SPEED INFORMATION TECHNOLOGY, INC. et al v. SAPIDO TECHNOLOGY, INC. et al
Filing
101
OPINION. Signed by Chief Judge Jose L. Linares on 12/19/2017. (ld, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Civil Action No.: 12-3040 (JLL)
SPEED INFORMATION TECHNOLOGY,
INC., et
‘
OPINION
Plaintiffs,
V.
SAPIDO TECHNOLOGY, INC., et at,
Defendants.
LINARES, Chief District Judge.
This matter comes before the Court by way of a Motion for Summary Judgment filed by
Defendants Sapido Technology, Inc. (“Sapido Taiwan”) and its affiliate entity Sapido Technology,
Inc. U.S. (“Sapido USA”) (collectively, “Defendants”) pursuant to Federal Rule of Civil Procedure
56 and Local Federal Rule of Civil Procedure 56.1. (ECF No. 87). Additionally, Plaintiffs Speed
Information Technology, Inc., Ekran Ozcan, and Farah Avci (collectively, “Plaintiffs”) have filed
a Cross-Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56 and Local
Federal Rule of Civil Procedure 56.1. (ECF No. 92). Both parties have submitted oppositions,
(ECF Nos. 92-1, 99), and Defendants submitted a reply thereto, (ECF No. 99). The Court decides
this matter without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons
set forth below, the Court denies Defendants’ Motion for Summary Judgment, with the exception
of granting Defendants’ Motion for Summary Judgment as to Count VI. Furthermore, the Court
denies Plaintiffs’ Cross-Motion for Summary Judgment.
BACKGROUND
I.
On March 17, 2010, Plaintiffs, a New Jersey corporation and its officers, entered into a
“Sole Distribution Agreement” (“2010 Agreement”) with Defendant Sapido Taiwan, a Taiwanese
corporation. (ECF No. 87-14 (“Defs. SMF”)
1).
¶
PursLLant to the
2010 Agreement, Plaintiffs
would be the sole United States distributor of Sapido Taiwan’s wireless network products for a
period of one year. (Defs. SMF
¶ 2:
ECF No. 92-6 (“PIs. SMF”)
¶ 2).
After the
one-year term
was completed, the 2010 Agreement would be renegotiated and a new agreement would be
confimied by both parties. (Defs. SMF
¶ 2).
Along with the 2010 Agreement, the parties entered
into an “Authorized Distribution Agreement,” which permitted Plaintiffs to use the “website,
contents, trademarks, and logos of Sapido [Taiwan] in connection with Sapido [Taiwan’s]
advertisement, promotion, and distribution of all Sapido [Taiwan’s] products.” (Defs. SMF
¶ 3).
Neither agreement provided that Plaintiffs would retain any intellectual property developed during
the course of the 2010 Agreement. (Defs. SMF
¶ 4).
At the conclusion of the 2010 Agreement, Sapido Taiwan forwarded
a
proposed renewal
of the 2010 Agreement and the parties began negotiating the terms of the new agreement. (Pls.
SMF
¶ 9—10).
In April 2011, the parties drafted the renewed agreement (“2011 Agreement”),
which was valid for one year. (Pls. SMF ¶ 15). The 2011 Agreement did not require the
signature
of both parties, but instead would go into effect upon the date of the “first order shipment.” (Pis.
SMF
¶
18). In May 2011, Plaintiffs signed the 2011 Agreement and ernailed a copy to Sapido
Taiwan. (Defs. SMF
Defendants do
not
¶
11). Though it is disputed whether the 2011 Agreement went into effect,
dispute that the parties engaged in transactions throughout late April and May
2011. (PIs. SMF ¶21; ECFNo. 99 at ix).
7
On June 9, 2011, Sapido Taiwan notified Plaintiffs that it was terminating Plaintiffs’ sole
distributorship of Sapido Taiwan’s products. (Defs. SMF
¶
12; Pls. SMF
¶ 29).
Sapido Taiwan
further notified Plaintiffs that it was opening its own branch office in the United States, named
Sapido USA, to sell its products. (Pis. SMF
¶J 30).
Sapido USA in its individual capacity never
entered into an agreement with Plaintiffs. (Defs. SMF
¶ 13).
Plaintiffs allege that Sapido USA
sold at least 5210,859.11 worth of products between May 27, 2011 and May 26, 2012. (Pis. SMF
¶ 31).
Therefore, if the parties were bound by the 2011 Agreement, Plaintiffs allege that they are
owed $83,914.86 at a minimum. (Pls. SMF
¶J 33).
Plaintiffs calculated this amount based on the
percent of the profit that Plaintiffs normally received under the 2010 Agreement. (Pis. SMF ¶ 32).
Plaintiffs accordingly filed a Complaint in this Court against Defendants. (ECF No. 1).
Plaintiffs subsequently amended their Complaint, which still alleges Theft of Services and
Intellectual Property (identified as Count VI), Breach of Implied in Fact Contract (identified as
Count IX), Breach of the 2011 Agreement (identified as Count X), Breach of the Implied Covenant
of Good Faith and Fair Dealing (identified as Count XI), Declaratory Relief (identified as Count
XIV), and Specific Performance (identified as Count XV).
(ECF No. 70 (first Amended
Complaint (“FAC”)) at 17—23). Defendants deny liability and now move for summary judgment
on all claims. (ECF No. 87). In addition, Plaintiffs cross move for summary judgment on all of
their remaining claims. (ECf No. 92).
II.
LEGAL STANDARD
Summary judgment is appropriate when there exists no “genuine dispute as to any material
fact” and the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). “[T]he
moving party must show that the non-moving party has failed to establish one or more essential
elements of its case on which the non-moving party has the burden of proof at trial.” McCcibe v.
3
Ernst & Yottng, LLP, 494 F.3d 418, 424 (3d Cir. 2007) (citing Celotex Corp. v. Catrett, 477 U.s.
317, 322—23 (1986)).
The Court must consider all facts and their reasonable inferences in the light most favorable
to the non-moving party. See Pa. Coal Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995). If a
reasonable juror could return a verdict for the non-moving party regarding material disputed
factual issues, summary judgment is not appropriate. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 249 (1986) (“[Alt the summary judgment stage the judge’s function is not himself to
weigh the evidence and determine the truth of the matter but to determine whether there is a
genuine issue for trial.”).
III.
DISCUSSION
A. Intellectual Property Claims
In order to assert a claim for the theft of intellectual property under New Jersey law, a
plaintiff must allege that (1) he or she provided a novel idea; (2) it was made in confidence to the
defendant; and (3) it was adopted and made use of by the defendant. See Johnson v. Benjamin
Moore & Co., 347 N.J. Super. 71, 84 (N.J. App. Div. 2002) (citing flemming v. Ronson Corp.,
107 N.J. Super. 311, 317 (N.J. Super. Ct. Law Div. 1969)). Additionally, marketing concepts do
not qualify as trade secrets for intellectual property purposes because “once [the concepts] are
implemented it is exposed for the world to see and for competitors to legally imitate.” Id. at 97
(citing Richter v. Westab, Inc., 529 f.2d 896, 900 (6th Cir. 1976)).
As Defendants point out, Plaintiffs broadly assert a claim for the theft of intellectual
property without specifying what trade secrets or ideas were allegedly stolen. (FAC at Count VI;
ECF No. 99 at 11—12). Instead of addressing this apparent deficiency in their opposition, Plaintiffs
4
assert arguments under unjust enrichment and the doctrine of qttantttm mertlit. (ECF No. 92-1 at
17—1 8). The Court notes that these arguments do not address what intellectual property Defendants
allegedly stole and that neither unjust enrichment nor the doctrine of quantum meruit have been
asserted in Plaintiffs’ Amended Complaint. (See generally FAC). Moreover, even if the Court
was to construe Plaintiffs’ claim as pertaining to the marketing and distribution that Plaintiffs
performed for Defendants, such a claim would still fail because marketing concepts do not qualify
as trade secrets under New Jersey law. Johnson, 347 N.J. Super. at 97. Therefore, the Court
concludes that Plaintiffs have failed to raise a genuine dispute of material fact regarding their claim
for thefi of intellectual property.
Plaintiffs’ claim of conversion fails for similar reasons. A claim for conversion requires
the “exercise of any act of dominion in denial of another’s title to the chattels, or inconsistent with
such title.” Mtttler v. Tech. Devices Corp., 8 N.J. 201, 207 (1951) (citing farrow v. Ocean Cty.
Tr. Co., 121 N.J.L. 344, 348 (1938)). Plaintiffs allege that Defendants deprived them of control
over listings on the Amazon website that Plaintiffs created during the course of the 2010
Agreement. (ECF No. 92-1 at 20). However, even if the Court assumes that the Amazon listings
were intellectual property, it is undisputed that Plaintiffs did not retain any rights to the intellectual
property created under the 2010 Agreement or the Authorized Distribution Agreement. (Defs.
SMF
¶ 4).
furthermore, Defendants point to Plaintiff Avci’s deposition, wherein she testified that
once a listing was created, Plaintiffs did not maintain the control to take it down. (ECF No. 87-4
at 189:14—19 (“[o]nce a listing is created, it’s created”)).
Plaintiff Avci also testified that
Defendants are not “stealing” Plaintiffs’ intellectual property, so much as they are “still taking
advantage of it.” (ECF No. 87-4 at 185:12—186:3). In response, Plaintiffs have not asserted any
facts which would show that they had title to the Amazon listings. (See ECF No. 92-2 at
5
¶
17—
20 (describing the process by which Plaintiffs created the Amazon listings for Defendants but not
asserting that Plaintiffs had title to their creation); ECF No. 93 at ¶ 55 (explaining that Defendants
took control of the Amazon listings but not asserting that Plaintiffs had title to them)). Therefore,
Plaintiffs have failed to raise a genuine dispute of material fact concerning the conversion claim,
in order to survive summary judgment, and the Court grants Defendants’ Motion for Summary
Judgment as to Count VI.
B. Contract Claims
As a preliminary matter, there is a genuine issue of material fact as to whether Sapido USA
is the same entity as Sapido Taiwan and would therefore have a contractual relationship with
Plaintiffs. If Sapido USA held itself out to be the same company as Sapido Taiwan, then it was in
privity with Plaintiffs and would be liable for any breach. See Bd. of Trs. of Teamsters Local 863
Pension fund v. Foodtown, Inc., 296 F.3d 164, 171 (3d Cir. 2002) (stating that, for the Court to
pierce the corporate veil under New Jersey law, a plaintiff must show that: “(I) one corporation is
organized and operated as to make it a mere instrumentality of another corporation, and (2) the
dominant corporation is using the subservient corporation to perpetrate fraud, to accomplish
injustice, or to circumvent the law.”). To support their claim that Sapido Taiwan holds itself out
as the same entity as Sapido USA, Plaintiffs point to Defendants’ email communications stating
that Sapido Taiwan is “setting up Sapido US branch run by our people and under this system, our
US branch will directly work with regional distributors and supply goods to them.” (ECF No. 93
at Ex. F). Defendants reject this argument. claiming that Sapido USA is merely a separate yet
wholly owned subsidiary, which undisputedly never entered into a contract with Plaintiffs. (ECF
No. 87-14 at 14, 18; Defs. SMF
¶
13). Considering both parties raise plausible yet contradicting
arguments which are supported by material facts, the Court finds that the question of Sapido USA’s
6
contractual relationship to Plaintiffs must be lefl for the trier of fact to decide. See Anderson, 477
U.S. at 252. Therefore, the Court will continue its analysis of Plaintiffs’ contract claims against
both Defendants.
Counts IX, X, and Xl all raise similar facts and arguments pertaining to the alleged breach
of the 2011 Agreement and therefore will be addressed simultaneously. The 2011 Agreement was
the renewed contract for Plaintiffs’ sole distribution of Defendants’ products in the United States.
(Pls. SMF
¶
15). One major change from the 2010 Agreement was that the 2011 Agreement was
to take effect upon “first order shipment.” (Pls. SMF
¶ 1 8).
Under New Jersey law, for a plaintiff
to successftilly establish a breach of contract claim, the following elements must be shown: (1) a
contract existed; (2) the defendant breached the contract; (3) damages arose from the alleged
breach; and (4) the plaintiff perfornied its own contractual duties. frederico v. Home Depot, 507
F. 3d 18$, 203 (3d Cir. 2007); Video Pipeline, Inc. v. Bttena Vista Entm
‘t,
Inc., 210 F. Supp. 2d
552, 561 (D.N.J. 2002) (citing Pub. Serv. Entm’t Grp., Inc. v. Phi/a. flee. Co., 722 F. Supp. 184,
219 (D.N.J. 1989)). A valid contract exists when there is “mutual assent, consideration, legality
of the object of the contract, capacity of the parties, and formulation of memorialization.”
Vttkovich
i’.
Haifa, Inc., No. 03-737, 2007 U.S. Dist. LEXIS 13344, at *14_15 (D.N.J. Feb. 2$,
2007) (citing fletche,--Harlee Corp. v. Pote Concrete Contractors, Inc., 421 F. Supp. 2d $31, 833
(D.N.J. 2006)).
The Court finds that neither side has demonstrated an entitlement to summary judgment
because there is a dispute of material fact as to whether the parties mutually assented to the 2011
Agreement and were thus bound by its terms. As stated above, the 2011 Agreement took effect
upon the “first order shipment.” (Pls. SMF
¶
1 8). Plaintiffs claim that the “first order shipment”
occurred no later than May 27, 2011 and therefore the 2011 Agreement became valid at that time.
7
(ECF No. 92-1 at 11). Plaintiffs point to the undisputed fact that they conducted business with
Defendants throughout late April 201 1 and May 2011 to show that the parties had begun acting
under the 2011 Agreement. (Pis. SMF
¶ 21;
ECF No. 93 at
¶ 3$).
Defendants, on the other hand,
contend that they did not assent to the 2011 Agreement because Plaintiffs were still trying to
negotiate terms after the May 27, 2011 transaction occurred, which shows that the 2011 Agreement
was not a final and enforceable document. (ECF No. 99 at 2). Defendants also point to Plaintiff
Avci’s deposition, wherein she testified that the 2011 Agreement did not include all of the terms
of the contract. (ECF No. 87-4 (“Well, this is a two-page contract. Right? Not everything is
here.”)).
In light of the contradicting facts and evidence asserted by the parties, the Court
concludes that there is a genuine issue of material fact as to whether the 2011 Agreement was an
enforceable contract. See Anderson, 477 U.S. at 249 (“[A]t the summary judgment stage the
judge’s function is not himself to weigh the evidence and determine the truth of the matter but to
determine whether there is a genuine issue for trial.”).
This Court, in permitting the breach of contract claims to proceed, will permit the implied
covenant claim to proceed as well, because the implied covenant of good faith and fair dealing is
inherent to a contract. See Conn. Gen. Life Ins. Co. v. RosetandArnbtilatoiy Surgety Ctr., No. 125941, 2014 U.S. Dist. LEXIS 79189, at *11_12 (D.N.J. June 11,2014); see also Paul Germann &
Assocs. v. Specialtvfoodligrnt. Grp., LLC, No. 11-1399, 2013 U.S. Dist. LEXIS 43810, at *24
(D.N.J. Mar. 27, 2013) (denying motion for summary judgment concerning breach of contract and
implied covenant claims, and noting that a party could be both in breach of contract and acting in
bad faith toward another party); Asta funding, Inc. v. Yottr Wellbeing, LLC, No. 11-2202, 2014
U.S. Dist. LEXIS 10713$, at *21 (D.N.J. Aug. 5, 2014) (denying summary judgment on implied
covenant claim based upon denial of summary judgment on breach of contract claim, because the
$
implied covenant claim
“may
depend on the existence and scope of the contract”). Therefore, the
Court denies both Motions for Summary Judgment as to Counts IX, X, and XI.
IV.
CONCLUSION
For the aforementioned reasons, the Court hereby denies Defendants’ Motion for Summary
Judgment, with the exception of granting Defendants’ Motion for Summary Judgment as to Count
VI. Furthermore, the Court hereby denies Plaintiffs’ Cross-Motion for Summary Judgment. An
appropriate Order follows this Opinion.
Date: December
j’f, 2017
JØSE L. IiNARES
hief Judge, United States District Court
9
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?