Logicease Solutions Inc. et al v. Softworks AI, LLC
Filing
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ORDER RE MOTION TO DISMISS. Signed by Judge James Donato on 1/7/2022. (jdlc3, COURT STAFF) (Filed on 1/7/2022)
Case 3:21-cv-00830-JD Document 37 Filed 01/07/22 Page 1 of 2
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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LOGICEASE SOLUTIONS INC., et al.,
Plaintiffs,
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Re: Dkt. No. 23
SOFTWORKS AI, LLC,
Defendant.
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United States District Court
Northern District of California
ORDER RE MOTION TO DISMISS
v.
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Case No. 3:21-cv-00830-JD
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Declaratory judgment plaintiffs Logicease Solutions Inc. (LSI) and SitusAMC Holdings
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Corp. (Situs) move to dismiss defendant Softworks AI, LLC’s (SWAI) counterclaims. Dkt. No.
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23. The parties’ familiarity with the record is assumed. The motion is denied.
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1.
Interference with Contract. Situs says that it was not a “stranger to the agreement”
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when it acquired LSI because LSI could transfer its rights and obligations under the contract to
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Situs. Dkt. No. 23 at 7. Not so. Although LSI could assign its rights and obligations, Situs points
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to no allegations that LSI actually did so. See Asahi Kasei Pharma Corp. v. Actelion Ltd., 222
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Cal. App. 4th 945, 961 (Cal. App. Ct. 2013). In addition, an economic interest in the contract does
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not necessarily defeat a claim of tortious interference. See Caliber Paving Co., Inc. v. Rexford
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Indus. Realty & Mgmt., Inc., 54 Cal. App. 5th 175, 181-83 (Cal. App. Ct. 2020); see also United
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Nat’l Maint., Inc. v. San Diego Convention Ctr., Inc., 766 F.3d 1002 (9th Cir. 2014). The tortious
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interference claim against Situs will go forward.
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2.
Misappropriation of Trade Secrets. Dismissal of the fourth, fifth, sixth, and
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seventh claims is denied for LSI and Situs. To plead and prove a claim of misappropriation of
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trade secrets, under both federal and California state law, SWAI must establish that (1) it had a
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trade secret, (2) LSI and Situs misappropriated the trade secret, and (3) the misappropriation
Case 3:21-cv-00830-JD Document 37 Filed 01/07/22 Page 2 of 2
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caused SWAI damage. InteliClear, LLC v. ETC Glob. Holdings, Inc., 978 F.3d 653, 657-58 (9th
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Cir. 2020); Sargent Fletcher, Inc. v. Able Corp., 100 Cal. App. 4th 1658, 1667 (Cal. App. Ct.
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2003). For federal and state law purposes, misappropriation means acquisition of a trade secret by
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a person who knows the trade secret was acquired by improper means, or disclosure or use of a
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trade secret of another without express or implied consent. See 18 U.S.C. §1839(5); Cal. Civ.
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Code § 3426.1(b).
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SWAI has plausibly alleged that LSI and Situs misappropriated a trade secret. SWAI’s
counterclaims indicate that LSI disclosed its trade secrets to Situs. See, e.g., Dkt. No. 19 at ¶ 12.
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SWAI has alleged facts showing LSI improperly requested that SWAI provide it with confidential
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information even after LSI knew that it intended to breach its contract with SWAI. Id. at ¶ 11. It
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United States District Court
Northern District of California
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may be, as LSI suggests, that LSI could safely disclose trade secrets to Situs after Situs acquired it,
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but SWAI says that LSI continued to request confidential information after LSI was acquired by
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Situs. Id. SWAI also alleges that LSI and Situs used the trade secrets to get a competitive
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advantage over SWAI’s product, develop Situs’s own product, and replace the custom product
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SWAI was making for LSI. Id. at ¶¶ 49, 57, 65, 72. Consequently, SWAI has adequately pleaded
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its claims for misappropriation of trade secrets against both Situs and LSI.
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IT IS SO ORDERED.
Dated: January 7, 2022
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JAMES DONATO
United States District Judge
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