that requires heightened protections that are regularly permitted in
`protective orders in patent cases.
`Indeed, the disputed language was already agreed to by Demaray in both of its lawsuits in the
`Western District of Texas against Applied’s customers, Intel and Samsung, (“WDTX PO”) over a
`year ago, and Demaray has not provided any reasonable justification why the same should not be
`adopted in this Court.
`A. Applied’s Proposed Language in ¶ 5 Should be Adopted
`Demaray now refuses heightened protections for: “design files (schematics, netlists, and layout
`files), or schematics (i.e., representations of any silicon mask or circuit design, diagram, or
`blueprint containing specific gate-level circuit design representations)”. Id. Applied requests the
`Court include this proposed language in ¶ 5 for the following reasons:
`First, as indicated above, Demaray had previously agreed to the exact proposed language that it is
`now refusing to include here. The proposed protective order is nearly identical to the WDTX PO.1
`Second, Applied, as a non-party to those customers suits, already produced hundreds of documents
`in response to multiple subpoenas from Demaray under the WDTX PO. Only a small number of
`those documents were produced under the heightened designation. Applied and Demaray further
`agreed that all of those documents could be cross-used in this case. In other words, the parties
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`1 The only substantive difference between the WDTX PO and what Applied proposes in this
`Court is the increase of the number of Litigation Managers a party may designate to see
`confidential information from one to two. Demaray agreed to this change.
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`Case 5:20-cv-09341-EJD Document 125 Filed 01/28/22 Page 2 of 5
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`have already agreed that the provisions in the WDTX PO govern the documents Applied has
`produced in this case.
`Third, Demaray already sought to remove design files and schematics from the categories of
`material that may be designated with heightened protections in the customer suits, including with
`respect to non-party Applied’s documents, and the WDTX Court DENIED Demaray’s request.
`On June 21, 2021, a discovery dispute was submitted in the customer suits where Demaray argued:
`[D]efendants/Applied are improperly designating general schematics as Source Code
`under the Protective Order. While the Protective Order agreed to by the parties allows
`good faith designation of certain design materials as “Source Code,” the heightened
`designation is not a default and requires the need for heightened security (e.g., a new
`semiconductor product that has not been announced publicly). Defendants’/Applied’s use
`of the heightened designation as a default is overly burdensome and unnecessary.
`The Texas Court heard argument on June 22, 2021 and on June 25, 2021 issued the following order
`by e-mail: “the Court denies plaintiff’s request No. 2 in light of the relevant language in the parties’
`agreed protective order.”
`Finally, Demaray’s arguments below about practicality for depositions and trial are unavailing.
`Demaray fails to identify any undue burden associated with treating Applied’s design files and
`schematics under the same protections that a party would treat source code in a software case, or
`which Demaray has agreed to treat process recipe information in the customer suits and in this
`case. Dkt. No. 123, Ex. A at ¶¶ 6, 32-39 (“OUTSIDE COUNSEL EYES ONLY – PROCESS
`RECIPE” provisions). In the customer suits, Applied has produced both certain schematics and
`process recipe information with heightened protections and Demaray has not once raised these
`allegedly undue burdens with handling process recipe information—which have the same
`protections. Applied has also produced hundreds of other technical documents under the
`OUTSIDE COUNSEL EYES ONLY designation. Demaray’s contention that Applied has abused
`the protective order designation is improper and not well-taken. Moreover, to the extent Demaray
`believes certain design files or schematics should be afforded a lower confidentiality designation,
`the Protective Order provides a process to address those disputes.
`B. Demaray’s Proposal Should Be Rejected
`In an attempt to resolve this dispute without Court intervention, Demaray proposed yesterday
`maintaining the same language from the WDTX PO, but adding the following “for avoidance of
`doubt” language: “For the avoidance of doubt, design files and schematics will only be designated
`as subject to Source Code protections for materials that the Designating Party has a good faith and
`reasonable belief require the added protections. Less restrictive protections will be used for all
`other design files and schematics.”
`Demaray, however, provided no justification for singling out “design files or schematics” in a
`manner that presumes that these materials should not be afforded heightened protections if a
`designating party makes such designation. Demaray’s proposal suggests some ulterior motive,
`including to create inconsistencies with the WDTX PO and undermine the designations made in
`those cases or the Texas Court’s June 25, 2021 order denying the same relief requested here.
`Moreover, Demaray’s proposal yesterday acknowledges that design files such as schematics may
`warrant heightened protections if a Designating Party has a good faith and reasonable belief that
`the added protections are appropriate.
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`Case 5:20-cv-09341-EJD Document 125 Filed 01/28/22 Page 3 of 5
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`Applied does not believe such “for avoidance of doubt” language is necessary because the
`Protective Order already requires that a designating party have a good faith and reasonable belief
`that protections (at whichever level under the Protective Order) are appropriate, and provides a
`process to challenge a designating party’s confidentiality designation if necessary.
`Applied’s Proposal
`Consistent with the parties’ agreed-to protective order in the Texas customer cases, and for the
`reasons stated above, Applied respectfully requests that the Court include the following proposed
`language in ¶ 5: “design files (schematics, netlists, and layout files), or schematics (i.e.,
`representations of any silicon mask or circuit design, diagram, or blueprint containing specific
`gate-level circuit design representations)”.
`Applied does not believe Demaray’s proposed “for avoidance of doubt” language is necessary and
`contrary to the parties previous agreement in the Texas cases for the reasons stated above.
`However, if the Court believes such “avoidance of doubt” language is necessary, Applied proposes
`the Court adopt language that applies to all designated material, not just the specific types of
`material Demaray takes issue with, such as: “For the avoidance of doubt, Material will only be
`designated “OUTSIDE COUNSEL EYES ONLY – SOURCE CODE” if the Designating Party
`has a good faith and reasonable belief that the Material requires the added protections provided by
`said designation.” Applied offered this language in the parties’ final meet and confer, but Demaray
`did not agree, insisting on singling out design files and schematics.
`Demaray’s Statement
`Applied’s attempt to classify its reactor “design files” and “schematics” as “Source Code”
`requiring review on stand-alone remote computers, among other limitations in the proposed
`Protective Order (Dkt. 123-01), is unnecessarily burdensome and should be rejected. The
`Demaray patents address particular configurations of reactors for PVD processes and have claim
`elements requiring, among other limitations, the use of “a narrow band-rejection filter,” for
`example, to protect the DC power source from damaging feedback from the RF bias. See, e.g.,
`’276 Patent, claim 1. Determination of whether such filter details are present in Applied’s
`reactors requires access to circuit-level information in the reactors and such information is likely
`to be central to this case. The proposed Protective Order contains less burdensome designations
`(e.g., “OUTSIDE COUNSEL EYES ONLY Material” (id., ¶ 4)) that should provide sufficient
`safeguards for such design files and schematics while still allowing Demaray’s counsel
`reasonable access to and use of such information. If Applied desires to designate certain design
`files or schematics as particularly sensitive (e.g., for unreleased products), it should meet and
`confer with Demaray and the parties can approach the Court, if necessary. But, the default should
`not be to require the burdensome restrictions associated with Source Code.
`A.
`Background
`In the proposed Protective Order, Applied seeks to define “Source Code” as including “design
`files (schematics, netlists, and layout files)” and “schematics (i.e., representations of any silicon
`mask or circuit design, diagram, or blueprint containing specific gate-level circuit design
`representations),” including “copies, summaries, and abstracts of the foregoing.” Proposed
`Protective Order, ¶ 5. There are various restrictions on the use of Source Code materials,
`including requiring stand-alone computers, monitoring review, prohibition of electronic copies,
`keeping hard copies under lock & key, and limited use at depositions and trial. Id., ¶¶ 24-31.
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`Case 5:20-cv-09341-EJD Document 125 Filed 01/28/22 Page 4 of 5
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`Schematics are not source code in the normal sense, which Oxford defines as “a text listing of
`commands to be compiled or assembled into an executable computer program.”
`It is undisputed that one of the issues likely to be central to this case is Applied’s inclusion and
`use of a narrow band-rejection filter in its reactors. Demaray will thus need reasonable access to
`and to reference circuit-level information in Applied’s reactors in discovery, including at
`depositions, expert reports, and at trial and the ability to discuss the details in such documents
`describing such filters freely among its outside counsel and experts. This includes both general
`design files and schematics of the type Applied shares with its customers as well as design files
`and schematics internal to Applied that Applied maintains in electronic form.
`Applied’s proposed language is a vestige from the Protective Order adopted in the Texas cases.
`In those cases, at the defendants’ insistence, the parties agreed to use a lengthy, 47-page
`Protective Order that Intel had insisted on in other cases. Under the Texas Protective Orders, a
`party may designate “design files … or schematics” as “Source Code” in certain circumstances.
`It was Demaray’s understanding that the parties contemplated that schematics for certain
`products (e.g., unreleased semiconductor products) may require such heightened protections. The
`Texas defendants and Applied on the other hand have taken the position that heightened source
`code protections are the default and can be applied to any schematics. The Texas
`defendants’/Applied’s over-use of heightened “Source Code” designations as a default has
`created significant obstacles for review and coordination among the Demaray team.
`B.
`Argument
`Applied has not shown that applying Source Code restrictions to schematics and design documents
`that are likely to be central to this case is necessary. Source code provisions in protective orders are
`often entered in this Court. See, e.g., Novitaz, Inc. v. Shopkick, Inc., No. 14-cv-05077-WHO, 2015
`U.S. Dist. LEXIS 189114, at *5-6 (N.D. Cal. Mar. 18, 2015). When applying such restrictions to
`technical documents, such protections are typically balanced with the need for reasonable access.
`For example, the “Model Protective Order for Litigation Involving Patents, Highly Sensitive
`Confidential Information and/or Trade Secrets” limits such added to protections to “extremely
`sensitive ‘Confidential Information or Items’ representing computer code and associated
`comments and revision histories, formulas, engineering specifications, or schematics that define
`or otherwise describe in detail the algorithms or structure of software or hardware designs,
`disclosure of which to another Party or Non-Party would create a substantial risk of serious
`harm that could not be avoided by less restrictive means.” Model Protective Order, Section 2.9.
`Rather than limiting designation of technical documents as Source Code, Applied’s proposed
`language suggests the default should be treating such documents as Source Code.
`First, Applied has not explained why less restrictive designations like “OUTSIDE COUNSEL
`EYES ONLY Material” (proposed Protective Order), ¶ 4) are insufficient to protect documents
`containing schematics (e.g., manuals and schematic compendiums). This designation level applies
`to “information that constitutes proprietary … technical … sensitive competitive information that
`the Designating Party maintains as highly confidential in its business” (id.) and provides
`significant restrictions on access and dissemination (id., ¶ 17). For example, many Applied
`manuals provided to customers contain schematics potentially subject to Source Code designation
`under Applied’s proposed language. It is unclear why Source Code restrictions in the proposed
`Protective Order (e.g., no electronic copies, hard copies under lock and key, no creation or
`exchange of electronic “summaries” or “abstracts”) should apply to such documents when Applied
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`maintains, uses, and disseminates electronic versions of such schematics. As another example,
`Applied maintains certain electrical schematics for its reactors in digital form in a schematic
`compendium allegedly for use internally. It is unclear why such documents cannot be treated as
`“OUTSIDE COUNSEL EYES ONLY Material,” when Applied maintains and uses such
`documents in electronic form.
`Second, limiting Demaray’s access and use of design documents and schematics in this case is
`unnecessarily burdensome. To address the issues raised in Applied’s DJ Complaint, Demaray will
`need reasonable access to and the ability to reference circuit-level information in Applied’s
`reactors in discovery, including at depositions, expert reports, and at trial. In preparing for trial,
`Demaray will also need to discuss the details in such documents (including summaries and
`abstracts thereof) among its outside counsel and experts. It is undisputed that the Demaray patents
`address particular configurations of reactors for PVD processes and have, among other limitations,
`“a narrow band-rejection filter.” See, e.g., ’276 Patent, claim 1. It is also undisputed that one of
`the likely central issues in this case will be whether such filter details are present in Applied’s
`reactors. This requires circuit-level information on the filters—indeed, the parties have already
`raised issues before the Court regarding the need for circuit-level filter details. Dkt. 118 (Joint
`Letter re: Targeted Discovery). This is hardly an “ulterior motive” as Applied insinuates.
`Applied points to the parties’ discussions during the meet and confer process. To try to resolve the
`dispute Demaray proposed language that made it clear that the default designation for schematics
`and design documents was not that they are “Source Code” subject to heightened restrictions. First,
`Applied rejected this proposal and it is improper for Applied to now rely on Demaray’s good faith
`attempt to resolve the issue without the need for judicial intervention. Applied’s approach would
`inhibits reasonable efforts to resolve disputes during the meet and confer process if those efforts
`are later going to be used to undermine a party’s position. Second, Applied’s rejection of such
`clarifying language confirms that their use of the “Source Code” designation for design documents
`and schematics is a real issue that needs to be resolved.
`C.
`Demaray’s Proposal
`If Applied desires to designate certain design files or schematics as particularly sensitive (e.g., for
`unreleased products) and subject to the Source Code provisions, it should meet and confer with
`Demaray when producing such materials and the parties can approach the Court, if necessary. But,
`the default should not be to require the burdensome restrictions associated with Source Code.
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`Respectfully submitted,
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`/s/ Philip Ou
`Philip Ou
`of PAUL HASTINGS LLP
`Counsel for Plaintiff
`Applied Materials, Inc.
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`/s/ C. McClain Wells
`C Maclain Wells
`of Irell and Manella LLP
`Counsel for Defendant
`Demaray LLC
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