Scienton Technologies, Inc. et al v. Computer Associates International Inc.
Filing
354
MEMORANDUM & ORDER denying 348 Motion for Reconsideration - As Plaintiffs have failed to present any new evidence or controlling law that might be expected to alter the Court's Summary Judgment Order, Plaintiffs' motion for reconsider ation is DENIED. Further, the Court previously granted the parties fourteen days from the date of the Summary Judgment Order to show cause why that document should remain under seal. More than fourteen days have passed, and the Court has yet to receive any briefing on the issue from either party. Accordingly, the Clerk of the Court is directed to UNSEAL the Summary Judgment Order at Docket Entry 347. So Ordered by Judge Joanna Seybert on 5/1/2013. C/ECF (Valle, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
SCIENTON TECHNOLOGIES, INC., NI GROUP,
INC., SECURE-IT, INC.,
Plaintiffs,
MEMORANDUM & ORDER
04-CV-2652(JS)(ETB)
-againstCOMPUTER ASSOCIATES INTERNATIONAL INC.,
Defendant.
---------------------------------------X
APPEARANCES
For Plaintiffs:
Dennis P. Stolle, Esq.
Matthew S. Barr, Esq.
Robert Dean MacGill, Esq.
Scott E. Murray, Esq.
Barnes & Thornburg LLP
11 South Meridian Street
Indianapolis, IN 46204
Panagiota Betty Tufariello, Esq.
The Law Offices of P.B. Tufariello, P.C.
25 Little Harbor Road
Mt. Sinai, NY 11766
For Defendant:
Jonathan N. Francis, Esq.
Michael D. Schissel, Esq.
Anthony D. Boccanfuso, Esq.
Erik Christopher Walsh, Esq.
Pamela Addison Miller, Esq.
Arnold & Porter LLP
399 Park Avenue
New York, NY 10022
Kevin Patrick Mulry, Esq.
John P. McEntee, Esq.
Farrell Fritz, P.C.
1320 Rxr Plaza
Uniondale, NY 11556
SEYBERT, District Judge:
Pending
before
the
Court
is
Plaintiffs
Scienton
Technologies,
Inc.,
(together,
NI
Group,
“Plaintiffs”
Inc.,
or
and
Secure-IT,
“Scienton”)
Inc.’s
motion
for
reconsideration of the Court’s September 25, 2012 Memorandum and
Order (the “Summary Judgment Order,” Docket Entry 347) granting
in
part
and
denying
in
part
Defendant
Computer
Associates
International Inc.’s (“Defendant” or “CA”) motion for summary
judgment.
For
the
following
reasons,
Plaintiffs’
motion
is
DENIED.
BACKGROUND
The
Court
assumes
familiarity
with
the
underlying
facts and procedural history of this case, which are discussed
in detail in the Summary Judgment Order.
In brief, Plaintiffs
commenced this action in June 2004 against Defendant asserting
claims
for,
Plaintiffs,
alleged
inter
alia,
however,
trade
secret
misappropriated.
misappropriation
had
was
difficulty
and
what
of
a
trade
articulating
they
secret.
what
believed
(See Summary Judgment Order 11-12.)
their
Defendant
On July
28, 2005, Defendant moved for an order pursuant to Rule 26(c) of
the Federal Rules of Civil Procedure requiring Plaintiffs, as a
condition
of
proceeding
with
trade
secret
discovery,
“to
identify with adequate specificity the trade secrets they claim
were misappropriated.”
(Notice of Mot., Docket Entry 41.)
In
opposition, Plaintiffs asserted that they had already defined
their alleged trade secret:
2
Scienton’s trade secrets consist not of a
piece of computer source code, a discrete
formula, or a single software program.
Rather,
it
is
far
more
sophisticated.
Scienton created a complex methodology for
enterprise security by combining numerous
elements and programs into a powerful and
unified security solution previously unknown
to the industry.
Scienton used certain of
CA’s existing programs as some of the
building blocks because of the relationship
it has entered into with CA.
In effect,
Scienton conceived and disclosed ways to use
CA’s programs in combination with its own
and others that neither CA nor anyone else
in the field had foreseen or understood.
(Pls. Opp., Docket Entry 50, at 6.)
Magistrate Judge Michael L.
Orenstein held a hearing on the motion on November 2, 2005,
where
Plaintiffs’
counsel,
in
describing
their
alleged
trade
secret, stated that “[i]t’s not the source code that’s at issue.
It’s
the
overall
elements . . . .”
unique
concept
of
combining
all
of
these
(Walsh Decl. Ex. 48, Nov. 2, 2005 Tr. 27
(emphasis added); see also Hunt Aff. in Opp., Docket Entry 48,
¶¶ 4-6 (describing the trade secret as a “conception” and a
“vision”);
cf.
Zivic
Aff.
in
Opp.,
Docket
Entry
49,
¶
6
(describing the trade secret as “architecture” and comparing it
“building a Frank Lloyd Wright home”).)
Judge Orenstein did not grant Defendant’s motion but
instead
copies
ordered
of
the
Defendant
programs
to
that
provide
Plaintiffs
Plaintiffs
believed
with
working
incorporated
their alleged trade secret and ordered Plaintiffs to identify,
3
with specificity, which aspects of their trade secret were in
fact incorporated in those programs.
2, 2005 Tr. 42.)
(Walsh Decl. Ex. 48, Nov.
Defendant provided Plaintiffs with working
copies of their programs, and, in response, Plaintiffs served a
letter, drafted by counsel, giving a “summary” of the “concepts
that [Plaintiffs] say[] [were] stolen.”
(Walsh Decl. Ex. 49,
Jan. 18, 2006 Tr. 25-26 (emphasis added).)
The parties again
appeared before Judge Orenstein on January 18, 2006 to discuss
the sufficiency of Plaintiffs’ response.
that
counsel’s
November.
letter
was
“not
what
Judge Orenstein held
th[e]
Court
Ex. 49, Jan. 18, 2006 Tr. 28.)
a
in
[The] Court ordered specificity, not [Plaintiffs’]
interpretation of what [they] felt was enough.”
provide
ordered
more
detailed
secret to Defendant.
(Walsh Decl.
Thus, he ordered Plaintiffs to
explanation
of
their
alleged
trade
(Walsh Decl. Ex. 49, Jan. 18, 2006 Tr.
33.)
On
March
6,
2006,
Plaintiffs
produced
a
document
titled “Trade Secret Disclosure,” which described their alleged
trade secret as follows:
a unique and previously unknown collection,
combination, refinement and enhancement of a
number of previously unrelated computer
programs and software functionalities to
create an ‘enterprise security solution’
encompassing physical and digital security
(‘Scienton’s ESS’) and having far greater
capabilities than any prior single security
4
system
or
pre-existing
security systems.
combination
of
(Walsh Decl. Ex. 6, Trade Secret Disclosure at 1.)
At a hearing
before Judge Orenstein on March 16, 2006, Plaintiffs’ counsel
clarified that their trade secret was “not the how [sic] you
particular[ly] wire one program to the other . . . , it’s the
actual
combination
of
particular function.”
programs
1,
4,
and
6
to
perform
a
(Walsh Decl. Ex. 50, Mar. 16, 2006 Tr.
10; see also id. at 10-11 (“How they operate together is not the
trade secret.”).)
Judge Orenstein ultimately found that this
Trade Secret Disclosure was sufficient for discovery to proceed.
Defendant moved for summary judgment on February 27,
2012, arguing, inter alia, that Plaintiffs failed to articulate
a legally cognizable trade secret.
(Def. Mot., Docket Entry
308, at 15.)
Specifically, Defendant argued that Plaintiffs’
trade
was
secret
insufficiently
vague
and
otherwise
not
actionable because a trade secret may not “consist merely of an
idea to combine publicly known products into a single product,
without defining how those products will work together.”
at 15-19.)
(Id.
In opposition, Plaintiffs, completely contradicting
their earlier representations to Judge Orenstein, argued that
its
Trade
Secret
Disclosure
products work together.
did
identify
how
the
different
(Pls. Opp., Docket Entry 339, at 19.)
5
The
Court
granted
summary
Defendant on the trade secret claim.
28-32.)
F.
judgment
in
favor
of
(Summary Judgment Order
The Court, citing to LinkCo, Inc. v. Fujitsu Ltd., 230
Supp.
2d
492
(S.D.N.Y.
2002),
explained
that
because
Plaintiffs’ purported trade secret was the idea or concept of
combining certain program functionalities--and not the source
code or technical details regarding how those different programs
would interact with one another--it was not entitled to trade
secret protection.
(Summary Judgment Order 31-32.)
The most
important consideration in determining whether a trade secret
exists is whether the information was actually a secret, and the
Court
found
that
the
secrecy
of
Plaintiffs’
“concept”--as
opposed to the source code--would have necessarily been lost
once the product was placed on the market.
Order
29-32.)
Accordingly,
trade secret claims.
the
Court
(Summary Judgment
dismissed
Plaintiffs’
Plaintiffs were permitted to go to trial
on their misappropriation of an idea, breach of the parties’
nondisclosure
also
arose
agreement,
out
of
and
unfair
Defendant’s
competition
alleged
use
of
claims--which
Plaintiffs’
“concept.”
Plaintiffs now move for reconsideration of the portion
of the Summary Judgment Order granting summary judgment in favor
of Defendant on the trade secret claim.
6
DISCUSSION
The Court will first discuss the applicable standard
of review before addressing the merits of Plaintiffs’ motion.
I.
Standard of Review
“Motions
Rule
6.3
district
and
are
court.”
for
reconsideration
committed
Liberty
to
Media
the
are
sound
Corp.
v.
governed
by
discretion
Vivendi
S.A., 861 F. Supp. 2d 262, 265 (S.D.N.Y. 2012).
Local
of
the
Universal,
“The standard
for granting such a motion is strict, and reconsideration will
generally
be
denied
unless
the
moving
party
can
point
to
controlling decisions or data that the court overlooked and that
might reasonably be expected to alter the conclusion reached by
the court.”
In re Optimal U.S. Litig., 886 F. Supp. 2d 298,
311-12 (S.D.N.Y. 2012) (internal quotation marks and citations
omitted)); see also Virgin Atl. Airways, Ltd. v. Nat’l Mediation
Bd., 956 F.2d 1245, 1255 (2d Cir. 1992) (“The major grounds
justifying
reconsideration
are
an
intervening
change
of
controlling law, the availability of new evidence, or the need
to
correct
a
clear
error
or
prevent
manifest
(internal quotation marks and citation omitted)).
injustice.”
It is not a
proper tool to repackage and relitigate arguments and issues
already considered by the Court in deciding the original motion.
See Liberty Media, 861 F. Supp. 2d at 265.
tool to raise new arguments and issues.
7
Nor is it a proper
See Lehmuller v. Inc.
Vill. of Sag Harbor, 982 F. Supp. 132, 135 (E.D.N.Y. 1997); In
re
Fosamax
Prods.
(S.D.N.Y. 2011).
a
substitute
Corp.,
25
Liab.
815
F.
Supp.
2d
649,
651
Further, a motion for reconsideration “is not
for
F.
Litig.,
appeal.”
Supp.
2d
Morales
369,
372
v.
Quintiles
(S.D.N.Y.
quotation marks and citation omitted).
Transnat’l
1998)
(internal
“Reconsideration of a
court’s previous order is an extraordinary remedy to be employed
sparingly
in
the
interests
scarce judicial resources.”
2d
713,
715
(S.D.N.Y.
of
finality
and
conservation
of
Parrish v. Sollecito, 253 F. Supp.
2003)
(internal
quotation
marks
and
citation omitted).
II.
Analysis
Plaintiffs
that:
move
for
reconsideration
on
the
grounds
(1) neither party raised the issue of secrecy, nor did
they cite to LinkCo; (2) although “LinkCo supports the Court’s
conclusion,”
(Pls.
Recon.
Mot.,
Docket
Entry
349,
at
4)
Plaintiffs disagree with that court’s holding; (3) Fifth and
Seventh Circuit case law contradicts LinkCo; and (4) there is a
question
of
fact
secret
regarding
would
have,
commercialization.
The
in
whether
Plaintiffs’
fact,
Court
been
will
alleged
trade
disclosed
address
each
upon
argument
separately.
First,
although
neither
party
cited
to
LinkCo,
the
Court is not limited to the cases and other law cited in the
8
parties’ briefs.
See, e.g., Horvath v. Westport Library Ass’n,
362 F.3d 147, 152 (2d Cir. 2004).
Further, although neither
party specifically raised the issue of secrecy, Defendant did
argue that Plaintiffs’ alleged trade secret was not worthy of
protection because it was merely the idea of combining certain
functionalities to achieve a desired result, not the intricacies
of how to combine those functionalities.
was integral to the Court’s holding.
And this conclusion
(See Summary Judgment
Order 31.)
Second,
Plaintiffs
ask
this
Court
to
disregard
the
decision in LinkCo, which they admit is directly on point and
“supports the Court’s conclusion” (Pls. Recon. Mot. 4), because
it
is
based
on
an
improper
reading
of
the
Second
Circuit’s
decision in Hudson Hotels Corp. v. Choice Hotels Int’l, 995 F.2d
1173 (2d Cir. 1993), abrogated on other grounds by Nadel v.
Play-By-Play
2000).
Toys
&
Novelties,
The Court disagrees.
Inc.,
208
F.3d
368
(2d
Cir.
Hudson Hotels involved the “idea
or concept” of a small-size, upscale hotel room or a “Microtel.”
Id. at 1174.
The Circuit, finding that the “Microtel concept is
a new product idea, nothing more,” stated that “[o]nce [the
plaintiff]
marketed
the
Microtel
concept . . . it
could
not
constitute a protectable trade secret because, from that time
forward, it could not be used secretly and continuously in its
business.”
Id. at 1177-78 (“Once it is built, marketed, and
9
occupied,
the
features
disclosed publicly.”).
the
pre-marketing
of
the
room
would
necessarily
be
The Circuit noted, however, that “[i]n
stage,
the
question
whether
a
marketing
concept or a new product idea can constitute a trade secret is
murkier” and instead found that the Microtel was not a protected
trade secret because the plaintiff had affirmatively abandoned
any claim that the idea of a small-size, upscale hotel room was
novel.
Id. at 1177-78.
The district court in LinkCo relied on
the dicta in Hudson Holding to find that the architecture of a
computer software program comprised of 26-elements was not a
trade
secret
plaintiff’s]
because
elements
“[o]nce
is
seen
the
by
combination
the
public,
of
the
system’s
architecture will become obvious and easily duplicated.”
Supp. 2d at 499.
[the
230 F.
The product in LinkCo was at the pre-marketing
stage; however, this issue was not raised by the court.
Plaintiffs argue that it was improper for LinkCo to
rely on Hudson Holding’s dicta (and in turn that it was improper
for
this
Court
distinction
product.
to
rely
on
LinkCo)
because
it
ignores
between
pre-
and
post-commercialization
of
a
the
new
However, the Circuit in Hudson Holding stated, albeit
in dicta, that finding that a new product idea or concept could
constitute
“contrary
a
to
trade
the
secret
holding
in
of
a
its
pre-marketing
leading
case
subject under section 757 of the Restatement.”
10
stage
was
addressing
the
995 F.2d at 1177
(emphasis added) (citing Richter v. Westab, Inc., 529 F.2d 896,
900 (5th Cir. 1976)).
Further, other courts in New York have
relied on Hudson Holding’s dicta in finding that a new product
idea
is
not
a
protected
trade
secret
because,
marketed, the idea will no longer be a secret.
once
it
is
See, e.g.,
Detsis v. Victoria’s Secret Stores, Inc., No. 03-CV-5358, 2006
WL 2819586, at *6 (S.D.N.Y. Sept. 29, 2006) (finding that the
novel concept of a necklace attached to bra straps was not a
trade secret because it would be “readily apparent from the
finished product, that once marketed, [would] become visible to
all competitors to copy”); Blank v. Pollack, 916 F. Supp. 165,
175 (N.D.N.Y. 1996) (finding that a folding window crank was not
a trade secret because “upon marketing and sale” the design
would be “open to public inspection of all of its features”).
Plaintiffs have not pointed to any decisions interpreting New
York law that have found otherwise.1
1
The two New York cases that Plaintiffs did cite do not
contradict LinkCo.
Plaintiffs cite to a New York State trial court decision from
1966 discussing whether a prototype for a novel photocopier
constituted a trade secret. Gen’l Aniline & Film Cop. v.
Frantz, 50 Misc. 994, 272 N.Y.S.2d 600 (Sup. Ct. Broome Cnty.
1966). The court’s analysis focused on the distinction between
trade secret claims and patent infringement claims. The court
stated that the “gravamen” of a misappropriation of trade
secrets claim is “breach of confidence”--whereas a patent
infringement claim is based on a policy of encouraging the
development of secret processes and devices. Id. at 1001, 272
N.Y.S.2d at 608 (citing RESTATEMENT (FIRST) OF TORTS § 757, cmt. b)).
11
Third, Plaintiffs instead ask this Court to look to
Fifth
and
Seventh
Illinois law.
Circuit
precedent
interpreting
Texas
and
Learning Curve Toys, Inc. v. PlayWood Toys, Inc.,
342 F.3d 714 (7th Cir. 2003) (applying Illinois law); Sikes v.
McGraw-Edison Co., 665 F.2d 731 (5th Cir. 1982) (applying Texas
law).
However, Illinois has adopted the Uniform Trade Secrets
Act, see 765 ILL. COMP. STAT. 1065/1, et al. (the Illinois Trade
Secrets Act); Hecny Transp., Inc. v. Chu, 430 F.3d 402, 404 (7th
Cir. 2005) (stating that the Illinois Trade Secrets Act is based
on the Uniform Trade Secrets Act), whereas New York has not, and
“Texas law [does not] draw . . . a rigid distinction between new
product ideas and trade secrets,” Sikes v. McGraw-Edison Co.,
671 F.2d 150, 151 (5th Cir. 1982); Keane v. Fox Tele. Stations,
Inc., 297 F. Supp. 2d 921, 938 (S.D. Tex. 2004) (stating that
Texas
does
not
have
a
separate
cause
of
action
for
Thus, the court found that the fact that similar photocopiers
came on the market after the defendant allegedly began copying
the plaintiff’s prototype did not relieve the defendant of
liability for misappropriation of a trade secret, because,
unlike a claim for patent infringement, the “field need not be
virginal” for a trade secret to exist. Id. The distinction
between pre- and post-commercialization of a new product idea
was not raised by the court.
Plaintiffs also cite to Panther Systems II, Ltd. v. Panther
Computer Systems, 783 F. Supp. 53, 66 (E.D.N.Y. 1991), for the
proposition that what matters is not “how a defendant could have
acquired the information, but rather upon how he did in fact
actually acquire it.” However, this was mentioned in the
court’s analysis of an unfair competition claim, not, as
Plaintiffs suggest, a trade secret claim. See id. Accordingly,
it is not relevant to this Court’s analysis.
12
misappropriation of an idea), aff’d, 129 F. App’x 874 (5th Cir.
Mar. 17, 2005), whereas New York does, see, e.g., Gary Friedrich
Enters., L.L.C. v. Marvel Enters., Inc., 713 F. Supp. 2d 215,
228 (S.D.N.Y. 2010); cf. Lehman v. Dow Jones & Co., 783 F.2d
285, 299 (2d Cir. 1986) (“A cause of action may arise with
respect to information that does not qualify as a trade secret
if the information is disclosed in confidence and later used in
a
manner
applying
that
New
breaches
York
the
law)).
confidence.”
Accordingly,
(collecting
this
Court
cases
will
not
disregard applicable law from this Circuit in favor of cases
that are neither controlling nor persuasive.
Finally, Plaintiffs assert that there is a question of
fact regarding whether such information would have become public
upon marketing and that they should be able to present evidence
on the issue at trial.
Plaintiffs, however, have failed to come
forward with the evidence that they believe the Court overlooked
or that may not have been presented in opposition to Defendant’s
motion for summary judgment in support of their argument that
their
alleged
trade
commercialization.
decision
on
mere
secret
The
would
remain
secret
Court
will
not
overturn
speculation
that
Plaintiffs
its
may
postprior
produce
sufficient evidence at trial to create an issue of fact.
The
Court
also
notes
that
there
is
no
manifest
injustice requiring reversal of its prior order, as Plaintiffs
13
may proceed to trial on their misappropriation of an idea claim,
which Plaintiffs conceded is based on misappropriation of the
same “novel idea” at issue in Plaintiffs’ trade secret claim.
(See Def. Supp. 56.1 Stmt., Docket Entry 311, ¶ 13 (citing Walsh
Decl. Ex. 7, Zivic Dep. 48-49).)
CONCLUSION
Accordingly, as Plaintiffs have failed to present any
new evidence or controlling law that might be expected to alter
the
Court's
Summary
Judgment
Order,
Plaintiffs’
motion
for
reconsideration is DENIED.
Further,
the
Court
previously
granted
the
parties
fourteen days from the date of the Summary Judgment Order to
show cause why that document should remain under seal.
More
than fourteen days have passed, and the Court has yet to receive
any briefing on the issue from either party.
Accordingly, the
Clerk of the Court is directed to UNSEAL the Summary Judgment
Order at Docket Entry 347.
SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:
May
1 , 2013
Central Islip, NY
14
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