Fujitsu Limited v. Tellabs Inc et al
Filing
104
MEMORANDUM Opinion and Order. Fujitsu Limited's and FNC's "Motion to Dismiss Tellabs' Trade Secret Misappropriation Counterclaim Pursuant to Fed. R. Civ. P. 12(b)(6)" 74 77 is denied. Fujitsu Limiteds answer to Tellabs 039; counterclaim and FNC's third-party answer to Tellabs' joined counterclaim, which is to be treated by Tellabs and FNC as a Rule 14 third-party complaint, are each to be filed on or before 10/22/13. Parties are again encouraged to discuss settlement. Signed by the Honorable James F. Holderman on 10/10/2013. Notice mailed by judge's staff (ntf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FUJITSU LIMITED,
)
)
Plaintiff/Counterdefendant,
)
)
v.
)
)
TELLABS OPERATIONS, INC.,
)
TELLABS, INC., and TELLABS NORTH
)
AMERICA, INC.,
)
)
Defendants/Counterclaimants.
)
____________________________________________ )
)
TELLABS OPERATIONS, INC.,
)
TELLABS, INC., and TELLABS NORTH
)
AMERICA, INC.,
)
)
Third-Party Plaintiffs,
)
)
v.
)
)
FUJITSU NETWORK COMMUNICATIONS, INC., )
)
Third-Party Defendant.
)
No. 12 C 3229
MEMORANDUM OPINION AND ORDER DENYING FUJITSU LIMITED’S AND FNC’S
MOTION TO DISMISS TELLABS’ COUNTERCLAIM AND THIRD-PARTY CLAIM
FOR MISAPPROPRIATION OF TRADE SECRETS
JAMES F. HOLDERMAN, District Judge:
On May 1, 2013, Tellabs, Inc., Tellabs Operations, Inc., and Tellabs North America, Inc.
(collectively “Tellabs”) filed several counterclaims against Fujitsu Limited (“Fujitsu Limited”) in
which Tellabs incorporates what it calls “joined claims” against Fujitsu Network
Communications, Inc. (“FNC”). (See Dkt. No. 48 (redacted) and Dkt. No. 54 (sealed).) The
court construes Tellabs’ claims against FNC under proper pleading as third-party claims pursuant
to Federal Rule of Civil Procedure 14. Among other counterclaims and third-party claims,
1
Tellabs alleges that both Fujitsu Limited and FNC (collectively “Fujitsu”) are liable for
misappropriation of trade secrets. (Id. at 35-44, Part III ¶¶ 10-35 (“First Claim”).) Specifically,
Tellabs alleges that Fujitsu misappropriated (1) the “Tellabs 7100 Verizon Presentation,” (2)
“Tellabs 7100 Manuals,” and (3) “software for the Tellabs 7192 Integrated System Manager.”
(Id. ¶¶ 17, 26.) Fujitsu has moved to dismiss Tellabs’ trade secret misappropriation claim under
Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (Dkt. No. 74 (sealed) and
Dkt. No. 77 (redacted) (“Fujitsu’s Mot.”).) For the reasons set forth below, Fujitsu’s motion to
dismiss is denied.
BACKGROUND
At this stage of the litigation, the court accepts as true all well-pleaded factual allegations
and draws all reasonable inferences in favor of Tellabs. Burke v. 401 N. Wabash Venture, LLC,
714 F.3d 501, 504 (7th Cir. 2013). The facts below are set forth in accordance with this
standard.
Tellabs and Fujitsu are competitors in the optical telecommunications industry,
specifically in the area of optical amplifiers. (First Claim ¶ 14.) In 2005, Tellabs and FNC
competed against each other in a “proposal process to sell new optical telecommunications
equipment, including optical amplifiers, to Verizon.” (Id.) Tellabs ultimately won the contract
with Verizon, and Fujitsu “began a ‘post mortem’ analysis to determine how to recover in the
face of Tellabs’ more advanced technology.” (Id. ¶¶ 14-16.)
As part of the Verizon proposal process, Tellabs prepared a presentation titled “Tellabs
7100 Optical Transport Platform System and Applications Overview” (“Tellabs 7100 Verizon
Presentation”), which Tellabs presented to employees of Verizon. (Id. ¶ 17.) The Tellabs 7100
Verizon Presentation described specific features of the Tellabs 7100 Optical Transport System,
2
including features of Tellabs’ optical amplifiers. (Id.) 1 “Each page of the Tellabs 7100 Verizon
Presentation was marked with the following notification: ‘Not for use or disclosure outside the
Verizon Companies except under written agreement.’” (Id.) An FNC employee named under
seal in Tellabs’ counterclaim and third-party claim (hereinafter “Employee #1”) “obtained an
unauthorized copy” of the Tellabs 7100 Verizon Presentation and distributed an unauthorized
copy of the Tellabs 7100 Verizon Presentation to another FNC employee, also named under seal
(hereinafter “Employee #2”), in November 2005. (Id. ¶ 21.) Employee #2, in turn, distributed
unauthorized copies to four additional FNC employees. (Id.) An unauthorized copy of the
Tellabs 7100 Verizon Presentation was also distributed to a Fujitsu Limited employee in
November 2005. (Id.) Employee #1 and Employee #2 then copied portions of the Tellabs 7100
Verizon Presentation into their own derivative presentation, which was “distributed and/or
displayed to employees within FNC and Fujitsu Limited that were involved in the Post Mortem
Analysis.” (Id. ¶ 22.)
In August 2006, FNC employee Ted van Ryn located and purchased from a vendor on
eBay “approximately 1400 lbs. of salvaged Tellabs 7100 equipment,” including at least three
optical amplifier modules used in a Tellabs 7100 Optical Transport System and a binder
containing manuals for the Tellabs 7100 Optical Transport System (“Tellabs 7100 Manuals”),
software for the “Tellabs 7192 Integrated System Manager,” and a “shrink-wrap” license
agreement (“License Agreement”). (Id. ¶¶ 26, 28, 30.) The eBay vendor was not related to or
affiliated with Tellabs, and FNC employees took specific measures to hide the identities of FNC
and Fujitsu Limited from the seller, “acting under the authorization and/or direction of Fujitsu
1
These specific features included “the ability of the amplifiers’ gain control algorithm to
automatically adjust for sudden changes in span loss and the ability to upgrade Tellabs’ in-line
amplifiers (‘ILAs’) to reconfigurable optical add-drop multiplexers (‘ROADMs’) while in
service (‘in-service upgrade’).” (First Claim ¶ 17.)
3
Limited.” (Id. ¶¶ 26-27.) The three optical amplifier modules purchased through eBay were
then “sent to Japan and were inspected by engineers at Fujitsu Limited as part of the Post
Mortem Analysis.” (Id. ¶ 28.) Fujitsu employees also distributed unauthorized copies of the
Tellabs 7100 Manuals to engineers at Fujitsu Limited “who were involved in inspecting Tellabs’
optical amplifiers as part of the Post Mortem Analysis,” and “copied, without Tellabs’
authorization, portions of the Tellabs 7100 Manuals into derivative works analyzing the features
of the Tellabs 7100 system.” (Id. ¶ 31.)
The License Agreement, attached as Exhibit C to Tellabs’ Answer and Counterclaims, 2
includes in its definition of “Licensed Materials” the Tellabs 7192 Integrated System Manager
software and “accompanying user documentation.” (License Agreement § 1.) 3 The License
Agreement further states that “the Licensed Materials furnished by Tellabs hereunder are, and
shall continue to be, proprietary property of and shall constitute trade secrets of Tellabs or its
licensor(s),” and that all “Licensed Materials are to be used . . . only for the intended use of the
Licensed Materials as offered and furnished by Tellabs.” (First Claim ¶ 30.)
Fujitsu used Tellabs’ trade secret information to design and develop improved optical
amplifiers, “which led to improved market success of optical telecommunications systems sold
in the United States by FNC and in other regions by Fujitsu Limited.” (Id. ¶ 32.) Tellabs alleges
“actual losses” and Fujitsu’s unjust enrichment due to FNC’s improved sales, and seeks
compensatory and punitive damages, as well as injunctive relief. (Id. ¶¶ 32-35.)
2
Documents attached to a complaint are considered part of the pleading. Fed. R. Civ. P. 10(c);
see also Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012).
3
Although the License Agreement states that the purpose of the License Agreement is “to use
the Licensed Materials for the purpose of managing a network of Tellabs ®7000 series network
elements owned by Licensee,” (License Agreement §§ 1, 2 (emphasis added)), the parties appear
to agree that the “accompanying user documentation” protected by the License Agreement
includes the Tellabs 7100 Manuals. (See Tellabs’ Resp. at 11.)
4
LEGAL STANDARD
Rule 8 of the Federal Rules of Civil Procedure requires all pleadings to include “a short
and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). In other words, a pleading must “give the defendant fair notice of what the . . . claim is
and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Pleadings do not need “detailed factual
allegations,” but must “contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2008) (quoting
Twombly, 550 U.S. at 570).
“A claim has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
McReynolds v. Merrill Lynch & Co., 694 F.3d 873, 885 (7th Cir. 2012) (quoting Iqbal, 556 U.S.
at 678). “Determining whether a complaint states a plausible claim for relief . . . [is] a contextspecific task that requires the reviewing court to draw on its judicial experience and common
sense.” Iqbal, 556 U.S. at 679. In making this determination, the court looks beyond “legal
conclusions” and “[t]hreadbare recitals of the elements of a cause of action.” Id. at 678. As long
as the pleading “give[s] effective notice to the opposing party” and “provide[s] sufficient detail
‘to present a story that holds together,’” however, it will generally survive a motion to dismiss.
Alexander v. United States, 721 F.3d 418, 422 (7th Cir. 2013) (quoting Swanson v. Citibank,
N.A., 614 F.3d 400, 403 (7th Cir. 2010)). On the other hand, a plaintiff can plead itself out of
court by pleading “facts that show [it] has no legal claim.” Atkins v. City of Chicago, 631 F.3d
823, 832 (7th Cir. 2011); accord D.B. ex rel. Kurtis B. v. Kopp, 725 F.3d 681, 686 (7th Cir.
2013) (quoting Jackson v. Marion County, 66 F.3d 151, 153-54 (7th Cir. 1995)).
5
CHOICE OF LAW
At the outset, the court addresses a potentially relevant choice-of-law issue raised by the
parties. According to Fujitsu, Texas law applies to Tellabs’ misappropriation of trade secrets
claim, because Texas is the state where the majority of the alleged acts of misappropriation took
place and because Texas is where FNC, which is headquartered in Richardson, Texas, received
the benefit of the alleged misappropriation. (See Dkt. No. 75 (sealed) and Dkt. No. 78 (redacted)
(“Fujitsu’s Mem.”) at 4-6.) According to Tellabs, Illinois law should apply because “the injury
to Tellabs—the actual losses suffered by Tellabs through Fujitsu’s acts of trade secret
misappropriation—were sustained in Naperville, Illinois.”
(Dkt. No. 86 (sealed) and 87
(redacted) (“Tellabs’ Resp.”) at 5.)
The parties have not identified a specific conflict of laws relevant to the pending motion
to dismiss, which usually would result in the court applying Illinois substantive law as the law of
the forum state. See Kochert v. Adagen Medical Int’l., Inc., 491 F.3d 674, 677 (7th Cir. 2007)
(“Where the parties have not identified a conflict in state law, we will generally apply the law of
the forum state.”). Because a misappropriation of trade secrets claim is a common law tort in
Texas and a statutory claim based on the Uniform Trade Secrets Act in Illinois, however, the
court will make a preliminary choice-of-law determination for purposes of assisting the parties in
understanding the scope and nature of Tellabs’ pending counterclaim.
This court’s jurisdiction over Tellabs’ counterclaim and third-party claim for
misappropriation of trade secrets is based on the court’s supplemental jurisdiction under 28
U.S.C. § 1367. “[R]easoning by analogy from diversity cases,” the Seventh Circuit has held that
district courts should apply the choice-of-law rules of the forum state in which they sit “to
determine what law governs pendent state claims.” Baltimore Orioles, Inc. v. Major League
6
Baseball Players Ass’n, 805 F.2d 663, 681 (7th Cir. 1986).
Illinois’s choice-of-law rules
therefore determine the substantive law governing Tellabs’ counterclaim and third-party claim
for misappropriation of trade secrets.
As the Seventh Circuit has noted, while “[t]he rules on choice of law in tort cases usually
select the law of the place where the victim of the tort was injured . . . the Illinois choice of law
rule applicable to misappropriation cases . . . selects the place where the misappropriation took
place or the defendant obtained the benefit of the misappropriation, the latter being the state or
other jurisdiction in which the defendant has its principal place of business.” Salton, Inc. v.
Philips Domestic Appliances & Personal Care B.V., 391 F.3d 871, 878-79 (7th Cir. 2004)
(emphasis in original) (citing Mergenthaler Linotype Co. v. Leonard Storch Enterprises, Inc.,
383 N.E.2d 1379, 1389 (Ill. App. Ct., 1st Dist. 1978)); see also Restatement (Second) of Conflict
of Laws § 145 cmt. f (1971) (“the place of injury does not play so important a role for choice-oflaw purposes in the case of false advertising and the misappropriation of trade values as in the
case of other kinds of torts”). As alleged in Tellabs’ counterclaim and third-party claim, some
alleged tortious acts occurred in Illinois, especially the attempted misappropriation of trade
secret information by the entity allegedly hired by FNC to surreptitiously obtain competitive
intelligence by contacting Tellabs’ employees in Illinois under false pretenses. (First Claim
¶¶ 23-24.) Nevertheless, the state where it appears the majority of the acts of misappropriation
took place and the state where Fujitsu obtained the benefit of the alleged misappropriation is
Texas.
Tellabs argues that “the parties may discover more information” about the location where
the alleged misappropriation took place during the discovery phase of the litigation, and that it is
therefore “premature at this stage” for the court to make a choice-of-law determination.
7
(Tellabs’ Resp. at 6.) The court acknowledges Tellabs’ practical concern. Because the parties
have not identified any substantive difference between Texas common law and Illinois statutory
law relevant to the pending motion to dismiss, however, the court finds that Tellabs will not be
prejudiced if the court applies Texas law on a preliminary basis in the analysis that follows. In
the event discovery produces new information relevant to the choice-of-law analysis, the parties
are explicitly granted leave to revisit this preliminary choice-of-law determination if they desire
to do so at a later point in this litigation.
ANALYSIS
Under Texas common law, to establish claim for trade secret misappropriation “a
plaintiff must show ‘(a) the existence of a trade secret; (b) a breach of a confidential relationship
or improper discovery of the trade secret; (c) use of the trade secret; and (d) damages.’” Daniels
Health Sciences, L.L.C. v. Vascular Health Sciences, L.L.C., 710 F.3d 579 (5th Cir. 2013)
(quoting Taco Cabana Int’l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir. 1991)).
Fujitsu does not challenge the sufficiency of Tellabs’ counterclaim and third-party claim with
respect to three of these four elements, and the court therefore accepts that Tellabs has
adequately pleaded that the Tellabs 7100 Verizon Presentation, the Tellabs 7100 Manuals, and
the Tellabs 7192 Integrated System Manager software are trade secrets of Tellabs, that were used
by Fujitsu, resulting in damages to Tellabs. 4 Because there is no allegation that Tellabs and
Fujitsu were parties to a “confidential relationship” breached by Fujitsu, the analysis that follows
is limited to the question of whether Tellabs has adequately pleaded that Fujitsu engaged in
“improper means” of acquiring Tellabs’ trade secrets.
4
Because Fujitsu has not challenged Tellabs’ efforts to maintain the secrecy of its alleged trade
secrets, the court need not recite or analyze the redacted allegations set forth in paragraphs 23-25
of Tellabs’ counterclaim and third-party claim. (See Tellabs’ Resp. at 11-12 (citing these
paragraphs as evidence of Tellabs’ “diligent efforts to maintain the secrecy of its competitive
information”).)
8
“Improper means of acquiring another’s trade secrets include theft, fraud, unauthorized
interception of communications, inducement of or knowing participation in a breach of
confidence, and other means either wrongful in themselves or wrongful under the circumstances
of the case.” Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 876 (5th Cir. 2013) (quoting
Astoria Indus. of Iowa, Inc. v. SNF, Inc., 223 S.W.3d 616, 636 (Tex. App. 2007)). Although “[a]
complete catalogue of improper means is not possible,” the concept of “improper means”
broadly includes “means which fall below the generally accepted standards of commercial
morality and reasonable conduct.” Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 785 (5th
Cir. 1999) (quoting E.I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012, 1016 (5th Cir.
1970)). Such means include “fraudulent misrepresentations to induce disclosure” and other
forms of “espionage.” Restatement of Torts § 757 cmt. f (1939); see also Phillips v. Frey, 20
F.3d 623, 630 (5th Cir. 1994). On the other hand, “trade secret law does not offer protection
against discovery by fair and honest means such as independent invention, accidental disclosure,
or ‘reverse engineering.’” Phillips, 20 F.3d at 629. Ultimately, it is unlawful for a defendant to
appropriate its competitor’s trade secrets “through deviousness,” if “countervailing defenses are
not reasonably available.” E.I. duPont deNemours & Co., 431 F.2d at 1017.
1.
Tellabs 7100 Verizon Presentation
Tellabs alleges in its Answer and Counterclaims that Employee #1 “obtained an
unauthorized copy of the Tellabs 7100 Verizon Presentation in 2005,” despite the fact that each
page of the presentation stated that it was “[n]ot for use or disclosure outside the Verizon
Companies except under written agreement,” and despite the obligation of Tellabs’ employees
not to “use or disclose, nor assist or authorize anyone else in using or disclosing, any Proprietary
Information without the written consent of the Company, except as may be necessary in the
9
ordinary course of performing [the employee’s] duties to the Company.” (First Claim ¶¶ 12, 17,
21.)
Tellabs does not allege in its counterclaim exactly how Employee #1 obtained an
unauthorized copy of the Tellabs 7100 Verizon Presentation.
Fujitsu argues that Tellabs has “couch[ed] its claim as a bare legal conclusion that the
Verizon Presentation was ‘unauthorized.’” (Fujitsu’s Mem. at 9.) The court disagrees. At this
stage of the litigation, Tellabs is permitted to rely on reasonable inferences based on the alleged
facts. Drawing all reasonable inferences in favor of Tellabs, the court agrees with Tellabs that
one reasonable inference from the facts alleged in Tellabs’ counterclaim and third-party claim is
that “Fujitsu obtained this presentation through improper means.” (Tellabs’ Resp. at 14.) Even
under the more stringent pleading requirements of Rule 9(b), if “the facts constituting the fraud
are not accessible to the plaintiff,” a plaintiff need only provide “the grounds for his suspicions.”
Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 948 (7th Cir. 2013). As pleaded, Tellabs’
counterclaim and third-party claim for misappropriation of the Tellabs 7100 Verizon
Presentation states a plausible right to relief and is sufficiently detailed to put Fujitsu on notice of
“what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (quoting
Conley v. Gibson, 355 U.S. 41, 47 (1957)). No more is required at this stage of the litigation.
2.
Tellabs 7100 Manuals and Tellabs 7192 Integrated System Manager Software 5
Tellabs further alleges in its Answer and Counterclaims that FNC employee Ted van Ryn
located and purchased from an eBay vendor certain Tellabs 7100 equipment, which included a
binder containing the Tellabs 7100 Manuals and the Tellabs 7192 Integrated System Manager
5
In its response brief, Tellabs inexplicably refers to “Tellabs 7192 source code” as one of its
alleged trade secrets. (Tellabs’ Resp. at 8, 10, 15.) Tellabs does not use the term “source code”
anywhere in its alleged counterclaim. Moreover, the License Agreement explicitly notes that
“the Tellabs 7192 Integrated System Manager software” is distinguishable from Tellabs’ “source
code.” (License Agreement § 1.) The court therefore analyzes this trade secret only as referring
to the Tellabs 7192 Integrated System Manager software.
10
software.
(First Claim ¶¶ 26, 30.)
The binder also contained a “shrink-wrap” License
Agreement stating that the Licensed Materials—e.g., the Tellabs 7192 Integrated System
Manager software and “accompanying user documentation”—were to be used “only for the
intended use of the Licensed Materials as offered and furnished by Tellabs.” (Id. ¶ 30; see also
License Agreement § 1 (defining “Licensed Materials”).) Specifically, the intended use of the
Licensed Materials was “for the purpose of managing a network of Tellabs ®7000 series
network elements owned by Licensee.” (License Agreement § 2.) The License Agreement
explicitly prohibited the Licensee from “reverse engineering, reverse compiling, disassembling,
modifying, adapting, or translating the Software or otherwise obtaining source code from the
object code version of the Software.” (Id.)
The License Agreement also stated at the top of the first page:
YOU AGREE THAT BY OPENING THE PACKAGE, YOU HAVE AGREED
TO COMPLY WITH THESE LICENSE TERMS. (If you do not wish to enter
into this Agreement, return the Software with the seal intact to Tellabs for a
refund or credit.)
(License Agreement at 1.) Tellabs’ counterclaim and third-party claim acknowledges that “[t]he
salvaged Tellabs 7100 equipment was listed on eBay by a third party unrelated to and
unaffiliated with Tellabs.” (First Claim ¶ 26.)
Fujitsu argues that Tellabs has failed to plausibly allege Fujitsu acquired the Tellabs 7100
Manuals or the Tellabs 7192 Integrated System Manager software using improper means,
because “the information FNC obtained was lawfully purchased from a public seller with no
alleged affiliation to Tellabs.” (Fujitsu’s Mem. at 7.) In support of this argument, Fujitsu notes
that Tellabs has not alleged that “the eBay seller obtained the Tellabs equipment and related
documentation through any improper means, or that the listing of the equipment and related
documentation for sale was improper.” (Id. at 8.)
11
Under Texas law, “improper means” need not themselves be unlawful. E.I. duPont
deNemours & Co., 431 F.2d at 1016 (“means may be improper . . . even though they do not
cause any other harm than that to the interest in the trade secret”) (quoting Restatement of Torts
§ 757, cmt. f (1939)). For example, in Astoria Industries of Iowa, Inc. v. SNF, Inc., the court
held that “reasonable and fair-minded people [could] reach different conclusions regarding
whether Astoria misappropriated [Brand FX’s] design drawings” when Astoria successfully
asked Brand FX’s customer for a copy of the confidential drawings. Astoria Indus. of Iowa, Inc.
v. SNF, Inc., 223 S.W.3d 616, 636-37 (Tex. App. 2007)). Similarly, in Alcatel USA, Inc. v. DGI
Technologies, Inc., the court found “ample evidence to support the jury’s determination that DGI
obtained DSC’s trade secrets through improper means,” where DGI mislead or “duped” an
employee of a third party into disclosing DSC’s operating system software. Alcatel, 166 F.3d at
785 (“a reasonable jury could have found that such means ‘fall below the generally accepted
standards of commercial morality and reasonable conduct’”) (quoting E.I. duPont deNemours &
Co., 431 F.2d at 1016).
Tellabs has alleged that FNC employees took specific measures to hide FNC’s and
Fujitsu Limited’s identifies from the eBay seller by using FNC employees’ personal accounts
and credit cards, and by falsely representing that FNC employees were acting on behalf of an
entity that was not FNC of Fujitsu Limited. (First Claim ¶ 27.) Fujitsu was also on notice that
Tellabs restricted its licensing of the Tellabs 7100 Manuals and the Tellabs 7192 Integrated
System Manager software to be used solely “for the purpose of managing a network of Tellabs
®7000 series network elements owned by Licensee.” (License Agreement § 2.) Viewing these
allegations in the light most favorable to Tellabs, as the court must do at this stage of the
litigation, the court finds that Tellabs has sufficiently pleaded that Fujitsu obtained the Tellabs
12
7100 Manuals and the Tellabs 7192 Integrated System Manager software through means that
were not “fair and honest.” Phillips, 20 F.3d at 629; see also E.I. duPont deNemours & Co., 431
F.2d at 1017 (“thou shall not appropriate a trade secret through deviousness under circumstances
in which countervailing defenses are not reasonably available.”). Whether Fujitsu’s actions
actually “fall below the generally accepted standards of commercial morality and reasonable
conduct” and whether there were “countervailing defenses . . . reasonably available” to Tellabs
are questions better addressed at the close of discovery, when the factual record has been more
fully-developed regarding the specifics of the eBay transaction. E.I. duPont deNemours & Co.,
431 F.2d at 1016-17. At this point in the litigation, the court finds that Tellabs has stated a
plausible claim for relief against both Fujitsu Limited and FNC. Each must now separately file
an answer to Tellabs’ claims.
CONCLUSION
For the reasons set forth above, Fujitsu Limited’s and FNC’s “Motion to Dismiss Tellabs’
Trade Secret Misappropriation Counterclaim Pursuant to Fed. R. Civ. P. 12(b)(6)” [74] [77] is
denied. Fujitsu Limited’s answer to Tellabs’ counterclaim and FNC’s third-party answer to
Tellabs’ joined counterclaim, which is to be treated by Tellabs and FNC as a Rule 14 third-party
complaint, are each to be filed on or before 10/22/13. Parties are again encouraged to discuss
settlement.
ENTER:
_______________________________
JAMES F. HOLDERMAN
United States District Court Judge
Date: October 10, 2013
13
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?