Contract analysis

I. LIKELIHOOD OF SUCCESS ON THE MERITS A. Overview of Plaintiff's Claims and Business

1. The Court finds that Plaintiff Lumos Analytics Inc. has demonstrated a substantial likelihood of success on the merits of its claims under the California Uniform Trade Secrets Act, California Civil Code Sections 3426 through 3426.11, and for breach of the Proprietary Information and Inventions Assignment Agreements executed by each of the individual Defendants. The evidence presented by Plaintiff, when weighed aga

2. Lumos Analytics Inc. is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business and headquarters located in Santa Clara, California. Lumos is a software-as-a-service ("SaaS") company specializing in artificial-intelligence-driven financial analytics. As of the time of the events giving rise to this action, Lumos employed approximately 340 individuals. The

3. The Court finds that Lumos has developed and maintained, through substantial investment of time, capital, and human resources, the following categories of confidential and proprietary information that qualify as trade secrets under CUTSA (collectively, the "Lumos Trade Secrets"): (a) The "LumosEdge" ensemble machine-learning model architecture, including its proprietary neural-network topology, layer configuration

4. The Court further finds that Lumos has taken reasonable measures to protect the secrecy of the Lumos Trade Secrets, including but not limited to: requiring all employees to execute the PIIAA prior to commencing employment; implementing role-based access controls on internal code repositories and data systems; maintaining encryption protocols for data at rest and in transit; conducting periodic security audits; and

5. Each of the individual Defendants — Rajiv Anand, Serena Mallick, and Derek Yun — executed Lumos's standard-form Proprietary Information and Inventions Assignment Agreement ("PIIAA") as a condition of their respective employment with Lumos. Copies of the executed PIIAAs were submitted as exhibits to the Declaration of Priya Chandrasekaran. The PIIAAs are governed by California law and contain, among others, the fol

6. The evidence before the Court establishes the following facts regarding the conduct of each individual Defendant in the period preceding and following their respective separations from Lumos: Rajiv Anand. Defendant Rajiv Anand served as Principal Engineer — ML Infrastructure at Lumos Analytics Inc. from approximately March 2019 through September 30, 2022. In this role, Anand had access to the LumosEdge model archi

7. The Court notes that none of the three individual Defendants returned company materials or confirmed the deletion of Lumos proprietary information upon their respective departures from Lumos, as each was obligated to do under the return-of-materials provision of their respective PIIAAs. This failure persists to the date of this hearing. E. NovaSpark Technologies Inc.

8. NovaSpark Technologies Inc. was incorporated in the State of Delaware on October 3, 2022, by Defendant Rajiv Anand. NovaSpark purports to offer AI-driven alternative-data analytics for hedge funds and proprietary trading desks — a product offering and target market that directly and substantially overlap with Lumos's core business and customer base. In November 2022, NovaSpark received $12 million in seed funding

9. On December 12, 2022, Lumos's IT security team identified anomalous data-exfiltration activity during a routine review of system access logs and data-loss-prevention alerts. The investigation revealed the specific file transfers, downloads, and email transmissions described above in connection with each individual Defendant. The results of this investigation, together with the Declarations of Priya Chandrasekaran

10. Based on the totality of the evidence presented, the Court finds that Plaintiff has established a strong likelihood of prevailing on the merits of its claims under CUTSA and for breach of the PIIAA. The evidence demonstrates that the individual Defendants acquired Lumos Trade Secrets by improper means — specifically, through unauthorized copying, downloading, and transmission of proprietary materials in breach of

11. The Court finds that Plaintiff Lumos Analytics Inc. has demonstrated that it will suffer irreparable harm in the absence of preliminary injunctive relief.

12. Trade secrets, by their very nature, derive their value from their secrecy. Once disclosed to competitors or incorporated into a competing product, the competitive advantage conferred by trade secrets is permanently and irrevocably lost. The harm resulting from such disclosure cannot be adequately compensated through an award of monetary damages after the fact. See Readylink Healthcare v. Cotton (2005) 126 Cal.Ap

13. In this case, the Lumos Trade Secrets at risk of misappropriation and misuse include the LumosEdge ensemble machine-learning model architecture, including its proprietary neural-network topology and hyperparameter configurations; the 2,847 individually engineered features in Lumos's proprietary feature-engineering libraries; the DataStream ETL pipeline codebase and data-schema definitions; the 14.6-terabyte curat

14. The Court further notes that Defendants' continued possession of the misappropriated materials creates an ongoing and unacceptable risk of further disclosure and use. The individual Defendants have not returned the materials they exfiltrated, and NovaSpark is actively developing and marketing a competing product. Each day that Defendants retain possession of Lumos Trade Secrets increases the risk that those secre

15. Additionally, the Court observes that under California Civil Code Section 3426.2, a presumption of irreparable harm arises from the threatened misappropriation of trade secrets. The evidence before the Court amply supports the conclusion that trade secret misappropriation has occurred and that further misappropriation is threatened.

16. Accordingly, the Court finds that Plaintiff has satisfied its burden of demonstrating irreparable harm.

17. The Court finds that the balance of hardships tips decidedly in favor of Plaintiff Lumos Analytics Inc.

18. Lumos has invested substantial resources in developing its proprietary technology over multiple years and across multiple funding rounds, having raised a total of approximately $185 million in venture capital through its Series D financing. The Lumos Trade Secrets represent the crown jewels of Lumos's business and the foundation of its competitive position. If Defendants are permitted to continue to possess, use,

19. In contrast, the hardship to Defendants from compliance with the preliminary injunction is comparatively modest and, in any event, is largely self-imposed. The injunction does not prohibit Defendants from working in the field of artificial intelligence or financial analytics. It does not prevent NovaSpark from operating as a business, hiring employees, or developing products. The injunction prohibits only the use

20. To the extent that Defendants contend they will suffer hardship from being required to return or sequester materials containing Lumos Trade Secrets, such hardship is the direct and foreseeable consequence of their own conduct in misappropriating those materials. A party cannot claim hardship arising from the loss of the fruits of its own wrongful conduct. See Donahue Schriber Realty Group, Inc. v. Nu Creation Out

21. The balance of hardships accordingly weighs strongly in Plaintiff's favor.

22. The Court finds that the public interest favors the issuance of the requested preliminary injunction.

23. The State of California has a strong public policy interest in the protection of trade secrets, as reflected in the enactment of the California Uniform Trade Secrets Act. The CUTSA is designed to promote innovation, investment, and fair competition by ensuring that companies that invest in the development of proprietary technology are able to protect that technology from misappropriation by former employees and c

24. The public interest is also served by the enforcement of contractual obligations, including the PIIAA restrictive covenant provisions executed voluntarily by each of the individual Defendants as a condition of their employment with Lumos. Upholding the enforceability of such agreements promotes certainty, encourages investment in employee development and proprietary technology, and fosters a business environment

25. No countervailing public interest has been identified that would weigh against the issuance of the injunction. ORDER Based on the foregoing findings, and for good cause shown, IT IS HEREBY ORDERED AS FOLLOWS:

1. Injunction Against Use and Disclosure IT IS HEREBY ORDERED that Defendants NovaSpark Technologies Inc., Rajiv Anand, Serena Mallick, and Derek Yun, and their respective officers, directors, agents, servants, employees, attorneys, successors, assigns, and all persons acting in concert or participation with any of them who receive actual notice of this Order, are hereby ENJOINED and RESTRAINED, during the pendency o

2. Preservation of Evidence and Devices IT IS FURTHER ORDERED that Defendants NovaSpark Technologies Inc., Rajiv Anand, Serena Mallick, and Derek Yun shall immediately preserve, and shall refrain from destroying, deleting, altering, modifying, overwriting, reformatting, wiping, degaussing, or otherwise tampering with or disposing of, all electronic devices, storage media, and repositories that contain, have contained

3. Sequestration and Return of Materials IT IS FURTHER ORDERED that, within fourteen (14) calendar days of the date of entry of this Order, Defendants shall: (a) Identify and sequester all materials, documents, files, data, source code, object code, compiled code, notebooks, scripts, configurations, datasets, and information of any kind in their possession, custody, or control that constitute or contain Lumos Trade S

4. Prohibition on Solicitation of Lumos Employees IT IS FURTHER ORDERED that Defendants Rajiv Anand, Serena Mallick, and Derek Yun are hereby enjoined, during the pendency of this action or until the expiration of the twelve-month post-separation non-solicitation period set forth in their respective PIIAAs, whichever is later, from directly or indirectly soliciting, recruiting, inducing, encouraging, or otherwise att

5. Reporting and Compliance Obligations IT IS FURTHER ORDERED that Defendants shall, within seven (7) calendar days of the date of entry of this Order, serve upon counsel for Plaintiff Lumos Analytics Inc., Calderwood & Harkness LLP, a written certification executed under penalty of perjury by each individual Defendant and by a duly authorized officer of NovaSpark Technologies Inc., identifying with specificity: (a)

6. Bond. Pursuant to California Code of Civil Procedure Section 529, the Court orders that Plaintiff Lumos Analytics Inc. shall post a bond in the amount of Five Hundred Thousand Dollars ($500,000.00) to secure Defendants against any damages they may sustain by reason of the issuance of this preliminary injunction, in the event it is ultimately determined that the injunction was wrongfully issued. The bond shall be p

7. Duration and Scope This Preliminary Injunction shall remain in full force and effect until the entry of final judgment in this action, further order of this Court modifying or dissolving the injunction, or written agreement of the parties approved by the Court. Defendants may move to dissolve or modify this injunction upon a showing of changed circumstances or other good cause, in accordance with applicable law.

8. Reservation of Rights Nothing in this Order shall be construed to limit, waive, or otherwise affect Plaintiff's right to seek additional or modified injunctive relief, contempt sanctions for violation of this Order, expedited discovery, or any other remedies as may be warranted by the circumstances of this case or applicable law. This Order is entered without prejudice to any party's claims, defenses, counterclaim

9. Service. This Order shall be served upon all Defendants and their counsel of record, Patricia Whitfield and Samuel Gerber of Whitfield, Raines & Gerber LLP, 235 Montgomery Street, Suite 1800, San Francisco, California 94104, by personal service or electronic service in accordance with the California Rules of Court, within two (2) business days of the date of entry of this Order. Any person served with a copy of th