1008-00005 · Lumos Analytics Inc · Pleadings

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SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SANTA CLARA

LUMOS ANALYTICS INC., a Delaware corporation,

Plaintiff,

NOVASPARK TECHNOLOGIES INC., a Delaware corporation; RAJIV ANAND, an individual; SERENA MALLICK, an individual; and DEREK YUN, an individual,

Defendants.

Case No. 23-CV-004871

PLAINTIFF LUMOS ANALYTICS INC.'S REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION

Hearing Date: February 10, 2023 Time: 9:00 a.m. Department: 1 Judge: Hon. David Rutherford

Date Filed: February 7, 2023

CALDERWOOD & HARKNESS LLP Marcus Delgado (SBN 198472), Responsible Partner Catherine Bloom (SBN 214839), Billing Partner Wendy Schultz (SBN 302156), Lead Associate Omar Siddiqui (SBN 318724), Working Associate 555 California Street, 40th Floor San Francisco, California 94104 Telephone: (415) 555-7200 Facsimile: (415) 555-7201

Email: wschultz@calderwoodharkness.com

Attorneys for Plaintiff Lumos Analytics Inc.

TABLE OF AUTHORITIES

Cases.

Statutes.

Secondary Sources.

PLAINTIFF LUMOS ANALYTICS INC.'S REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION

I. INTRODUCTION

This Reply Memorandum is submitted by Plaintiff Lumos Analytics Inc. ("Lumos" or "Plaintiff") in response to the Opposition to Motion for Preliminary Injunction (the "Opposition") filed by Defendants NovaSpark Technologies Inc. ("NovaSpark"), Rajiv Anand ("Anand"), Serena Mallick ("Mallick"), and Derek Yun ("Yun") (collectively, "Defendants") on February 2, 2023, through their counsel of record, Whitfield, Raines & Gerber LLP, by and through Patricia Whitfield and Samuel Gerber. Having carefully reviewed Defendants' Opposition and the supporting declarations, Lumos respectfully submits that Defendants have failed to overcome the evidence of misappropriation already before this Court and that the preliminary injunction should issue.

Defendants' Opposition raises three principal arguments, each of which fails on the merits and the evidence. First, Defendants contend that NovaSpark's product was independently developed without reliance on any Lumos trade secrets. This claim is flatly contradicted by the documented timeline of exfiltration events, the near-instantaneous founding of NovaSpark within days of Anand's departure, and the complete absence of any documentary evidence or declaration from Defendants that would substantiate a claim of independent development. Second, Defendants argue that the confidentiality obligations in the Proprietary Information and Inventions Assignment Agreement ("PIIAA") executed by each individual Defendant are limited in scope and do not cover the specific materials at issue. This argument ignores the plain language of the PIIAA, which defines "Proprietary Information" in sweeping terms that unambiguously encompass all five categories of trade secrets identified by Lumos. Third, Defendants assert that the requested injunction is overbroad and would effectively shut down NovaSpark's business. This is a red herring. The proposed injunction is narrowly tailored to the five specific categories of identified trade secrets and does not prohibit NovaSpark from operating, hiring employees, raising capital, or developing products through independent and lawful means.

Each of these arguments is meritless and fails to overcome the overwhelming evidence of misappropriation that Lumos has already presented to this Court. That evidence was sufficiently compelling for this Court to grant a Temporary Restraining Order on January 23, 2023, and the record has only grown stronger since that date. Nothing in the Opposition alters the calculus. The documented exfiltration of 3.2 GB of files, the cloning of an entire code repository, the downloading of 47 proprietary Jupyter notebooks, and the transmission of a 37-page confidential product roadmap to personal accounts — all occurring in a coordinated sequence in the days surrounding each Defendant's departure from Lumos — speak for themselves.

Lumos Analytics Inc. respectfully requests that the Court grant the motion for preliminary injunction on all five categories of trade secrets and enter the proposed order in full.

II. STATEMENT OF RELEVANT FACTS

A. The Proprietary Technology at Issue

Lumos Analytics Inc. is a Delaware-incorporated, California-headquartered software-as-a-service ("SaaS") company that specializes in AI-driven financial analytics for institutional investors. Founded in approximately 2017, Lumos has grown to approximately 340 employees and has built a significant presence in the institutional financial analytics market. In 2022, Lumos achieved annual recurring revenue ("ARR") of approximately $67 million. Over the course of its existence, Lumos has raised approximately $185 million in venture capital financing through its Series D round, including a $40 million Series B round led by Ridgeline Ventures in 2019 and a $72 million Series D round led by Northstar Growth Equity in June 2022. These investments have been deployed, in substantial measure, to build the proprietary technology that Defendants have now misappropriated.

At the core of Lumos's commercial offering is LumosEdge, its flagship AI-driven analytics platform. As detailed in the Declarations of Priya Chandrasekaran (CEO) and Rachel Fong (VP of Engineering) submitted in support of Lumos's original motion, the technology underlying LumosEdge represents years of development effort, the investment of tens of millions of dollars, and the accumulated expertise of a world-class engineering team. Lumos seeks to protect five specific categories of trade secrets, each of which constitutes core proprietary technology:

(1) LumosEdge Ensemble ML Model Architecture. This encompasses Lumos's proprietary neural-network topology and hyperparameter configurations, which represent the product of extensive research, experimentation, and iterative refinement. The specific architecture — including the arrangement of ensemble layers, the selection and tuning of hyperparameters, and the novel integration of multiple model types — is not publicly known and provides Lumos with a significant competitive advantage in the accuracy and speed of its financial signal generation.

(2) Proprietary Feature-Engineering Libraries. Lumos has developed 2,847 individual engineered features for financial signal generation. These features are the product of years of domain expertise in quantitative finance, combined with advanced machine learning techniques. Each feature was carefully designed, tested, and validated against historical data, and the collection as a whole represents a proprietary asset of extraordinary value.

(3) DataStream ETL Pipeline Codebase and Data-Schema Definitions. Lumos's DataStream system is a proprietary extract-transform-load ("ETL") pipeline codebase that manages the ingestion, normalization, and transformation of data from 43 alternative-data vendors. The codebase includes proprietary data-schema definitions, error-handling routines, and vendor-specific integration logic that were developed over multiple years at significant cost.

(4) Curated and Labeled Training Dataset. Lumos maintains a curated and labeled training dataset of approximately 14.6 terabytes of historical financial and alternative data. This dataset was assembled, cleaned, labeled, and validated through a painstaking process that required significant investment of both capital and engineering resources. The dataset is not publicly available, and its curation and labeling represent independent and substantial trade secret value.

(5) Confidential Product Roadmap Documents (2023–2025). These documents include the unreleased LumosEdge 3.0 specifications, contained in a 37-page PDF that details Lumos's strategic product direction, planned feature releases, anticipated market positioning, and competitive strategy for the 2023–2025 timeframe. Disclosure of this roadmap would enable a competitor to anticipate and undermine Lumos's product strategy.

Each of these categories is individually protectable as a trade secret under the California Uniform Trade Secrets Act ("CUTSA"), Cal. Civ. Code §§ 3426–3426.11, and collectively they constitute the technological foundation of Lumos's business.

B. The Defendants' Coordinated Departures and Exfiltration

The evidence before this Court establishes that the three individual Defendants — Anand, Mallick, and Yun — engaged in a coordinated pattern of exfiltration and departure from Lumos, followed by the near-immediate creation of and employment at NovaSpark, a directly competing company. The timeline is as follows:

September 26, 2022: Rajiv Anand, who served as a Senior Machine Learning Engineer at Lumos and was a key architect of the LumosEdge signal-generation engine, transferred approximately 3.2 gigabytes of files to a personal Hollowell Health IT account. As detailed in the Declaration of Rachel Fong and the supporting forensic analysis report prepared by CyberTrace Forensics LLC, these files included model architecture specifications, hyperparameter configuration files, and related documentation for the LumosEdge ensemble ML model. (Fong Decl. ¶¶ 14–18; CyberTrace Report at 7–12.)

September 28, 2022: Anand forwarded the confidential 37-page LumosEdge 3.0 Product Roadmap PDF to his personal email address (r.anand.personal@vaultmail.com). This document was classified as "Lumos Confidential — Restricted Distribution" and was accessible only to a limited group of senior employees and executives. (Chandrasekaran Decl. ¶ 22; Fong Decl. ¶ 19.)

September 30, 2022: Anand submitted his resignation from Lumos, effective immediately, without providing the customary two-week notice period. He did not return any company-issued devices or certify the deletion of Lumos materials from personal accounts or storage media as required by his PIIAA. (Chandrasekaran Decl. ¶ 24.)

October 3, 2022: NovaSpark Technologies Inc. was incorporated in the State of Delaware, with Rajiv Anand listed as the sole incorporator and registered agent. This incorporation occurred a mere three days after Anand's resignation from Lumos. (Compl., Ex. G [Delaware Secretary of State filing].)

October 10, 2022: Serena Mallick, who served as a Senior Data Engineer at Lumos and was the lead developer of the proprietary DataStream ETL pipeline system, cloned the entire DataStream ETL pipeline repository — approximately 780 megabytes of code, schema definitions, and documentation — to a personal external USB drive bearing the serial number WD-4837291. This event was captured in Lumos's system access logs and was subsequently confirmed by the CyberTrace forensic analysis. (Fong Decl. ¶¶ 25–28; CyberTrace Report at 13–16.)

October 14, 2022: Mallick resigned from Lumos. Like Anand, she did not return company materials or certify the deletion of Lumos proprietary information from personal devices or storage media. (Chandrasekaran Decl. ¶ 26.)

October 17, 2022: Mallick commenced employment at NovaSpark Technologies Inc. as Vice President of Engineering — three days after her departure from Lumos. (Compl., Ex. H [Mallick Westmark Health IT profile screenshot, archived October 20, 2022].)

October 18, 2022: Derek Yun, who served as a Machine Learning Engineer at Lumos with direct access to proprietary training datasets, model hyperparameters, and feature-engineering libraries, downloaded 47 proprietary Jupyter notebooks containing feature-engineering code and model-training scripts to a personal Larkspur Technologies account. These notebooks contained implementations of numerous proprietary engineered features and training procedures. (Fong Decl. ¶¶ 30–33; CyberTrace Report at 17–20.)

October 21, 2022: Yun resigned from Lumos. He likewise did not return company materials or certify deletion of proprietary information. (Chandrasekaran Decl. ¶ 28.)

October 24, 2022: Yun commenced employment at NovaSpark as a founding engineer. (Compl., Ex. I [Yun Westmark Health IT profile screenshot, archived October 28, 2022].)

November 15, 2022: NovaSpark closed a $12 million seed financing round from Blackpine Capital Partners LP. The speed with which NovaSpark was able to raise significant venture capital — approximately six weeks after its incorporation — further supports the inference that NovaSpark presented investors with a product or prototype that was substantially derived from Lumos's proprietary technology, rather than developed from scratch.

December 12, 2022: Lumos's IT security team, during a routine audit of data-access logs, identified the anomalous data-exfiltration activity described above. This discovery prompted the internal investigation that led to the filing of this action.

The sequence of events is striking in its coordination. Each individual Defendant exfiltrated specific, targeted categories of Lumos proprietary materials in the days immediately preceding his or her departure. Taken together, the materials removed by Anand, Mallick, and Yun constitute the complete technological foundation necessary to replicate the core functionality of LumosEdge — the model architecture and hyperparameters (Anand), the data-ingestion pipeline (Mallick), and the feature-engineering code and training scripts (Yun) — plus the strategic roadmap for future development (Anand). This was not a coincidence.

C. The PIIAA Obligations

Upon commencing employment at Lumos, each of the three individual Defendants executed Lumos's standard Proprietary Information and Inventions Assignment Agreement. The PIIAAs are substantially identical in their material terms and contain the following key provisions:

(a) Assignment of Inventions. Each Defendant agreed to assign to Lumos all right, title, and interest in and to any inventions, developments, improvements, or discoveries made during the course of employment that relate to Lumos's business or were made using Lumos resources. (PIIAA § 3.)

(b) Confidentiality and Non-Disclosure. Each Defendant agreed to hold in confidence and not to use or disclose any Proprietary Information of Lumos during and after employment. The non-disclosure obligation survives termination of employment for a period of three years with respect to confidential information, and indefinitely with respect to trade secrets. (PIIAA § 2.)

(c) Non-Solicitation of Employees. Each Defendant agreed not to solicit, recruit, or hire any Lumos employee for a period of twelve months following separation from Lumos. (PIIAA § 5.)

(d) Restrictive Covenant — Non-Use and Non-Disclosure of Trade Secrets. Each Defendant agreed not to use or disclose Lumos trade secrets at any time, without temporal limitation. This covenant is independent of and in addition to the general confidentiality obligation and expressly survives termination of employment indefinitely. (PIIAA § 2(c).)

The PIIAA further requires each employee, upon termination of employment for any reason, to immediately return to Lumos all company materials, documents, data, equipment, and other property, and to certify in writing that all copies of Lumos proprietary information stored on personal devices or accounts have been permanently deleted. (PIIAA § 6.)

It is undisputed that none of the three individual Defendants returned company materials or provided the required certification of deletion upon their respective departures from Lumos. (Chandrasekaran Decl. ¶¶ 24, 26, 28.) This failure, standing alone, constitutes a breach of the PIIAA.

D. The Temporary Restraining Order

On January 20, 2023, Lumos filed the Complaint and its Ex Parte Application for Temporary Restraining Order. On January 23, 2023, after reviewing the moving papers and supporting declarations and hearing oral argument from both sides, this Court granted the Temporary Restraining Order. The TRO ordered Defendants to:

(a) Immediately cease all use of Lumos proprietary information and trade secrets, including but not limited to the five categories of trade secrets identified in the Complaint;

(b) Preserve all electronic devices, storage media, and cloud accounts containing or potentially containing Lumos proprietary information, and refrain from wiping, reformatting, or otherwise altering such devices and media; and

(c) Refrain from destroying, deleting, altering, or concealing any documents, files, communications, or other materials relevant to Lumos's claims.

In granting the TRO, the Court found that Lumos had demonstrated a likelihood of success on the merits and that the risk of irreparable harm warranted immediate relief. (TRO Order at 3–4.) Nothing in Defendants' Opposition undermines those findings.

III. ARGUMENT

A. Defendants' "Independent Development" Defense Is Contradicted by the Evidence and Is Premature

The centerpiece of Defendants' Opposition is the assertion that NovaSpark's product was independently developed without reliance on any Lumos trade secrets. This defense collapses under the weight of the evidence already before the Court.

1. The Timeline Itself Refutes Independent Development. The undisputed chronology of events renders the independent-development defense implausible on its face. NovaSpark Technologies Inc. was incorporated in Delaware on October 3, 2022 — a mere three days after Rajiv Anand's resignation from Lumos and while both Serena Mallick and Derek Yun were still employed at Lumos with ongoing, unfettered access to its most sensitive proprietary systems. The speed of this incorporation alone strongly suggests that Anand had been planning NovaSpark's formation while still employed at Lumos and while still subject to his duties of loyalty and his PIIAA obligations.

The nature of NovaSpark's business confirms this inference. NovaSpark purports to offer AI-driven alternative-data analytics for hedge funds and proprietary trading desks — a market that directly and substantially overlaps with Lumos's core commercial offering. NovaSpark did not enter an adjacent or tangentially related market; it entered the precise market that Lumos serves, targeting the same customer base with a functionally equivalent product. Defendants offer no explanation for this remarkable coincidence.

More critically, Defendants offer no credible explanation for how NovaSpark could have developed a competing product in such a compressed timeframe without reliance on Lumos's technology. The LumosEdge platform represents years of development effort by a team of dozens of engineers, data scientists, and domain experts, supported by the investment of tens of millions of dollars in venture capital. The notion that three individuals — however talented — could independently replicate this technology from scratch in a matter of weeks strains credulity beyond the breaking point. See Cobalt Ridge Health IT Design Systems, Inc. v. Avant! Corp. (2002) 29 Cal.4th 215, 228 (noting the implausibility of independent development where the timing of the defendant's product release was inconsistent with development from scratch); Ashford Group (2002) 101 Cal.App.4th 1443, 1457 (observing that the speed with which a former employee developed a competing product was circumstantial evidence of misappropriation).

Each of the three individual Defendants held positions at Lumos that gave them direct access to the precise categories of trade secrets at issue. Anand was a key architect of the LumosEdge signal-generation engine, with access to Lumos's most sensitive proprietary codebases, model architectures, hyperparameter configurations, and training data. Mallick was the lead developer responsible for building and maintaining the proprietary DataStream ETL pipelines, which manage the ingestion, transformation, and integration of data from 43 alternative-data vendors. Yun, as a Machine Learning Engineer, had direct access to proprietary training datasets, model hyperparameters, and feature-engineering libraries containing 2,847 individually engineered features. Together, these three individuals possessed the collective knowledge and — as the exfiltration evidence demonstrates — the actual possession of materials necessary to replicate the core functionality of LumosEdge.

Defendants' Opposition does not include a single declaration from any individual Defendant, from any NovaSpark engineer, or from any other witness describing the purported independent-development process. There are no design documents, no commit histories, no version-control logs, no whiteboard sketches, no meeting notes — nothing that would corroborate the claim that NovaSpark's product was developed through independent effort. This silence speaks volumes. If NovaSpark had genuinely developed its product independently, Defendants could and should have submitted evidence documenting that process. Their failure to do so supports a strong inference that no such evidence exists. See Cobalt Ridge Health IT, 29 Cal.4th at 229 (noting that the absence of documentation supporting an independent-development defense weighs against the defendant).

2. The Exfiltration Evidence Directly Undermines the Independent-Development Claim. Beyond the circumstantial evidence provided by the timeline and the defendants' roles, the direct evidence of exfiltration shatters any pretense of independent development. The evidence demonstrates that each individual Defendant took specific, targeted Lumos proprietary materials in the days immediately surrounding his or her departure from Lumos. This was not accidental, inadvertent, or incidental — it was deliberate and systematic.

Rajiv Anand. On September 26, 2022 — four days before his resignation — Anand transferred approximately 3.2 gigabytes of files to a personal Hollowell Health IT account. The forensic analysis conducted by CyberTrace Forensics LLC confirms that these files included model architecture specifications and hyperparameter configuration files for the LumosEdge ensemble ML model. (CyberTrace Report at 7–12.) Two days later, on September 28, 2022, Anand forwarded the confidential 37-page LumosEdge 3.0 Product Roadmap PDF — a document classified as "Lumos Confidential — Restricted Distribution" — to his personal email address at r.anand.personal@vaultmail.com. (CyberTrace Report at 12.) There is no legitimate business reason for an employee to transfer model architecture files and a confidential product roadmap to a personal account two to four days before resigning.

Serena Mallick. On October 10, 2022 — four days before her resignation and one week after NovaSpark's incorporation — Mallick cloned the entire DataStream ETL pipeline repository, approximately 780 megabytes of code and documentation, to a personal external USB drive bearing serial number WD-4837291. (CyberTrace Report at 13–16.) This was not the transfer of a few files or a backup of personal materials; it was the wholesale duplication of an entire proprietary codebase that Mallick had developed as part of her employment at Lumos and that was assigned to Lumos under the PIIAA.

Derek Yun. On October 18, 2022 — three days before his resignation — Yun downloaded 47 proprietary Jupyter notebooks to a personal Larkspur Technologies account. These notebooks contained feature-engineering code and model-training scripts, including implementations of numerous proprietary engineered features from Lumos's library of 2,847 features. (CyberTrace Report at 17–20.)

The significance of these exfiltration events cannot be overstated. Collectively, the materials taken by Anand, Mallick, and Yun encompass the core building blocks of the very product that NovaSpark claims to have independently developed: the model architecture and hyperparameters (Anand), the data-ingestion pipeline (Mallick), the feature-engineering code and training scripts (Yun), and the strategic product roadmap (Anand). It beggars belief that Defendants would take these materials if they intended to develop their product independently.

Defendants' Opposition attempts to minimize the exfiltration evidence by characterizing the transfers as routine or inadvertent. This characterization is unsupported by any evidence and is contradicted by the record. The transfers were targeted — each Defendant took precisely the category of materials corresponding to his or her area of expertise and responsibility at Lumos. The transfers occurred in a narrow temporal window surrounding each Defendant's departure. And the materials were transferred to personal accounts and devices — not to other Lumos accounts or systems. These are not the hallmarks of routine activity or inadvertent transfers. They are the hallmarks of a deliberate and coordinated plan to misappropriate Lumos's most valuable proprietary technology.

Defendants' bare assertion of independent development, unsupported by any declaration or documentary evidence, is insufficient to overcome this record. At the preliminary injunction stage, the Court is not required to accept Defendants' unsworn characterizations at face value. See San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1545 (a party's unsupported assertions do not create a factual dispute sufficient to defeat a preliminary injunction motion where the moving party has submitted substantial evidence).

3. At the Preliminary Injunction Stage, Lumos Need Only Show Likelihood of Success. Defendants' Opposition appears to argue that Lumos must conclusively prove misappropriation at this stage of the proceedings. That is not the law. The question before the Court on a motion for preliminary injunction is not whether Lumos will ultimately prevail on the merits at trial, but whether Lumos has demonstrated a likelihood of prevailing on the merits. See IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69–70; ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1016.

The standard requires a showing that, on the evidence presented, the moving party is more likely than not to succeed at trial. See Altavion, Inc. v. Strathmore Corporation (2014) 226 Cal.App.4th 26, 47. It does not require the moving party to negate every possible defense, particularly where the defense is unsupported by evidence. The independent-development defense, which Defendants assert in their Opposition brief but do not support with any declaration, documentary evidence, or expert analysis, does not diminish Lumos's showing of likely success.

The combination of (a) documented exfiltration of specific, identified trade secret materials by all three individual Defendants in the days surrounding their departures; (b) the near-immediate founding of and employment at a directly competing startup targeting the same market and customer base; (c) the absence of any credible explanation for NovaSpark's ability to develop a competing product in a matter of weeks; and (d) the failure of any Defendant to submit evidence supporting the independent-development claim compels the conclusion that Lumos is likely to succeed on its CUTSA claims. See Cobalt Ridge Health IT, 29 Cal.4th at 229; Beck Morriven CPAs LLP v. Cocchi (2012) 51 Cal.App.5th 1094, 1099–1100.

B. The Scope of the PIIAA Confidentiality Obligations Clearly Encompasses the Materials at Issue

Defendants' second principal argument is that the confidentiality obligations in their respective PIIAAs do not cover the specific materials at issue. This argument is foreclosed by the plain language of the agreement.

1. The PIIAA's Definition of Proprietary Information Is Broad and Unambiguous. The PIIAA executed by each individual Defendant defines "Proprietary Information" in broad and unambiguous terms. Section 1 of the PIIAA provides:

"Proprietary Information" means all information relating to the Company's business, technology, products, and services, whether oral, written, graphic, or machine-readable, including without limitation: source code, object code, algorithms, data structures, databases, data sets, data models, software architectures, system designs, techniques, methodologies, processes, formulas, inventions, discoveries, improvements, trade secrets, know-how, research, experimental work, development, engineering, product plans, product roadmaps, marketing plans, customer lists, financial information, projections, and any other information that has or could have commercial value or other utility in the business in which the Company is engaged.

This definition is expansive by design, as courts have recognized is appropriate for technology companies whose competitive advantage depends on the protection of proprietary information. See Flir Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1280–81 (upholding a broadly defined confidentiality provision in an employment agreement and holding that "the language of such agreements is to be given its ordinary and popular meaning").

Each of the five categories of trade secrets identified by Lumos falls squarely within this definition:

• The LumosEdge ensemble ML model architecture is encompassed by the PIIAA's references to "algorithms," "software architectures," "system designs," and "techniques."

• The proprietary feature-engineering libraries are encompassed by the PIIAA's references to "source code," "algorithms," "data structures," "techniques," "methodologies," and "processes."

• The DataStream ETL pipeline codebase and data-schema definitions are encompassed by the PIIAA's references to "source code," "data models," "software architectures," "system designs," and "engineering."

• The curated and labeled training dataset is encompassed by the PIIAA's references to "databases," "data sets," and "data models."

• The confidential product roadmap documents are encompassed by the PIIAA's references to "product plans," "product roadmaps," and "any other information that has or could have commercial value."

There is no ambiguity. Each category of trade secret at issue is described, in some cases verbatim, in the PIIAA's definition of Proprietary Information. Defendants' argument to the contrary is untenable.

The PIIAA's restrictive covenant provisions reinforce this conclusion. Section 2(c) of the PIIAA expressly prohibits the use or disclosure of Lumos trade secrets "at any time," without limitation. This obligation survives termination of employment indefinitely for trade secrets and for at least three years post-termination for other categories of confidential information. See Flir Systems, 174 Cal.App.4th at 1282 (enforcing post-employment non-disclosure obligations with respect to trade secrets). Defendants' conduct in exfiltrating and using the identified materials plainly violates these provisions.

2. Defendants Cannot Rely on the "General Knowledge" Exception. To the extent Defendants argue that the materials at issue constitute "general knowledge and skills" that employees are entitled to carry with them when they depart, this argument fails as both a legal and factual matter.

California law recognizes that employees are entitled to use their general skills, knowledge, and experience in subsequent employment. See Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1527. However, this principle has well-defined limits. An employee may take with him or her general expertise and publicly available knowledge, but may not take the employer's specific trade secrets, proprietary implementations, or confidential information. See id. at 1527–28; Halcyon Enterprises v. Bramwell Partners LLC (2010) 184 Cal.App.4th 210, 236–37; 4 Milgrim on Trade Secrets § 15.01[1] (Matthew Bender 2022).

The materials at issue here are emphatically not general skills or publicly available techniques. They are specific, proprietary implementations that are unique to Lumos and that derive independent economic value from not being generally known. Consider what is at stake:

• A particular neural-network topology with specific hyperparameter configurations that were developed through extensive experimentation and iterative refinement — not general knowledge of machine learning or neural network design.

• 2,847 specifically engineered features for financial signal generation, each of which was individually designed, tested, and validated — not a general understanding of feature engineering as a concept.

• A particular ETL pipeline codebase covering 43 specific alternative-data vendor integrations, with vendor-specific connection logic, error-handling routines, and data-schema definitions — not a general familiarity with ETL processes.

• 14.6 terabytes of curated, labeled training data, painstakingly assembled, cleaned, and validated over years — not an abstract understanding of what constitutes useful training data.

• A 37-page confidential product roadmap setting forth Lumos's strategic product direction for 2023–2025, including unreleased LumosEdge 3.0 specifications — not a general awareness of industry trends.

These are concrete, documented, particularized trade secrets — not abstract knowledge or general expertise. The distinction between general knowledge and trade secrets is well established in California law, and it is not even a close call in this case. See Morlife, 56 Cal.App.4th at 1528 (distinguishing between "general knowledge" and "specific secret plans or processes of the employer"); Flir Systems, 174 Cal.App.4th at 1283 (holding that specific technical specifications and design parameters were trade secrets, not general knowledge). The "general knowledge" exception is entirely inapplicable to the materials at issue here.

3. California Law Enforces Confidentiality Obligations Even Without Non-Compete Agreements. Defendants' Opposition also suggests — without squarely stating — that the PIIAA's restrictive covenant provisions are akin to an unenforceable non-compete agreement under California Business & Professions Code § 16600. This argument fundamentally mischaracterizes both the nature of the PIIAA's provisions and the relief that Lumos seeks.

Lumos does not seek to prevent Defendants from working in the AI or financial technology industry. Lumos does not seek to prevent Defendants from developing alternative-data analytics products, from serving hedge fund or institutional clients, or from competing with Lumos in any lawful manner. What Lumos seeks — and what the PIIAA prohibits — is the use of Lumos's specific, identified trade secrets to compete unfairly. This is a fundamentally different proposition from a non-compete agreement, and California courts have consistently recognized and enforced this distinction.

California law is clear that non-disclosure and non-use obligations that protect trade secrets are enforceable and are distinguishable from broad non-competition covenants that restrain an individual's right to pursue a livelihood. See Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937, 946 (discussing the scope of § 16600 while recognizing that trade secret protections remain independently enforceable); Morlife, 56 Cal.App.4th at 1527–28 (upholding non-disclosure obligations while striking non-compete provisions); Altavion, 226 Cal.App.4th at 52 (distinguishing between contractual non-disclosure obligations and non-compete restraints); Barker v. Insight Global, LLC (2022) 75 Cal.App.5th 442, 458 (reaffirming that California law permits enforcement of trade secret protections without running afoul of § 16600).

Moreover, the CUTSA itself provides for injunctive relief against actual or threatened misappropriation of trade secrets, independent of any contractual obligation. Cal. Civ. Code § 3426.2(a) ("Actual or threatened misappropriation may be enjoined."). The PIIAA supplements, but does not create, Lumos's right to injunctive protection of its trade secrets. Even if the PIIAA did not exist — which it does — Lumos would be entitled to seek injunctive relief under the CUTSA to prevent the misappropriation of its trade secrets. The PIIAA simply provides an additional, contractual basis for the same relief.

Defendants' attempt to reframe the PIIAA as an unenforceable non-compete agreement is a transparent effort to avoid the consequences of their own contractual obligations. It should be rejected.

C. The Requested Injunction Is Not Overbroad

Defendants' third argument — that the proposed injunction is overbroad and would effectively shut down NovaSpark's business — reflects a fundamental misunderstanding of the scope of the proposed relief. It also amounts to an implicit admission: if NovaSpark cannot operate without using Lumos's trade secrets, that fact underscores the very misappropriation that Lumos seeks to enjoin.

1. The Injunction Is Narrowly Tailored to the Five Identified Categories of Trade Secrets. The proposed preliminary injunction is limited to the five specific categories of trade secrets identified in the Complaint and in the supporting Declarations of Priya Chandrasekaran and Rachel Fong. It does not impose a blanket prohibition on NovaSpark's operations, and it does not restrain Defendants from lawful competitive activity.

Specifically, the proposed injunction would require Defendants to:

(a) Cease all use, reproduction, distribution, and disclosure of the five identified categories of Lumos trade secrets;

(b) Return to Lumos or, at Lumos's election, certify the permanent destruction of all copies of Lumos proprietary information in Defendants' possession, custody, or control;

(d) Refrain from soliciting Lumos employees in accordance with the PIIAA's non-solicitation provisions.

The proposed injunction does not prohibit NovaSpark from operating, hiring employees, raising additional capital, or developing products through lawful means. It does not prohibit the individual Defendants from working in the AI or financial technology industry, from using their general skills and knowledge, or from competing with Lumos in any lawful manner. It prohibits only the use of Lumos's specific proprietary materials.

This limitation is critical, and it exposes the logical fallacy at the heart of Defendants' overbreadth argument. If, as Defendants claim, NovaSpark's product was independently developed without reliance on Lumos trade secrets, then the injunction imposes no burden whatsoever on NovaSpark's operations. NovaSpark would simply continue to operate using its purportedly independent technology, unaffected by the injunction. The fact that Defendants argue the injunction would effectively shut down NovaSpark's business is a tacit concession that NovaSpark's product is, in fact, built upon Lumos's trade secrets. Defendants cannot have it both ways.

2. The Preservation and Non-Destruction Obligations Are Reasonable and Necessary. Defendants also object to the preservation and non-destruction requirements contained in the TRO and proposed preliminary injunction. These objections are meritless.

Preservation obligations are standard and routine in trade secret litigation. They serve the essential purpose of ensuring that evidence — including evidence of both misappropriation and any purported independent development — is available for discovery and, if necessary, for trial. The Court already found these obligations appropriate when it granted the TRO on January 23, 2023, and Defendants have not identified any new facts or circumstances that would warrant revisiting that determination.

The preservation obligations are particularly critical here given the nature of the evidence at issue. The materials exfiltrated by Defendants are digital files that can be deleted, overwritten, or concealed with minimal effort. Absent a preservation order, there is a substantial risk that key evidence will be destroyed — either deliberately or through the routine operation of automated systems. The preservation requirements imposed by the TRO and sought in the proposed preliminary injunction are a reasonable and necessary safeguard against this risk.

To the extent Defendants complain that the preservation requirements are burdensome, the burden is modest: Defendants need only refrain from destroying or altering electronic evidence. This is a standard obligation that every litigant bears once litigation has commenced, and compliance with the order should require no more than basic diligence.

3. A Forensic Examination Can Protect Both Parties' Interests. In a further demonstration of the narrowly tailored nature of Lumos's approach, Lumos has expressed its willingness to stipulate to a neutral forensic examination of NovaSpark's systems and the individual Defendants' personal devices and accounts. Such an examination would be conducted by an agreed-upon independent forensic examiner — or, if the parties cannot agree, an examiner appointed by the Court — for the purpose of determining the extent to which Lumos materials are present on Defendants' systems.

A neutral forensic examination serves both parties' interests. For Lumos, it provides the objective, verifiable evidence necessary to assess the full scope of the misappropriation. For Defendants, it provides an opportunity to demonstrate — if they can — that their systems do not contain Lumos proprietary materials and that their product was, as they claim, independently developed. A forensic examination would also be conducted under appropriate protocols, including a protective order, to ensure that Defendants' own legitimate proprietary information is not disclosed to Lumos.

Lumos's willingness to pursue this avenue demonstrates that the relief it seeks is focused, proportionate, and designed to resolve the factual disputes at the heart of this case. It is the opposite of the overbroad, punitive approach that Defendants ascribe to Lumos in their Opposition.

D. Lumos Satisfies All Requirements for Preliminary Injunctive Relief

Under California law, a preliminary injunction may be granted where the moving party demonstrates (1) a likelihood of success on the merits, (2) irreparable harm in the absence of injunctive relief, (3) that the balance of hardships tips in the moving party's favor, and (4) that the public interest supports the granting of relief. See IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69–70; ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1016. Lumos satisfies each of these requirements, and Defendants' Opposition does not establish otherwise.

1. Likelihood of Success on the Merits. As discussed at length in Section III.A above, the evidence of exfiltration by all three individual Defendants, the near-immediate founding of a directly competing company, and the breach of the PIIAA obligations establish a strong likelihood of success on all five causes of action asserted in the Complaint:

(1) Misappropriation of Trade Secrets under the CUTSA (Cal. Civ. Code §§ 3426–3426.11). Lumos has demonstrated that it possesses protectable trade secrets, that Defendants acquired those trade secrets through improper means (exfiltration), and that Defendants have used or disclosed — or threaten to use or disclose — those trade secrets in connection with NovaSpark's competing business. See Cobalt Ridge Health IT, 29 Cal.4th at 228; ReadyLink, 126 Cal.App.4th at 1017.

(2) Breach of Contract (PIIAA). Each individual Defendant executed a PIIAA containing express confidentiality, non-disclosure, non-use, and return-of-materials obligations. Each Defendant breached these obligations by exfiltrating Lumos proprietary information, failing to return company materials upon termination, and using Lumos trade secrets in connection with NovaSpark's business. NovaSpark is liable for these breaches as the entity that induced, facilitated, and benefited from the individual Defendants' breaches.

(3) Breach of Duty of Loyalty. Each individual Defendant owed a duty of loyalty to Lumos during his or her employment. Anand's transfer of materials to his personal account and his incorporation of NovaSpark while still subject to his duties of loyalty, and Mallick's and Yun's exfiltration of materials while still employed at Lumos, constitute clear breaches of that duty.

(4) Unfair Business Practices (Cal. Bus. & Prof. Code § 17200). NovaSpark's use of misappropriated trade secrets to compete with Lumos constitutes an unfair, unlawful, and fraudulent business practice within the meaning of Section 17200, which provides a broad, flexible remedy for competitive misconduct.

(5) Conversion. Defendants' unauthorized taking and retention of Lumos's proprietary materials — including digital files, codebases, and documents — constitutes conversion of Lumos's property.

The evidence supporting each of these claims is substantial, and Defendants have offered no evidence — only unsupported argument — in response. The likelihood-of-success requirement is amply satisfied.

2. Irreparable Harm. Trade secret misappropriation, by its very nature, causes irreparable harm. Once a trade secret is disclosed or used by a competitor, the competitive advantage derived from that trade secret is diminished or destroyed, and that loss cannot be fully restored by a subsequent award of monetary damages. See Ashford Group (2002) 101 Cal.App.4th 1443, 1449 ("Trade secret misappropriation causes irreparable injury because a trade secret, once lost, is lost forever."); DVD Copy Control Association, Inc. v. Bunner (2003) 31 Cal.4th 864, 881 (recognizing the inherently irreparable nature of trade secret disclosure); Brescia v. Angelin (2009) 172 Cal.App.4th 133, 147 (same); Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1261 (affirming preliminary injunction based on finding of irreparable harm from trade secret misappropriation).

The irreparable harm to Lumos in this case is concrete and immediate. Lumos's competitive position in the institutional financial analytics market — with 2022 annual recurring revenue of approximately $67 million, a growing customer base, and a product roadmap extending through 2025 — is directly threatened by NovaSpark's use of the very proprietary technology that underlies LumosEdge. NovaSpark is targeting the same customers, offering the same category of product, and competing for the same market share. Every day that NovaSpark operates using Lumos's trade secrets, the harm to Lumos compounds.

The threat to Lumos's product roadmap is particularly acute. The confidential LumosEdge 3.0 product roadmap, which Anand forwarded to his personal email address on September 28, 2022, sets forth Lumos's strategic product direction for 2023–2025, including planned features, technical specifications, and market-positioning strategies. If exploited by NovaSpark, this roadmap would allow NovaSpark to anticipate Lumos's product releases, preemptively develop competing features, and systematically undermine Lumos's strategic positioning. The competitive harm from such exploitation cannot be undone after the fact.

Monetary damages alone cannot adequately compensate Lumos for the harm caused by the ongoing misappropriation. The loss of competitive advantage, the erosion of customer relationships, the degradation of market position, and the destruction of the value of the trade secrets themselves are harms that are, by definition, incapable of precise quantification and cannot be made whole by a damages award at trial. See Gemini Aluminum, 95 Cal.App.4th at 1261–62; O'Grady v. Superior Court (2006) 139 Cal.App.4th 1423, 1457; Pooley, Trade Secrets § 7.04[3] (Law Journal Press 2022). The irreparable harm requirement is satisfied.

3. Balance of Hardships Favors Lumos. The balance of hardships tips decisively in Lumos's favor. On one side of the scale, Lumos faces the potential destruction of trade secrets that represent years of development effort, the investment of tens of millions of dollars, and the core of its commercial value proposition. These trade secrets are the foundation of a business with $67 million in annual recurring revenue, approximately 340 employees, and $185 million in total venture capital investment. If NovaSpark is permitted to continue using Lumos's proprietary technology, the competitive advantage conferred by that technology will be permanently diminished, and Lumos's business, employees, and investors will suffer commensurately.

On the other side of the scale, the hardship to Defendants from being required to cease using Lumos's trade secrets is entirely self-inflicted. The individual Defendants chose to exfiltrate Lumos's proprietary materials in violation of their PIIAA obligations. They chose to form and join a directly competing company. They chose to build NovaSpark's product using — as the evidence strongly suggests — Lumos's specific, identified trade secrets. Any hardship that results from an order requiring them to stop using those trade secrets is a consequence of their own unlawful conduct, not of Lumos's request for injunctive relief. See Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1669 (holding that hardship resulting from a party's own wrongful conduct does not weigh against injunctive relief).

NovaSpark is free to develop competing products using only independently created or publicly available technology. If NovaSpark's product was truly independently developed, as Defendants claim, then the injunction imposes no hardship at all. If, on the other hand, NovaSpark cannot operate without Lumos's trade secrets, then the balance of hardships weighs even more strongly in Lumos's favor, because it confirms that NovaSpark's business is built upon misappropriated technology.

Defendants' reliance on NovaSpark's $12 million in seed funding from Blackpine Capital Partners LP as a basis for arguing hardship is misplaced. The fact that NovaSpark has raised capital does not entitle it to build its business on a foundation of stolen trade secrets. To the contrary, the magnitude of NovaSpark's fundraise amplifies the urgency of injunctive relief: the longer NovaSpark is permitted to operate using Lumos's technology, the more deeply entrenched the misappropriation becomes, and the more difficult it will be to unwind the competitive harm.

The balance of hardships favors Lumos.

4. Public Interest. Finally, the public interest supports the granting of injunctive relief. California's public policy strongly favors the protection of trade secrets, the enforcement of confidentiality agreements, and the deterrence of employee misappropriation. See In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 313; Sargent Fletcher, 110 Cal.App.4th at 1670–71.

These principles are not abstract. They are essential to the functioning of California's technology economy. Companies invest billions of dollars annually in research and development, the fruits of which often take the form of trade secrets rather than patents. The willingness of companies to invest in innovation — and of investors to fund that investment — depends in significant part on confidence that proprietary technology will be protected from misappropriation. If employees could freely exfiltrate their employer's most valuable proprietary materials and use them to launch competing ventures, the incentive to invest in innovation would be dramatically undermined.

Granting the preliminary injunction in this case promotes respect for intellectual property rights and contractual obligations, deters future acts of misappropriation, and reinforces the legal framework that enables California's technology sector to flourish. The public interest weighs in favor of granting the requested relief.

IV. CONCLUSION

For the foregoing reasons, Defendants' Opposition fails to demonstrate any basis for denying the preliminary injunction. The evidence overwhelmingly supports Lumos's claims, and each of Defendants' three principal arguments — independent development, limited scope of confidentiality obligations, and overbreadth — is unsupported by evidence and unpersuasive as a matter of law.

The documented timeline of exfiltration, the coordinated departures, the near-immediate formation of a directly competing startup, the absence of any evidence of independent development, the plain language of the PIIAA, and the narrowly tailored scope of the proposed injunction all compel the conclusion that a preliminary injunction should issue.

Lumos Analytics Inc. respectfully requests that the Court grant the motion for preliminary injunction on all five categories of trade secrets, and enter an order:

(1) Enjoining Defendants NovaSpark Technologies Inc., Rajiv Anand, Serena Mallick, and Derek Yun from possessing, using, copying, disclosing, distributing, or otherwise exploiting any Lumos proprietary information and trade secrets, including but not limited to the five categories of trade secrets identified in the Complaint;

(2) Requiring Defendants to return to Lumos, or at Lumos's election to certify the permanent destruction of, all copies of Lumos proprietary information in Defendants' possession, custody, or control;

(3) Requiring Defendants to preserve all electronic devices, storage media, and cloud accounts containing or potentially containing Lumos proprietary information, pending forensic examination;

(4) Ordering Defendants to submit to a neutral forensic examination of their systems and devices by an independent forensic examiner, subject to an appropriate protective order; and

(5) Granting such further relief as the Court deems just and proper.

Respectfully submitted,

DATED: February 7, 2023

CALDERWOOD & HARKNESS LLP

By: ________

Wendy Schultz (SBN 302156) Lead Associate

Omar Siddiqui (SBN 318724) Working Associate

Marcus Delgado (SBN 198472) Responsible Partner

Catherine Bloom (SBN 214839) Billing Partner

555 California Street, 40th Floor San Francisco, California 94104 Telephone: (415) 555-7200 Facsimile: (415) 555-7201

Attorneys for Plaintiff Lumos Analytics Inc.

PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF SAN FRANCISCO

I, the undersigned, declare as follows:

I am a citizen of the United States and am employed in the County of San Francisco, State of California. I am over the age of eighteen (18) years and am not a party to the within action. My business address is Calderwood & Harkness LLP, 555 California Street, 40th Floor, San Francisco, California 94104.

On February 7, 2023, I served the following document:

PLAINTIFF LUMOS ANALYTICS INC.'S REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION

on the following parties by the methods indicated below:

Patricia Whitfield, Esq. Samuel Gerber, Esq. WHITFIELD, RAINES & GERBER LLP 235 Montgomery Street, Suite 1800 San Francisco, California 94104 Telephone: (415) 555-3400

Email: pwhitfield@wrglaw.com; sgerber@wrglaw.com

Attorneys for Defendants NovaSpark Technologies Inc., Rajiv Anand, Serena Mallick, and Derek Yun

BY ELECTRONIC SERVICE: I caused a true and correct copy of the above-referenced document to be transmitted electronically to the email addresses set forth above for the attorneys for Defendants, via the Court's electronic filing and service system, on February 7, 2023.

BY PERSONAL DELIVERY: I caused a true and correct copy of the above-referenced document to be delivered by hand to the offices of Whitfield, Raines & Gerber LLP at the address set forth above on February 7, 2023.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on February 7, 2023, in San Francisco, California.

________________________________________

Angela R. Torres Legal Secretary Calderwood & Harkness LLP

Page(s)

Altavion, Inc. v. Strathmore Corporation (2014) 226 Cal.App.4th 26	15, 21
Barker v. Insight Global, LLC (2022) 75 Cal.App.5th 442	22
Brescia v. Angelin (2009) 172 Cal.App.4th 133	29
Cobalt Ridge Health IT Design Systems, Inc. v. Avant! Corp. (2002) 29 Cal.4th 215	10, 15, 28
DVD Copy Control Association, Inc. v. Bunner (2003) 31 Cal.4th 864	21, 30
Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937	22
Flir Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270	17, 18, 20
Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249	29, 31
In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292	33
IT Corp. v. County of Imperial (1983) 35 Cal.3d 63	27
Beck Morriven CPAs LLP v. Cocchi (2012) 51 Cal.App.5th 1094	15
Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514	19, 20, 22
O'Grady v. Superior Court (2006) 139 Cal.App.4th 1423	30
ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006	27, 28
San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528	15
Halcyon Enterprises v. Bramwell Partners LLC (2010) 184 Cal.App.4th 210	19
Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658	31, 33
Ashford Group (2002) 101 Cal.App.4th 1443	10, 29

Page(s)

California Civil Code § 3426	10, 15, 27
California Civil Code § 3426.1	17, 19
California Civil Code § 3426.2	22, 23, 27
California Civil Code § 3426.4	30
California Civil Code § 3426.11	15, 27
California Business & Professions Code § 17200	28
California Business & Professions Code § 16600	22

Page(s)

4 Milgrim on Trade Secrets (Matthew Bender 2022) § 15.01	19
Pooley, Trade Secrets (Law Journal Press 2022) § 7.04	21, 30

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
LUMOS ANALYTICS INC., a Delaware corporation,
Plaintiff,
v.
NOVASPARK TECHNOLOGIES INC., a Delaware corporation; RAJIV ANAND, an individual; SERENA MALLICK, an individual; and DEREK YUN, an individual,
Defendants.
Case No. 23-CV-004871
PLAINTIFF LUMOS ANALYTICS INC.'S REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION
Hearing Date: February 10, 2023 Time: 9:00 a.m. Department: 1 Judge: Hon. David Rutherford
Date Filed: February 7, 2023
CALDERWOOD & HARKNESS LLP Marcus Delgado (SBN 198472), Responsible Partner Catherine Bloom (SBN 214839), Billing Partner Wendy Schultz (SBN 302156), Lead Associate Omar Siddiqui (SBN 318724), Working Associate 555 California Street, 40th Floor San Francisco, California 94104 Telephone: (415) 555-7200 Facsimile: (415) 555-7201
Email: wschultz@calderwoodharkness.com
Attorneys for Plaintiff Lumos Analytics Inc.
TABLE OF AUTHORITIES
Cases.
Statutes.
Secondary Sources.
PLAINTIFF LUMOS ANALYTICS INC.'S REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION
I. INTRODUCTION
This Reply Memorandum is submitted by Plaintiff Lumos Analytics Inc. ("Lumos" or "Plaintiff") in response to the Opposition to Motion for Preliminary Injunction (the "Opposition") filed by Defendants NovaSpark Technologies Inc. ("NovaSpark"), Rajiv Anand ("Anand"), Serena Mallick ("Mallick"), and Derek Yun ("Yun") (collectively, "Defendants") on February 2, 2023, through their counsel of record, Whitfield, Raines & Gerber LLP, by and through Patricia Whitfield and Samuel Gerber. Having carefully reviewed Defendants' Opposition and the supporting declarations, Lumos respectfully submits that Defendants have failed to overcome the evidence of misappropriation already before this Court and that the preliminary injunction should issue.
Defendants' Opposition raises three principal arguments, each of which fails on the merits and the evidence. First, Defendants contend that NovaSpark's product was independently developed without reliance on any Lumos trade secrets. This claim is flatly contradicted by the documented timeline of exfiltration events, the near-instantaneous founding of NovaSpark within days of Anand's departure, and the complete absence of any documentary evidence or declaration from Defendants that would substantiate a claim of independent development. Second, Defendants argue that the confidentiality obligations in the Proprietary Information and Inventions Assignment Agreement ("PIIAA") executed by each individual Defendant are limited in scope and do not cover the specific materials at issue. This argument ignores the plain language of the PIIAA, which defines "Proprietary Information" in sweeping terms that unambiguously encompass all five categories of trade secrets identified by Lumos. Third, Defendants assert that the requested injunction is overbroad and would effectively shut down NovaSpark's business. This is a red herring. The proposed injunction is narrowly tailored to the five specific categories of identified trade secrets and does not prohibit NovaSpark from operating, hiring employees, raising capital, or developing products through independent and lawful means.
Each of these arguments is meritless and fails to overcome the overwhelming evidence of misappropriation that Lumos has already presented to this Court. That evidence was sufficiently compelling for this Court to grant a Temporary Restraining Order on January 23, 2023, and the record has only grown stronger since that date. Nothing in the Opposition alters the calculus. The documented exfiltration of 3.2 GB of files, the cloning of an entire code repository, the downloading of 47 proprietary Jupyter notebooks, and the transmission of a 37-page confidential product roadmap to personal accounts — all occurring in a coordinated sequence in the days surrounding each Defendant's departure from Lumos — speak for themselves.
Lumos Analytics Inc. respectfully requests that the Court grant the motion for preliminary injunction on all five categories of trade secrets and enter the proposed order in full.
II. STATEMENT OF RELEVANT FACTS
A. The Proprietary Technology at Issue
Lumos Analytics Inc. is a Delaware-incorporated, California-headquartered software-as-a-service ("SaaS") company that specializes in AI-driven financial analytics for institutional investors. Founded in approximately 2017, Lumos has grown to approximately 340 employees and has built a significant presence in the institutional financial analytics market. In 2022, Lumos achieved annual recurring revenue ("ARR") of approximately $67 million. Over the course of its existence, Lumos has raised approximately $185 million in venture capital financing through its Series D round, including a $40 million Series B round led by Ridgeline Ventures in 2019 and a $72 million Series D round led by Northstar Growth Equity in June 2022. These investments have been deployed, in substantial measure, to build the proprietary technology that Defendants have now misappropriated.
At the core of Lumos's commercial offering is LumosEdge, its flagship AI-driven analytics platform. As detailed in the Declarations of Priya Chandrasekaran (CEO) and Rachel Fong (VP of Engineering) submitted in support of Lumos's original motion, the technology underlying LumosEdge represents years of development effort, the investment of tens of millions of dollars, and the accumulated expertise of a world-class engineering team. Lumos seeks to protect five specific categories of trade secrets, each of which constitutes core proprietary technology:
(1) LumosEdge Ensemble ML Model Architecture. This encompasses Lumos's proprietary neural-network topology and hyperparameter configurations, which represent the product of extensive research, experimentation, and iterative refinement. The specific architecture — including the arrangement of ensemble layers, the selection and tuning of hyperparameters, and the novel integration of multiple model types — is not publicly known and provides Lumos with a significant competitive advantage in the accuracy and speed of its financial signal generation.
(2) Proprietary Feature-Engineering Libraries. Lumos has developed 2,847 individual engineered features for financial signal generation. These features are the product of years of domain expertise in quantitative finance, combined with advanced machine learning techniques. Each feature was carefully designed, tested, and validated against historical data, and the collection as a whole represents a proprietary asset of extraordinary value.
(3) DataStream ETL Pipeline Codebase and Data-Schema Definitions. Lumos's DataStream system is a proprietary extract-transform-load ("ETL") pipeline codebase that manages the ingestion, normalization, and transformation of data from 43 alternative-data vendors. The codebase includes proprietary data-schema definitions, error-handling routines, and vendor-specific integration logic that were developed over multiple years at significant cost.
(4) Curated and Labeled Training Dataset. Lumos maintains a curated and labeled training dataset of approximately 14.6 terabytes of historical financial and alternative data. This dataset was assembled, cleaned, labeled, and validated through a painstaking process that required significant investment of both capital and engineering resources. The dataset is not publicly available, and its curation and labeling represent independent and substantial trade secret value.
(5) Confidential Product Roadmap Documents (2023–2025). These documents include the unreleased LumosEdge 3.0 specifications, contained in a 37-page PDF that details Lumos's strategic product direction, planned feature releases, anticipated market positioning, and competitive strategy for the 2023–2025 timeframe. Disclosure of this roadmap would enable a competitor to anticipate and undermine Lumos's product strategy.
Each of these categories is individually protectable as a trade secret under the California Uniform Trade Secrets Act ("CUTSA"), Cal. Civ. Code §§ 3426–3426.11, and collectively they constitute the technological foundation of Lumos's business.
B. The Defendants' Coordinated Departures and Exfiltration
The evidence before this Court establishes that the three individual Defendants — Anand, Mallick, and Yun — engaged in a coordinated pattern of exfiltration and departure from Lumos, followed by the near-immediate creation of and employment at NovaSpark, a directly competing company. The timeline is as follows:
September 26, 2022: Rajiv Anand, who served as a Senior Machine Learning Engineer at Lumos and was a key architect of the LumosEdge signal-generation engine, transferred approximately 3.2 gigabytes of files to a personal Hollowell Health IT account. As detailed in the Declaration of Rachel Fong and the supporting forensic analysis report prepared by CyberTrace Forensics LLC, these files included model architecture specifications, hyperparameter configuration files, and related documentation for the LumosEdge ensemble ML model. (Fong Decl. ¶¶ 14–18; CyberTrace Report at 7–12.)
September 28, 2022: Anand forwarded the confidential 37-page LumosEdge 3.0 Product Roadmap PDF to his personal email address (r.anand.personal@vaultmail.com). This document was classified as "Lumos Confidential — Restricted Distribution" and was accessible only to a limited group of senior employees and executives. (Chandrasekaran Decl. ¶ 22; Fong Decl. ¶ 19.)
September 30, 2022: Anand submitted his resignation from Lumos, effective immediately, without providing the customary two-week notice period. He did not return any company-issued devices or certify the deletion of Lumos materials from personal accounts or storage media as required by his PIIAA. (Chandrasekaran Decl. ¶ 24.)
October 3, 2022: NovaSpark Technologies Inc. was incorporated in the State of Delaware, with Rajiv Anand listed as the sole incorporator and registered agent. This incorporation occurred a mere three days after Anand's resignation from Lumos. (Compl., Ex. G [Delaware Secretary of State filing].)
October 10, 2022: Serena Mallick, who served as a Senior Data Engineer at Lumos and was the lead developer of the proprietary DataStream ETL pipeline system, cloned the entire DataStream ETL pipeline repository — approximately 780 megabytes of code, schema definitions, and documentation — to a personal external USB drive bearing the serial number WD-4837291. This event was captured in Lumos's system access logs and was subsequently confirmed by the CyberTrace forensic analysis. (Fong Decl. ¶¶ 25–28; CyberTrace Report at 13–16.)
October 14, 2022: Mallick resigned from Lumos. Like Anand, she did not return company materials or certify the deletion of Lumos proprietary information from personal devices or storage media. (Chandrasekaran Decl. ¶ 26.)
October 17, 2022: Mallick commenced employment at NovaSpark Technologies Inc. as Vice President of Engineering — three days after her departure from Lumos. (Compl., Ex. H [Mallick Westmark Health IT profile screenshot, archived October 20, 2022].)
October 18, 2022: Derek Yun, who served as a Machine Learning Engineer at Lumos with direct access to proprietary training datasets, model hyperparameters, and feature-engineering libraries, downloaded 47 proprietary Jupyter notebooks containing feature-engineering code and model-training scripts to a personal Larkspur Technologies account. These notebooks contained implementations of numerous proprietary engineered features and training procedures. (Fong Decl. ¶¶ 30–33; CyberTrace Report at 17–20.)
October 21, 2022: Yun resigned from Lumos. He likewise did not return company materials or certify deletion of proprietary information. (Chandrasekaran Decl. ¶ 28.)
October 24, 2022: Yun commenced employment at NovaSpark as a founding engineer. (Compl., Ex. I [Yun Westmark Health IT profile screenshot, archived October 28, 2022].)
November 15, 2022: NovaSpark closed a $12 million seed financing round from Blackpine Capital Partners LP. The speed with which NovaSpark was able to raise significant venture capital — approximately six weeks after its incorporation — further supports the inference that NovaSpark presented investors with a product or prototype that was substantially derived from Lumos's proprietary technology, rather than developed from scratch.
December 12, 2022: Lumos's IT security team, during a routine audit of data-access logs, identified the anomalous data-exfiltration activity described above. This discovery prompted the internal investigation that led to the filing of this action.
The sequence of events is striking in its coordination. Each individual Defendant exfiltrated specific, targeted categories of Lumos proprietary materials in the days immediately preceding his or her departure. Taken together, the materials removed by Anand, Mallick, and Yun constitute the complete technological foundation necessary to replicate the core functionality of LumosEdge — the model architecture and hyperparameters (Anand), the data-ingestion pipeline (Mallick), and the feature-engineering code and training scripts (Yun) — plus the strategic roadmap for future development (Anand). This was not a coincidence.
C. The PIIAA Obligations
Upon commencing employment at Lumos, each of the three individual Defendants executed Lumos's standard Proprietary Information and Inventions Assignment Agreement. The PIIAAs are substantially identical in their material terms and contain the following key provisions:
(a) Assignment of Inventions. Each Defendant agreed to assign to Lumos all right, title, and interest in and to any inventions, developments, improvements, or discoveries made during the course of employment that relate to Lumos's business or were made using Lumos resources. (PIIAA § 3.)
(b) Confidentiality and Non-Disclosure. Each Defendant agreed to hold in confidence and not to use or disclose any Proprietary Information of Lumos during and after employment. The non-disclosure obligation survives termination of employment for a period of three years with respect to confidential information, and indefinitely with respect to trade secrets. (PIIAA § 2.)
(c) Non-Solicitation of Employees. Each Defendant agreed not to solicit, recruit, or hire any Lumos employee for a period of twelve months following separation from Lumos. (PIIAA § 5.)
(d) Restrictive Covenant — Non-Use and Non-Disclosure of Trade Secrets. Each Defendant agreed not to use or disclose Lumos trade secrets at any time, without temporal limitation. This covenant is independent of and in addition to the general confidentiality obligation and expressly survives termination of employment indefinitely. (PIIAA § 2(c).)
The PIIAA further requires each employee, upon termination of employment for any reason, to immediately return to Lumos all company materials, documents, data, equipment, and other property, and to certify in writing that all copies of Lumos proprietary information stored on personal devices or accounts have been permanently deleted. (PIIAA § 6.)
It is undisputed that none of the three individual Defendants returned company materials or provided the required certification of deletion upon their respective departures from Lumos. (Chandrasekaran Decl. ¶¶ 24, 26, 28.) This failure, standing alone, constitutes a breach of the PIIAA.
D. The Temporary Restraining Order
On January 20, 2023, Lumos filed the Complaint and its Ex Parte Application for Temporary Restraining Order. On January 23, 2023, after reviewing the moving papers and supporting declarations and hearing oral argument from both sides, this Court granted the Temporary Restraining Order. The TRO ordered Defendants to:
(a) Immediately cease all use of Lumos proprietary information and trade secrets, including but not limited to the five categories of trade secrets identified in the Complaint;
(b) Preserve all electronic devices, storage media, and cloud accounts containing or potentially containing Lumos proprietary information, and refrain from wiping, reformatting, or otherwise altering such devices and media; and
(c) Refrain from destroying, deleting, altering, or concealing any documents, files, communications, or other materials relevant to Lumos's claims.
In granting the TRO, the Court found that Lumos had demonstrated a likelihood of success on the merits and that the risk of irreparable harm warranted immediate relief. (TRO Order at 3–4.) Nothing in Defendants' Opposition undermines those findings.
III. ARGUMENT
A. Defendants' "Independent Development" Defense Is Contradicted by the Evidence and Is Premature
The centerpiece of Defendants' Opposition is the assertion that NovaSpark's product was independently developed without reliance on any Lumos trade secrets. This defense collapses under the weight of the evidence already before the Court.
1. The Timeline Itself Refutes Independent Development. The undisputed chronology of events renders the independent-development defense implausible on its face. NovaSpark Technologies Inc. was incorporated in Delaware on October 3, 2022 — a mere three days after Rajiv Anand's resignation from Lumos and while both Serena Mallick and Derek Yun were still employed at Lumos with ongoing, unfettered access to its most sensitive proprietary systems. The speed of this incorporation alone strongly suggests that Anand had been planning NovaSpark's formation while still employed at Lumos and while still subject to his duties of loyalty and his PIIAA obligations.
The nature of NovaSpark's business confirms this inference. NovaSpark purports to offer AI-driven alternative-data analytics for hedge funds and proprietary trading desks — a market that directly and substantially overlaps with Lumos's core commercial offering. NovaSpark did not enter an adjacent or tangentially related market; it entered the precise market that Lumos serves, targeting the same customer base with a functionally equivalent product. Defendants offer no explanation for this remarkable coincidence.
More critically, Defendants offer no credible explanation for how NovaSpark could have developed a competing product in such a compressed timeframe without reliance on Lumos's technology. The LumosEdge platform represents years of development effort by a team of dozens of engineers, data scientists, and domain experts, supported by the investment of tens of millions of dollars in venture capital. The notion that three individuals — however talented — could independently replicate this technology from scratch in a matter of weeks strains credulity beyond the breaking point. See Cobalt Ridge Health IT Design Systems, Inc. v. Avant! Corp. (2002) 29 Cal.4th 215, 228 (noting the implausibility of independent development where the timing of the defendant's product release was inconsistent with development from scratch); Ashford Group (2002) 101 Cal.App.4th 1443, 1457 (observing that the speed with which a former employee developed a competing product was circumstantial evidence of misappropriation).
Each of the three individual Defendants held positions at Lumos that gave them direct access to the precise categories of trade secrets at issue. Anand was a key architect of the LumosEdge signal-generation engine, with access to Lumos's most sensitive proprietary codebases, model architectures, hyperparameter configurations, and training data. Mallick was the lead developer responsible for building and maintaining the proprietary DataStream ETL pipelines, which manage the ingestion, transformation, and integration of data from 43 alternative-data vendors. Yun, as a Machine Learning Engineer, had direct access to proprietary training datasets, model hyperparameters, and feature-engineering libraries containing 2,847 individually engineered features. Together, these three individuals possessed the collective knowledge and — as the exfiltration evidence demonstrates — the actual possession of materials necessary to replicate the core functionality of LumosEdge.
Defendants' Opposition does not include a single declaration from any individual Defendant, from any NovaSpark engineer, or from any other witness describing the purported independent-development process. There are no design documents, no commit histories, no version-control logs, no whiteboard sketches, no meeting notes — nothing that would corroborate the claim that NovaSpark's product was developed through independent effort. This silence speaks volumes. If NovaSpark had genuinely developed its product independently, Defendants could and should have submitted evidence documenting that process. Their failure to do so supports a strong inference that no such evidence exists. See Cobalt Ridge Health IT, 29 Cal.4th at 229 (noting that the absence of documentation supporting an independent-development defense weighs against the defendant).
2. The Exfiltration Evidence Directly Undermines the Independent-Development Claim. Beyond the circumstantial evidence provided by the timeline and the defendants' roles, the direct evidence of exfiltration shatters any pretense of independent development. The evidence demonstrates that each individual Defendant took specific, targeted Lumos proprietary materials in the days immediately surrounding his or her departure from Lumos. This was not accidental, inadvertent, or incidental — it was deliberate and systematic.
Rajiv Anand. On September 26, 2022 — four days before his resignation — Anand transferred approximately 3.2 gigabytes of files to a personal Hollowell Health IT account. The forensic analysis conducted by CyberTrace Forensics LLC confirms that these files included model architecture specifications and hyperparameter configuration files for the LumosEdge ensemble ML model. (CyberTrace Report at 7–12.) Two days later, on September 28, 2022, Anand forwarded the confidential 37-page LumosEdge 3.0 Product Roadmap PDF — a document classified as "Lumos Confidential — Restricted Distribution" — to his personal email address at r.anand.personal@vaultmail.com. (CyberTrace Report at 12.) There is no legitimate business reason for an employee to transfer model architecture files and a confidential product roadmap to a personal account two to four days before resigning.
Serena Mallick. On October 10, 2022 — four days before her resignation and one week after NovaSpark's incorporation — Mallick cloned the entire DataStream ETL pipeline repository, approximately 780 megabytes of code and documentation, to a personal external USB drive bearing serial number WD-4837291. (CyberTrace Report at 13–16.) This was not the transfer of a few files or a backup of personal materials; it was the wholesale duplication of an entire proprietary codebase that Mallick had developed as part of her employment at Lumos and that was assigned to Lumos under the PIIAA.
Derek Yun. On October 18, 2022 — three days before his resignation — Yun downloaded 47 proprietary Jupyter notebooks to a personal Larkspur Technologies account. These notebooks contained feature-engineering code and model-training scripts, including implementations of numerous proprietary engineered features from Lumos's library of 2,847 features. (CyberTrace Report at 17–20.)
The significance of these exfiltration events cannot be overstated. Collectively, the materials taken by Anand, Mallick, and Yun encompass the core building blocks of the very product that NovaSpark claims to have independently developed: the model architecture and hyperparameters (Anand), the data-ingestion pipeline (Mallick), the feature-engineering code and training scripts (Yun), and the strategic product roadmap (Anand). It beggars belief that Defendants would take these materials if they intended to develop their product independently.
Defendants' Opposition attempts to minimize the exfiltration evidence by characterizing the transfers as routine or inadvertent. This characterization is unsupported by any evidence and is contradicted by the record. The transfers were targeted — each Defendant took precisely the category of materials corresponding to his or her area of expertise and responsibility at Lumos. The transfers occurred in a narrow temporal window surrounding each Defendant's departure. And the materials were transferred to personal accounts and devices — not to other Lumos accounts or systems. These are not the hallmarks of routine activity or inadvertent transfers. They are the hallmarks of a deliberate and coordinated plan to misappropriate Lumos's most valuable proprietary technology.
Defendants' bare assertion of independent development, unsupported by any declaration or documentary evidence, is insufficient to overcome this record. At the preliminary injunction stage, the Court is not required to accept Defendants' unsworn characterizations at face value. See San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1545 (a party's unsupported assertions do not create a factual dispute sufficient to defeat a preliminary injunction motion where the moving party has submitted substantial evidence).
3. At the Preliminary Injunction Stage, Lumos Need Only Show Likelihood of Success. Defendants' Opposition appears to argue that Lumos must conclusively prove misappropriation at this stage of the proceedings. That is not the law. The question before the Court on a motion for preliminary injunction is not whether Lumos will ultimately prevail on the merits at trial, but whether Lumos has demonstrated a likelihood of prevailing on the merits. See IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69–70; ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1016.
The standard requires a showing that, on the evidence presented, the moving party is more likely than not to succeed at trial. See Altavion, Inc. v. Strathmore Corporation (2014) 226 Cal.App.4th 26, 47. It does not require the moving party to negate every possible defense, particularly where the defense is unsupported by evidence. The independent-development defense, which Defendants assert in their Opposition brief but do not support with any declaration, documentary evidence, or expert analysis, does not diminish Lumos's showing of likely success.
The combination of (a) documented exfiltration of specific, identified trade secret materials by all three individual Defendants in the days surrounding their departures; (b) the near-immediate founding of and employment at a directly competing startup targeting the same market and customer base; (c) the absence of any credible explanation for NovaSpark's ability to develop a competing product in a matter of weeks; and (d) the failure of any Defendant to submit evidence supporting the independent-development claim compels the conclusion that Lumos is likely to succeed on its CUTSA claims. See Cobalt Ridge Health IT, 29 Cal.4th at 229; Beck Morriven CPAs LLP v. Cocchi (2012) 51 Cal.App.5th 1094, 1099–1100.
B. The Scope of the PIIAA Confidentiality Obligations Clearly Encompasses the Materials at Issue
Defendants' second principal argument is that the confidentiality obligations in their respective PIIAAs do not cover the specific materials at issue. This argument is foreclosed by the plain language of the agreement.
1. The PIIAA's Definition of Proprietary Information Is Broad and Unambiguous. The PIIAA executed by each individual Defendant defines "Proprietary Information" in broad and unambiguous terms. Section 1 of the PIIAA provides:
"Proprietary Information" means all information relating to the Company's business, technology, products, and services, whether oral, written, graphic, or machine-readable, including without limitation: source code, object code, algorithms, data structures, databases, data sets, data models, software architectures, system designs, techniques, methodologies, processes, formulas, inventions, discoveries, improvements, trade secrets, know-how, research, experimental work, development, engineering, product plans, product roadmaps, marketing plans, customer lists, financial information, projections, and any other information that has or could have commercial value or other utility in the business in which the Company is engaged.
This definition is expansive by design, as courts have recognized is appropriate for technology companies whose competitive advantage depends on the protection of proprietary information. See Flir Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1280–81 (upholding a broadly defined confidentiality provision in an employment agreement and holding that "the language of such agreements is to be given its ordinary and popular meaning").
Each of the five categories of trade secrets identified by Lumos falls squarely within this definition:
• The LumosEdge ensemble ML model architecture is encompassed by the PIIAA's references to "algorithms," "software architectures," "system designs," and "techniques."
• The proprietary feature-engineering libraries are encompassed by the PIIAA's references to "source code," "algorithms," "data structures," "techniques," "methodologies," and "processes."
• The DataStream ETL pipeline codebase and data-schema definitions are encompassed by the PIIAA's references to "source code," "data models," "software architectures," "system designs," and "engineering."
• The curated and labeled training dataset is encompassed by the PIIAA's references to "databases," "data sets," and "data models."
• The confidential product roadmap documents are encompassed by the PIIAA's references to "product plans," "product roadmaps," and "any other information that has or could have commercial value."
There is no ambiguity. Each category of trade secret at issue is described, in some cases verbatim, in the PIIAA's definition of Proprietary Information. Defendants' argument to the contrary is untenable.
The PIIAA's restrictive covenant provisions reinforce this conclusion. Section 2(c) of the PIIAA expressly prohibits the use or disclosure of Lumos trade secrets "at any time," without limitation. This obligation survives termination of employment indefinitely for trade secrets and for at least three years post-termination for other categories of confidential information. See Flir Systems, 174 Cal.App.4th at 1282 (enforcing post-employment non-disclosure obligations with respect to trade secrets). Defendants' conduct in exfiltrating and using the identified materials plainly violates these provisions.
2. Defendants Cannot Rely on the "General Knowledge" Exception. To the extent Defendants argue that the materials at issue constitute "general knowledge and skills" that employees are entitled to carry with them when they depart, this argument fails as both a legal and factual matter.
California law recognizes that employees are entitled to use their general skills, knowledge, and experience in subsequent employment. See Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514, 1527. However, this principle has well-defined limits. An employee may take with him or her general expertise and publicly available knowledge, but may not take the employer's specific trade secrets, proprietary implementations, or confidential information. See id. at 1527–28; Halcyon Enterprises v. Bramwell Partners LLC (2010) 184 Cal.App.4th 210, 236–37; 4 Milgrim on Trade Secrets § 15.01[1] (Matthew Bender 2022).
The materials at issue here are emphatically not general skills or publicly available techniques. They are specific, proprietary implementations that are unique to Lumos and that derive independent economic value from not being generally known. Consider what is at stake:
• A particular neural-network topology with specific hyperparameter configurations that were developed through extensive experimentation and iterative refinement — not general knowledge of machine learning or neural network design.
• 2,847 specifically engineered features for financial signal generation, each of which was individually designed, tested, and validated — not a general understanding of feature engineering as a concept.
• A particular ETL pipeline codebase covering 43 specific alternative-data vendor integrations, with vendor-specific connection logic, error-handling routines, and data-schema definitions — not a general familiarity with ETL processes.
• 14.6 terabytes of curated, labeled training data, painstakingly assembled, cleaned, and validated over years — not an abstract understanding of what constitutes useful training data.
• A 37-page confidential product roadmap setting forth Lumos's strategic product direction for 2023–2025, including unreleased LumosEdge 3.0 specifications — not a general awareness of industry trends.
These are concrete, documented, particularized trade secrets — not abstract knowledge or general expertise. The distinction between general knowledge and trade secrets is well established in California law, and it is not even a close call in this case. See Morlife, 56 Cal.App.4th at 1528 (distinguishing between "general knowledge" and "specific secret plans or processes of the employer"); Flir Systems, 174 Cal.App.4th at 1283 (holding that specific technical specifications and design parameters were trade secrets, not general knowledge). The "general knowledge" exception is entirely inapplicable to the materials at issue here.
3. California Law Enforces Confidentiality Obligations Even Without Non-Compete Agreements. Defendants' Opposition also suggests — without squarely stating — that the PIIAA's restrictive covenant provisions are akin to an unenforceable non-compete agreement under California Business & Professions Code § 16600. This argument fundamentally mischaracterizes both the nature of the PIIAA's provisions and the relief that Lumos seeks.
Lumos does not seek to prevent Defendants from working in the AI or financial technology industry. Lumos does not seek to prevent Defendants from developing alternative-data analytics products, from serving hedge fund or institutional clients, or from competing with Lumos in any lawful manner. What Lumos seeks — and what the PIIAA prohibits — is the use of Lumos's specific, identified trade secrets to compete unfairly. This is a fundamentally different proposition from a non-compete agreement, and California courts have consistently recognized and enforced this distinction.
California law is clear that non-disclosure and non-use obligations that protect trade secrets are enforceable and are distinguishable from broad non-competition covenants that restrain an individual's right to pursue a livelihood. See Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937, 946 (discussing the scope of § 16600 while recognizing that trade secret protections remain independently enforceable); Morlife, 56 Cal.App.4th at 1527–28 (upholding non-disclosure obligations while striking non-compete provisions); Altavion, 226 Cal.App.4th at 52 (distinguishing between contractual non-disclosure obligations and non-compete restraints); Barker v. Insight Global, LLC (2022) 75 Cal.App.5th 442, 458 (reaffirming that California law permits enforcement of trade secret protections without running afoul of § 16600).
Moreover, the CUTSA itself provides for injunctive relief against actual or threatened misappropriation of trade secrets, independent of any contractual obligation. Cal. Civ. Code § 3426.2(a) ("Actual or threatened misappropriation may be enjoined."). The PIIAA supplements, but does not create, Lumos's right to injunctive protection of its trade secrets. Even if the PIIAA did not exist — which it does — Lumos would be entitled to seek injunctive relief under the CUTSA to prevent the misappropriation of its trade secrets. The PIIAA simply provides an additional, contractual basis for the same relief.
Defendants' attempt to reframe the PIIAA as an unenforceable non-compete agreement is a transparent effort to avoid the consequences of their own contractual obligations. It should be rejected.
C. The Requested Injunction Is Not Overbroad
Defendants' third argument — that the proposed injunction is overbroad and would effectively shut down NovaSpark's business — reflects a fundamental misunderstanding of the scope of the proposed relief. It also amounts to an implicit admission: if NovaSpark cannot operate without using Lumos's trade secrets, that fact underscores the very misappropriation that Lumos seeks to enjoin.
1. The Injunction Is Narrowly Tailored to the Five Identified Categories of Trade Secrets. The proposed preliminary injunction is limited to the five specific categories of trade secrets identified in the Complaint and in the supporting Declarations of Priya Chandrasekaran and Rachel Fong. It does not impose a blanket prohibition on NovaSpark's operations, and it does not restrain Defendants from lawful competitive activity.
Specifically, the proposed injunction would require Defendants to:
(a) Cease all use, reproduction, distribution, and disclosure of the five identified categories of Lumos trade secrets;
(b) Return to Lumos or, at Lumos's election, certify the permanent destruction of all copies of Lumos proprietary information in Defendants' possession, custody, or control;
(c) Preserve all electronic devices, storage media, and cloud accounts for purposes of forensic examination; and
(d) Refrain from soliciting Lumos employees in accordance with the PIIAA's non-solicitation provisions.
The proposed injunction does not prohibit NovaSpark from operating, hiring employees, raising additional capital, or developing products through lawful means. It does not prohibit the individual Defendants from working in the AI or financial technology industry, from using their general skills and knowledge, or from competing with Lumos in any lawful manner. It prohibits only the use of Lumos's specific proprietary materials.
This limitation is critical, and it exposes the logical fallacy at the heart of Defendants' overbreadth argument. If, as Defendants claim, NovaSpark's product was independently developed without reliance on Lumos trade secrets, then the injunction imposes no burden whatsoever on NovaSpark's operations. NovaSpark would simply continue to operate using its purportedly independent technology, unaffected by the injunction. The fact that Defendants argue the injunction would effectively shut down NovaSpark's business is a tacit concession that NovaSpark's product is, in fact, built upon Lumos's trade secrets. Defendants cannot have it both ways.
2. The Preservation and Non-Destruction Obligations Are Reasonable and Necessary. Defendants also object to the preservation and non-destruction requirements contained in the TRO and proposed preliminary injunction. These objections are meritless.
Preservation obligations are standard and routine in trade secret litigation. They serve the essential purpose of ensuring that evidence — including evidence of both misappropriation and any purported independent development — is available for discovery and, if necessary, for trial. The Court already found these obligations appropriate when it granted the TRO on January 23, 2023, and Defendants have not identified any new facts or circumstances that would warrant revisiting that determination.
The preservation obligations are particularly critical here given the nature of the evidence at issue. The materials exfiltrated by Defendants are digital files that can be deleted, overwritten, or concealed with minimal effort. Absent a preservation order, there is a substantial risk that key evidence will be destroyed — either deliberately or through the routine operation of automated systems. The preservation requirements imposed by the TRO and sought in the proposed preliminary injunction are a reasonable and necessary safeguard against this risk.
To the extent Defendants complain that the preservation requirements are burdensome, the burden is modest: Defendants need only refrain from destroying or altering electronic evidence. This is a standard obligation that every litigant bears once litigation has commenced, and compliance with the order should require no more than basic diligence.
3. A Forensic Examination Can Protect Both Parties' Interests. In a further demonstration of the narrowly tailored nature of Lumos's approach, Lumos has expressed its willingness to stipulate to a neutral forensic examination of NovaSpark's systems and the individual Defendants' personal devices and accounts. Such an examination would be conducted by an agreed-upon independent forensic examiner — or, if the parties cannot agree, an examiner appointed by the Court — for the purpose of determining the extent to which Lumos materials are present on Defendants' systems.
A neutral forensic examination serves both parties' interests. For Lumos, it provides the objective, verifiable evidence necessary to assess the full scope of the misappropriation. For Defendants, it provides an opportunity to demonstrate — if they can — that their systems do not contain Lumos proprietary materials and that their product was, as they claim, independently developed. A forensic examination would also be conducted under appropriate protocols, including a protective order, to ensure that Defendants' own legitimate proprietary information is not disclosed to Lumos.
Lumos's willingness to pursue this avenue demonstrates that the relief it seeks is focused, proportionate, and designed to resolve the factual disputes at the heart of this case. It is the opposite of the overbroad, punitive approach that Defendants ascribe to Lumos in their Opposition.
D. Lumos Satisfies All Requirements for Preliminary Injunctive Relief
Under California law, a preliminary injunction may be granted where the moving party demonstrates (1) a likelihood of success on the merits, (2) irreparable harm in the absence of injunctive relief, (3) that the balance of hardships tips in the moving party's favor, and (4) that the public interest supports the granting of relief. See IT Corp. v. County of Imperial (1983) 35 Cal.3d 63, 69–70; ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1016. Lumos satisfies each of these requirements, and Defendants' Opposition does not establish otherwise.
1. Likelihood of Success on the Merits. As discussed at length in Section III.A above, the evidence of exfiltration by all three individual Defendants, the near-immediate founding of a directly competing company, and the breach of the PIIAA obligations establish a strong likelihood of success on all five causes of action asserted in the Complaint:
(1) Misappropriation of Trade Secrets under the CUTSA (Cal. Civ. Code §§ 3426–3426.11). Lumos has demonstrated that it possesses protectable trade secrets, that Defendants acquired those trade secrets through improper means (exfiltration), and that Defendants have used or disclosed — or threaten to use or disclose — those trade secrets in connection with NovaSpark's competing business. See Cobalt Ridge Health IT, 29 Cal.4th at 228; ReadyLink, 126 Cal.App.4th at 1017.
(2) Breach of Contract (PIIAA). Each individual Defendant executed a PIIAA containing express confidentiality, non-disclosure, non-use, and return-of-materials obligations. Each Defendant breached these obligations by exfiltrating Lumos proprietary information, failing to return company materials upon termination, and using Lumos trade secrets in connection with NovaSpark's business. NovaSpark is liable for these breaches as the entity that induced, facilitated, and benefited from the individual Defendants' breaches.
(3) Breach of Duty of Loyalty. Each individual Defendant owed a duty of loyalty to Lumos during his or her employment. Anand's transfer of materials to his personal account and his incorporation of NovaSpark while still subject to his duties of loyalty, and Mallick's and Yun's exfiltration of materials while still employed at Lumos, constitute clear breaches of that duty.
(4) Unfair Business Practices (Cal. Bus. & Prof. Code § 17200). NovaSpark's use of misappropriated trade secrets to compete with Lumos constitutes an unfair, unlawful, and fraudulent business practice within the meaning of Section 17200, which provides a broad, flexible remedy for competitive misconduct.
(5) Conversion. Defendants' unauthorized taking and retention of Lumos's proprietary materials — including digital files, codebases, and documents — constitutes conversion of Lumos's property.
The evidence supporting each of these claims is substantial, and Defendants have offered no evidence — only unsupported argument — in response. The likelihood-of-success requirement is amply satisfied.
2. Irreparable Harm. Trade secret misappropriation, by its very nature, causes irreparable harm. Once a trade secret is disclosed or used by a competitor, the competitive advantage derived from that trade secret is diminished or destroyed, and that loss cannot be fully restored by a subsequent award of monetary damages. See Ashford Group (2002) 101 Cal.App.4th 1443, 1449 ("Trade secret misappropriation causes irreparable injury because a trade secret, once lost, is lost forever."); DVD Copy Control Association, Inc. v. Bunner (2003) 31 Cal.4th 864, 881 (recognizing the inherently irreparable nature of trade secret disclosure); Brescia v. Angelin (2009) 172 Cal.App.4th 133, 147 (same); Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1261 (affirming preliminary injunction based on finding of irreparable harm from trade secret misappropriation).
The irreparable harm to Lumos in this case is concrete and immediate. Lumos's competitive position in the institutional financial analytics market — with 2022 annual recurring revenue of approximately $67 million, a growing customer base, and a product roadmap extending through 2025 — is directly threatened by NovaSpark's use of the very proprietary technology that underlies LumosEdge. NovaSpark is targeting the same customers, offering the same category of product, and competing for the same market share. Every day that NovaSpark operates using Lumos's trade secrets, the harm to Lumos compounds.
The threat to Lumos's product roadmap is particularly acute. The confidential LumosEdge 3.0 product roadmap, which Anand forwarded to his personal email address on September 28, 2022, sets forth Lumos's strategic product direction for 2023–2025, including planned features, technical specifications, and market-positioning strategies. If exploited by NovaSpark, this roadmap would allow NovaSpark to anticipate Lumos's product releases, preemptively develop competing features, and systematically undermine Lumos's strategic positioning. The competitive harm from such exploitation cannot be undone after the fact.
Monetary damages alone cannot adequately compensate Lumos for the harm caused by the ongoing misappropriation. The loss of competitive advantage, the erosion of customer relationships, the degradation of market position, and the destruction of the value of the trade secrets themselves are harms that are, by definition, incapable of precise quantification and cannot be made whole by a damages award at trial. See Gemini Aluminum, 95 Cal.App.4th at 1261–62; O'Grady v. Superior Court (2006) 139 Cal.App.4th 1423, 1457; Pooley, Trade Secrets § 7.04[3] (Law Journal Press 2022). The irreparable harm requirement is satisfied.
3. Balance of Hardships Favors Lumos. The balance of hardships tips decisively in Lumos's favor. On one side of the scale, Lumos faces the potential destruction of trade secrets that represent years of development effort, the investment of tens of millions of dollars, and the core of its commercial value proposition. These trade secrets are the foundation of a business with $67 million in annual recurring revenue, approximately 340 employees, and $185 million in total venture capital investment. If NovaSpark is permitted to continue using Lumos's proprietary technology, the competitive advantage conferred by that technology will be permanently diminished, and Lumos's business, employees, and investors will suffer commensurately.
On the other side of the scale, the hardship to Defendants from being required to cease using Lumos's trade secrets is entirely self-inflicted. The individual Defendants chose to exfiltrate Lumos's proprietary materials in violation of their PIIAA obligations. They chose to form and join a directly competing company. They chose to build NovaSpark's product using — as the evidence strongly suggests — Lumos's specific, identified trade secrets. Any hardship that results from an order requiring them to stop using those trade secrets is a consequence of their own unlawful conduct, not of Lumos's request for injunctive relief. See Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1669 (holding that hardship resulting from a party's own wrongful conduct does not weigh against injunctive relief).
NovaSpark is free to develop competing products using only independently created or publicly available technology. If NovaSpark's product was truly independently developed, as Defendants claim, then the injunction imposes no hardship at all. If, on the other hand, NovaSpark cannot operate without Lumos's trade secrets, then the balance of hardships weighs even more strongly in Lumos's favor, because it confirms that NovaSpark's business is built upon misappropriated technology.
Defendants' reliance on NovaSpark's $12 million in seed funding from Blackpine Capital Partners LP as a basis for arguing hardship is misplaced. The fact that NovaSpark has raised capital does not entitle it to build its business on a foundation of stolen trade secrets. To the contrary, the magnitude of NovaSpark's fundraise amplifies the urgency of injunctive relief: the longer NovaSpark is permitted to operate using Lumos's technology, the more deeply entrenched the misappropriation becomes, and the more difficult it will be to unwind the competitive harm.
The balance of hardships favors Lumos.
4. Public Interest. Finally, the public interest supports the granting of injunctive relief. California's public policy strongly favors the protection of trade secrets, the enforcement of confidentiality agreements, and the deterrence of employee misappropriation. See In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292, 313; Sargent Fletcher, 110 Cal.App.4th at 1670–71.
These principles are not abstract. They are essential to the functioning of California's technology economy. Companies invest billions of dollars annually in research and development, the fruits of which often take the form of trade secrets rather than patents. The willingness of companies to invest in innovation — and of investors to fund that investment — depends in significant part on confidence that proprietary technology will be protected from misappropriation. If employees could freely exfiltrate their employer's most valuable proprietary materials and use them to launch competing ventures, the incentive to invest in innovation would be dramatically undermined.
Granting the preliminary injunction in this case promotes respect for intellectual property rights and contractual obligations, deters future acts of misappropriation, and reinforces the legal framework that enables California's technology sector to flourish. The public interest weighs in favor of granting the requested relief.
IV. CONCLUSION
For the foregoing reasons, Defendants' Opposition fails to demonstrate any basis for denying the preliminary injunction. The evidence overwhelmingly supports Lumos's claims, and each of Defendants' three principal arguments — independent development, limited scope of confidentiality obligations, and overbreadth — is unsupported by evidence and unpersuasive as a matter of law.
The documented timeline of exfiltration, the coordinated departures, the near-immediate formation of a directly competing startup, the absence of any evidence of independent development, the plain language of the PIIAA, and the narrowly tailored scope of the proposed injunction all compel the conclusion that a preliminary injunction should issue.
Lumos Analytics Inc. respectfully requests that the Court grant the motion for preliminary injunction on all five categories of trade secrets, and enter an order:
(1) Enjoining Defendants NovaSpark Technologies Inc., Rajiv Anand, Serena Mallick, and Derek Yun from possessing, using, copying, disclosing, distributing, or otherwise exploiting any Lumos proprietary information and trade secrets, including but not limited to the five categories of trade secrets identified in the Complaint;
(2) Requiring Defendants to return to Lumos, or at Lumos's election to certify the permanent destruction of, all copies of Lumos proprietary information in Defendants' possession, custody, or control;
(3) Requiring Defendants to preserve all electronic devices, storage media, and cloud accounts containing or potentially containing Lumos proprietary information, pending forensic examination;
(4) Ordering Defendants to submit to a neutral forensic examination of their systems and devices by an independent forensic examiner, subject to an appropriate protective order; and
(5) Granting such further relief as the Court deems just and proper.
Respectfully submitted,
DATED: February 7, 2023
CALDERWOOD & HARKNESS LLP
By: ________
Wendy Schultz (SBN 302156) Lead Associate
Omar Siddiqui (SBN 318724) Working Associate
Marcus Delgado (SBN 198472) Responsible Partner
Catherine Bloom (SBN 214839) Billing Partner
555 California Street, 40th Floor San Francisco, California 94104 Telephone: (415) 555-7200 Facsimile: (415) 555-7201
Attorneys for Plaintiff Lumos Analytics Inc.
PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF SAN FRANCISCO
I, the undersigned, declare as follows:
I am a citizen of the United States and am employed in the County of San Francisco, State of California. I am over the age of eighteen (18) years and am not a party to the within action. My business address is Calderwood & Harkness LLP, 555 California Street, 40th Floor, San Francisco, California 94104.
On February 7, 2023, I served the following document:
PLAINTIFF LUMOS ANALYTICS INC.'S REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION
on the following parties by the methods indicated below:
Patricia Whitfield, Esq. Samuel Gerber, Esq. WHITFIELD, RAINES & GERBER LLP 235 Montgomery Street, Suite 1800 San Francisco, California 94104 Telephone: (415) 555-3400
Email: pwhitfield@wrglaw.com; sgerber@wrglaw.com
Attorneys for Defendants NovaSpark Technologies Inc., Rajiv Anand, Serena Mallick, and Derek Yun
BY ELECTRONIC SERVICE: I caused a true and correct copy of the above-referenced document to be transmitted electronically to the email addresses set forth above for the attorneys for Defendants, via the Court's electronic filing and service system, on February 7, 2023.
BY PERSONAL DELIVERY: I caused a true and correct copy of the above-referenced document to be delivered by hand to the offices of Whitfield, Raines & Gerber LLP at the address set forth above on February 7, 2023.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on February 7, 2023, in San Francisco, California.
________________________________________
Angela R. Torres Legal Secretary Calderwood & Harkness LLP
Page(s)
Altavion, Inc. v. Strathmore Corporation (2014) 226 Cal.App.4th 26 | 15, 21
Barker v. Insight Global, LLC (2022) 75 Cal.App.5th 442 | 22
Brescia v. Angelin (2009) 172 Cal.App.4th 133 | 29
Cobalt Ridge Health IT Design Systems, Inc. v. Avant! Corp. (2002) 29 Cal.4th 215 | 10, 15, 28
DVD Copy Control Association, Inc. v. Bunner (2003) 31 Cal.4th 864 | 21, 30
Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937 | 22
Flir Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270 | 17, 18, 20
Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249 | 29, 31
In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292 | 33
IT Corp. v. County of Imperial (1983) 35 Cal.3d 63 | 27
Beck Morriven CPAs LLP v. Cocchi (2012) 51 Cal.App.5th 1094 | 15
Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514 | 19, 20, 22
O'Grady v. Superior Court (2006) 139 Cal.App.4th 1423 | 30
ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006 | 27, 28
San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528 | 15
Halcyon Enterprises v. Bramwell Partners LLC (2010) 184 Cal.App.4th 210 | 19
Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658 | 31, 33
Ashford Group (2002) 101 Cal.App.4th 1443 | 10, 29
Page(s)
California Civil Code § 3426 | 10, 15, 27
California Civil Code § 3426.1 | 17, 19
California Civil Code § 3426.2 | 22, 23, 27
California Civil Code § 3426.4 | 30
California Civil Code § 3426.11 | 15, 27
California Business & Professions Code § 17200 | 28
California Business & Professions Code § 16600 | 22
Page(s)
4 Milgrim on Trade Secrets (Matthew Bender 2022) § 15.01 | 19
Pooley, Trade Secrets (Law Journal Press 2022) § 7.04 | 21, 30

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SANTA CLARA

TABLE OF AUTHORITIES

I. INTRODUCTION

II. STATEMENT OF RELEVANT FACTS

III. ARGUMENT

IV. CONCLUSION

CALDERWOOD & HARKNESS LLP

PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF SAN FRANCISCO

Record

Parties

Dates

Amounts