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Posts Tagged ‘Plaintiff’

Presence of EULA Fails to Convert Reverse Engineering Into an “Improper Means” Within Definition of California Trade Secret Law

In EULA, Improper Means, Reverse Engineering on February 21, 2012 at 3:13 pm
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In an unreported case from the Central District of California, Senior District Judge Ronald S.W. Lew held that plaintiff may not maintain a trade secrets claim for reverse engineering of software code, where plaintiff alleged that a trial version of the software was properly downloaded pursuant to an end user license agreement (“EULA”).  Aqua Connect, Inc. v. Code Rebel, LLC, et al., No. CV 11 5764 RSWL (MANx), 2012 WL 469737 (C.D. Cal.  Feb. 13, 2012).

Background

Plaintiff Aqua Connect, Inc. sued Defendants Code Rebel, LLC and others.  Defendants brought a motion to dismiss plaintiff’s claim for misappropriate of trade secrets.  Id.  Plaintiff alleged that defendants downloaded a trial version of Plaintiff’s Aqua Connect Terminal Server software (“ACTS”) and subsequently reverse engineered ACTS in violation of the End User License Agreement (“EULA”), which defendants had to agree to in order to use the trial version of ACTS.  Id. Plaintiff alleged that defendants misappropriated the trade secrets within ACTS and used that information to create and distribute a competing software product.  Id.


Discussion

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Publicly Visible “Images” and “Features” of Gaming Applications Not Trade Secret, Even If Source Code Kept Confidential

In Public Availability on February 17, 2012 at 6:20 am
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In a slip opinion, District Judge Yvonne Gonzalez Rogers of the Northern District of California struck portions of trade secret allegations regarding certain gaming applications where those “images” and “features” were visible to the public. SocialApps, LLC v. Zynga, Inc., No. 4:11 CV 04910 YGR, 2012 WL 381216 (N.D. Cal. Feb. 6, 2012) (slip op.).

Background

Plaintiff SocialApps LLC (“SA”) sued Defendant Zynga Inc. (“Zynga”) for violation of the California Uniform Trade Secrets Act (“CUTSA”), copyright, and various other contract-based common law claims.  Id. Zynga moved to dismiss, inter alia, the CUTSA claim.  Id. Plaintiff alleged that it developed the first farming social network game to be accessed through Facebook.  Id.  The game was publicly released on Facebook in November 2008 as “myFarm.”  Id.  In May 2009, Zynga approached SA about acquiring the intellectual property rights and other information about myFarm, and the parties entered into a letter agreement on May 19, 2009.  Id.

Plaintiff alleges that Zynga violated the express terms of the agreement, as well as the implied understandings the parties had reached in connection with the agreement, by making use of the myFarm confidential source code, processes, and other information revealed pursuant to the letter agreement. Id. SA goes on to allege that Zynga thereafter used the confidential source code and other information it acquired from SA to create its own game, “FarmVille,” without SA’s permission and without compensating SA. Id.

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Southern District Holds That Misappropriation of Trade Secrets Claim Properly Pled Even Where Complaint Lacks Allegation of Use to Plaintiff’s Detriment

In Motion to Dismiss on November 17, 2010 at 7:47 am
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The Southern District of California denied a motion to dismiss a claim for misappropriation of trade secrets even where counter-claimant does not allege plaintiff’s use of the trade secret to counter-claimant’s detriment.  Young v. Fluorotronics, Inc., No. 10cv976-WQH-BGS, 2010 WL 4569996 (S.D. Cal. Nov. 3, 2010) (slip op.).

Background

Plaintiff John Young, M.D. filed a complaint against Fluorotronics, Inc. and others relating to his investment in Fluoro-Raman technology, which was purported to be a portable, non-destructive and rapid screening device able to detect problems with food and drugs before they are distributed and detect counterfeit drugs.  Id. *1.  Plainitff alleged that the Private Placement Memorandum and Balance Sheet falsely stated that Fluorotronics was the owner of the “iStar ICCD Intensified CCD Detector Head camera” (“Camera”) and “certain Laser Equipment” (“Laser”). Id. Young for himself and others invested in Fluorotronics, but contrary to the representations of defendants, Fluorotronics allegedly did not own the Camera, but borrowed it from Andor Technology.  Id. **1-2.  When Fluorotronics failed to pay Andor for the camera, Young purchased it from Andor. Id. *2.  Plaintiff brought claims for (1) fraud; (2) negligent misrepresentation; (3) intentional misrepresentation; (4) securities fraud in violation of the Securities and Exchange Act of 1934, Section 10(b) and Rule 10b-5; (5) sale of unregistered securities; (6) breach of fiduciary duty; (7) violation of Section 1507(a) of the California General Corporation Law; and (8) violation of Section 2201 of the California General Corporation Law. Read the rest of this entry »

Second District Vacates Arbitration Award for Failure to Resolve Misappropriation of Trade Secrets Counterclaim

In Arbitration on November 15, 2010 at 11:08 am
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The Second District Court of Appeal vacated an arbitration award for failure to resolve defendants’ counter-claim for misappropriation of trade secrets.  Rad v. Keehan, No. B222049, 2010 WL 4487142 (Cal. App. 2d Dist. Nov. 10, 2010).  Defendants Michael Keehan, Lucy Keehan, Lucy’s Silk Store, Inc. and Michael’s Imports, Inc. (collectively defendants) appealed from a judgment entered after the trial court denied their motion to vacate an arbitration award against them and instead confirmed the award.  Id. *1.  Defendants contended that the arbitrator failed to decide their counter-claim for misappropriation of trade secrets, and thus the trial court should have vacated the arbitration award for failure to resolve all issues submitted to arbitration. Id. The Second District Agreed. Id.

Background

Plaintiff Ira Rad, on behalf of his company Bita LLC, executed an agreement (Sales Agreement) with one of defendants’ corporations, Michael Imports, Inc., to sell and distribute silk products from defendants’ “Lucy’s Silk” label. Id. Bita paid defendants $60,000 as partial consideration for the exclusive right to sell the products in the eastern United States, but after execution of the Sales Agreement, defendants continued to sell the products directly to East Coast customers, undercutting Bita’s sales.  Id. Plaintiffs sued defendants, alleging, inter alia, causes of action for breach of contract, fraud, negligent misrepresentation, and rescission with respect to the Sales Agreement. Id. The parties ultimately stipulated to submit their disputes to binding arbitration and a stay of the litigation was entered. Id. Read the rest of this entry »

Plaintiffs Awarded Over $1 Million After Bench Trial in a Trade Secrets Case

In Judgments, Verdicts on November 2, 2010 at 11:41 am
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After a bench trial in San Francisco Superior Court, plaintiffs in a trade secrets case recovered judgment on the merits against certain defendants in the amount of $921,469, plus pre-judgment interest in the amount of $301,664, and punitive damages of $275,000.  UltraEx Inc. vs. Express It Delivery Services Inc., Case No., CGC-05-447942, 2010 WL 4260535, 44 Trials Digest 13th 5 (Cal. Sup. Ct. Verdict Date: April 1, 2010).

According to court records, on April 29, 1998, plaintiff UltraEx Inc. merged with two other corporations, Express It Courier Services Inc. (“Old Express It”) and 800 Courier Inc.  Id. *1. Plaintiff was the surviving corporation in this merger, but prior to the merger, Old Express It and 800 Courier had each been actively conducting a package delivery business in California.  Id. Defendant Express It Delivery Services Inc. (“New Express It”) was a California corporation formed in November 2004. Id. Read the rest of this entry »

Benefits of Adding Claims Under the Computer Fraud & Abuse Act in Trade Secret Misappropriation Cases

In Uncategorized on October 7, 2010 at 9:03 am
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David Smith has written a useful article discussing the Benefits of Trade Secret Misappropriation Claims Under the Computer Fraud & Abuse Act (“Benefits“), and comparing these claims to those under the Uniform Trade Secrets Act (“UTSA”).  The CFAA, 18 U.S.C. § 1030, is a federal statute outlawing “theft and destruction of data, hacking, use of viruses, theft of passwords and extortionate threats to damage computers.”  SeeBenefits at 1. The CFAA now allows a civil right of action.  See 18 U.S.C. § 1030(g).  The author points to the following three benefits of a CFAA cause of action in a trade secrets dispute:

  • Federal Question Jurisdiction: “The CFAA provides for federal question subject matter jurisdiction, which then allows a plaintiff to bring appropriate state law claims under the court’s supplemental jurisdiction.” Benefits at 1.  Smith points to the benefits of nationwide service of process in trade secrets disputes.  Id. He notes that this “benefit [nationwide service of process] cannot be downplayed because often in complex trade secret litigation the plaintiff resides in one state, the defendant resides in a different state, and both the evidence of trade secret theft and key witnesses are in different states around the country. Litigating this type of case in state court might require filing motions and proceedings in multiple jurisdictions throughout the country in order to depose key witnesses and obtain necessary evidence. Nationwide service of process avoids this entire situation and saves substantial amounts of time.” Id. (citing Liccardi, The Computer Fraud and Abuse Act: A Vehicle for Litigating Trade Secrets in Federal Court, 8 J. MARSHALL REV. INTELL. PROP. L. 155 (Fall 2008) at 13-14). Read the rest of this entry »

Los Angeles Jury Awards $157,000 After Trial in Trade Secrets Case

In Verdicts on September 7, 2010 at 4:28 pm
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A Los Angeles Superior Court jury awarded plaintiff an aggregate $157,000 verdict in Hong vs. Life University, an employment and trade secrets case.  37 Trials Digest 13th 12,  2010 WL 3454121 (Verdict Date June 28, 2010).

Plaintiff allegedly entered into an employment contract with defendant university for a five-year term to begin October 1, 2006.  Plaintiff alleged that defendants breached the agreement by firing him on June 15, 2007. Read the rest of this entry »

Northern District Holds No Cause of Action Exists for Misappropriation of “Ideas”

In Motion to Dismiss, Preliminary Injunction on August 28, 2010 at 6:30 am
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The Northern District held that no cause of action exists for “misappropriation of business ideas”.  Interserve, Inc. v. Fusion Garage PTE. Ltd., No. C 09-5812 RS (PVT), 2010 WL 3339520 (N.D. Cal. Aug. 24, 2010) (slip op.).

Plaintiff Interserve, Inc. and Fusion Garage collaborated in an attempt to bring to market a tablet computer, which they intended to call the “CrunchPad.”  Id. *1.  Shortly before the parties had planned to announce that the product would soon be released, defendant Fusion Garage advised plaintiffs that it would proceed on its own, and market a tablet computer under the name “joojoo” instead. Id. Plaintiffs brought suit, alleging that they are co-owners of the joojoo.  Id. They sought a preliminary injunction requiring defendant to sequester all proceeds it obtains from selling the product. Id. Defendant opposed the motion for preliminary injunction, and moved to dismiss the complaint, including a claim for misappropriation of “business ideas”. Id. Read the rest of this entry »