Next Communications, Inc. et al v. Viber Media, Inc.

Filing 149

OPINION AND ORDER. For the reasons stated above, IT IS HEREBY ORDERED THAT Defendant's motion for summary judgment is GRANTED, and Defendant's motions for sanctions and fees are DENIED. The Clerk of the Court is respectfully directed to ter minate the motion pending at docket number 111, enter judgment for Defendant, and close this case. SO ORDERED. re: 111 MOTION for Summary Judgment and for Sanctions filed by Viber Media, Inc. (Signed by Judge Richard J. Sullivan on 9/30/2017) (rjm)

videoconferencing: (1) NxtGn Proprietary
Services, an allegedly “unique combination
of networking hardware, signaling servers,
and proprietary software” that enables
mobile devices to participate in highdefinition videoconference calls; (2) the
NxtGen App, which allegedly “uses a
proprietary process to scale individual
routers, which allows millions of people to
connect simultaneously to the same
videoconferencing feed”; and (3) the
Celebrity Event Management business idea,
which envisioned “millions of simultaneous
users . . . participat[ing] in an interactive
videoconference with a celebrity from any
device.” (Doc. No. 67, Amended Complaint
(“Am. Compl.”) ¶¶ 10, 13, 17, 87.)

Frenklakh met again at another trade show
in May 2013, where Maimon gave
Frenklakh a hard copy of a third PowerPoint
presentation titled “NxtGn HD Video Cloud
Platform (2013).” (Id. ¶¶ 14–15.) A month
later,
Maimon
gave
Frenklakh
a
demonstration of the still-unfinished NxtGen
App. (Id. ¶ 19.) Maimon and Frenklakh
also participated in a June 13, 2013
conference call with several representatives
from Next, Viber, and Telarix, one of Next’s
technology partners, to discuss Next’s and
Telarix’s videoconferencing solutions. (Id.
¶¶ 20–22.) According to Maimon, Viber’s
representatives seemed more interested in
Next’s NxtGn Proprietary Services than in
Telarix’s solution. (Id. ¶ 22.) Shortly after
this meeting, however, Viber stopped
communicating with Next for about seven
months. (Id. ¶ 26.)

Next and Viber, the maker of a widely
used mobile VoIP app, both attended a trade
show in May of 2012, at which Viber
employee Arie Frenklakh spoke with Next
CEO Arik Maimon about Next’s
videoconferencing technology. (Doc. No.
138 (“Maimon Decl.”) ¶¶ 5–7.) A month
later, Next and Viber entered into a
Nondisclosure
and
Confidentiality
Agreement (“NDA”) “in order to facilitate a
possible business transaction.” (Def. 56.1 ¶¶
9–10; Maimon Decl. ¶ 9.) The NDA
prohibited the disclosure of proprietary
information to third parties and defined
“proprietary
information”
to
mean
information designated as proprietary by the
disclosing party and not generally known to
the public. (Def. 56.1 ¶ 14.)

In January of 2014, Frenklakh and
Maimon met again in Miami. (Id. ¶ 27.) A
month later, Maimon learned that Viber had
been acquired by Rakuten, Inc., a Japanese
online retailer. (Id. ¶ 28.) Shortly after the
acquisition, Maimon had lunch with a Viber
shareholder, who described “an unfinished
feature in Viber’s app” that Maimon thought
sounded “nearly identical to a presentation
[he] had given to Viber regarding NxtGn
[Proprietary Services’] videoconferencing
capabilities” and was “subject to [the
parties’] NDA.” (Id. ¶¶ 29–30, 32.)
B. Procedural History
Next commenced this action on October
14, 2014, alleging that Viber was “using the
information it learned about the NxtGn
Proprietary Services to develop its own
advanced videoconferencing technology,”
and that Viber had taken a step toward
implementing its own version of Next’s
Celebrity Event Management business idea.
(Am. Compl. ¶¶ 54, 56–57.)
More

In November of 2012, Frenklakh visited
Next’s Miami offices to learn more about
Next’s
videoconferencing
solutions.
(Maimon Decl. ¶¶ 11.) After a meeting with
Next’s engineering team, Maimon gave
Frenklakh hard copies of two PowerPoint
presentations, titled “Technology Offerings
– NxtGn – 2012” and “NxtGn HD Video
Cloud Platform.” (Id. ¶ 13.) Maimon and
2

specifically, Next’s Amended Complaint
asserted four claims: (1) misappropriation
of trade secrets; (2) misappropriation of a
business idea; (3) breach of contract; and (4)
unjust enrichment. (Doc. No. 54.) On
March 30, 2016, the Court granted Viber’s
motion to dismiss with respect to the claim
for misappropriation of a business idea but
denied it with respect to the other three
claims. (Doc. No. 72.) The Court then
issued a scheduling order requiring the
parties to participate in “Phase I” of
discovery, during which Next had to
produce to Viber “all materials and
information [that it alleged] (i) were
disclosed and/or provided to Viber, and (ii)
contain and/or constitute trade secrets or
confidential
information
of
[Next],
including, without limitation, the alleged
Proprietary
Information,
the
NxtGn
Proprietary Technology, the NxtGn App,
and the Celebrity Event Management
business idea.” (Doc. No. 87 ¶ 9.) The
order added, “[Next] shall identify with
particularity in writing to Viber which parts,
if any, of the Phase I Production constitute
Proprietary Information or trade secrets.”
(Id. ¶ 10 (emphasis added).)

Yurchenko Declaration as the only pages of
[Next’s] Phase I Production [that Next]
contend[s]
contain
[p]roprietary
[i]nformation or trade secrets.” (Id. ¶ 45.)2
Phase I discovery closed on August 23,
2016, and on October 11, 2016, Viber
moved for summary judgment on the ground
that the materials contained in Next’s Phase
I production did not include any trade
secrets or proprietary information within the
meaning of the parties’ NDA. (Doc. No.
111.) After Next’s counsel withdrew on
November 28, 2016, the Court granted Next
an extension of time until February 6, 2017
to retain new counsel and submit its
opposition. (Doc. Nos. 126, 129, 132.) The
motion was fully submitted on February 16,
2017. (Doc. No. 144.)
II. LEGAL STANDARD
Under Rule 56(a) of the Federal Rules of
Civil Procedure, “[t]he court shall grant
summary judgment if the movant shows that
there is no genuine dispute as to any
material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ.
P. 56(a). There is “no genuine dispute as to
any material fact” where (1) the parties
agree on all facts (that is, there are no
disputed facts); (2) the parties disagree on
some or all facts, but a reasonable factfinder could never accept the nonmoving
party’s version of the facts (that is, there are

On June 30, 2016, Next completed its
Phase I production, which consisted of email
correspondence, several PowerPoint slide
decks, and declarations from Maimon and
Next technical advisor Vitaliy Yurchenko.
(Def. 56.1 ¶¶ 5–6, 16.) Pursuant to the
scheduling order, Viber then deposed Next’s
Rule 30(b)(6) witness, Michael De Prado,
the company’s President and Chief
Operating Officer. (Id. ¶ 5; Doc. No. 114-2
at 5 (“De Prado Tr.”)) At his deposition, De
Prado identified the particular pages of the
Phase I production that Next alleges contain
or constitute trade secrets or proprietary
information within the meaning of the NDA.
(Def. 56.1 ¶ 17.) Specifically, De Prado
“identified the [s]lide [d]ecks and the

2

The slide decks De Prado identified include (1) a
PowerPoint presentation marked “Telarix Proprietary
and Confidential,” (2) a PowerPoint presentation
titled
“NxtGn:
Elegant,
efficient
Telecommunications Platforms for PTTs, Telcos,
Network Operators, and Enterprises,” which has a
confidentiality marking on only one page, (3) a
PowerPoint presentation titled “2012 NxtGn
Technology
Offerings”
(marked
“highly
confidential”), and (4) a PowerPoint presentation
titled “NxtGn HD Video Cloud Platform (2013).”
(Id. ¶ 53.)

3

no genuinely disputed facts), see Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986); or (3) the parties
disagree on some or all facts, but even on
the nonmoving party’s version of the facts,
the moving party would win as a matter of
law (that is, none of the factual disputes are
material), see Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986).

III. DISCUSSION
Viber now moves for summary
judgment on each of Next’s three causes of
action – misappropriation of trade secrets,
breach of contract, and unjust enrichment –
as well as for sanctions and attorney’s fees.
A. Misappropriation of Trade Secrets
To succeed on a claim for
misappropriation of trade secrets under New
York law,3 a party must show “(1) that it
possessed a trade secret, and (2) that the
defendants used that trade secret in breach
of an agreement, confidential relationship or
duty, or as a result of discovery by improper
means.” Faiveley Transp. Malmo AB v.
Wabtec Corp., 559 F.3d 110, 117 (2d Cir.
2009) (citation omitted).
The parties’
dispute here focuses almost entirely on the
first element, whether Next possessed a
trade secret.

In determining whether a fact is
genuinely disputed, the court “is not to
weigh the evidence but is instead required to
view the evidence in the light most
favorable to the party opposing summary
judgment, to draw all reasonable inferences
in favor of that party, and to eschew
credibility assessments.” Weyant v. Okst,
101 F.3d 845, 854 (2d Cir. 1996).
Nevertheless, to show a genuine dispute, the
nonmoving party must provide “hard
evidence,” D’Amico v. City of N.Y., 132
F.3d 145, 149 (2d Cir. 1998), “from which a
reasonable inference in [its] favor may be
drawn,” Binder & Binder PC v. Barnhart,
481 F.3d 141, 148 (2d Cir. 2007) (internal
quotation marks omitted).
“Conclusory
allegations, conjecture, and speculation,”
Kerzer v. Kingly Mfg., 156 F.3d 396, 400
(2d Cir. 1998), as well as the existence of a
mere “scintilla of evidence in support of the
[nonmoving party’s] position,” Anderson,
477 U.S. at 252, are insufficient to create a
genuinely disputed fact. A moving party is
“entitled to judgment as a matter of law” on
an issue if (1) it bears the burden of proof on
the issue and the undisputed facts meet that
burden; or (2) the nonmoving party bears the
burden of proof on the issue and the moving
party “‘show[s]’ – that is, point[s] out . . . –
that there is an absence of evidence [in the
record] to support the nonmoving party’s
[position].” Celotex Corp. v. Catrett, 477
U.S. 317, 325 (1986).

“A trade secret is any formula, pattern,
device or compilation of information which
is used in one’s business, and which gives
the owner an opportunity to obtain an
advantage over competitors who do not
know or use it.” Id. (citation omitted).
Under New York law, “a trade secret can
exist in a combination of characteristics and
components, each of which, by itself, is in
the public domain, but the unified process,
design and operation of which, in unique
3

Since both parties rely on New York law in their
briefs, and since the NDA contains a New York
choice-of-law provision, the Court applies New York
law to Next’s claims. See Krumme v. West Point,
238 F.3d 133, 138 (2d Cir. 2000); Clarex Ltd. v.
Natixis Sec. Am. LLC, No. 12-cv-7908 (PAE), 2013
WL 2631043, at *2 (S.D.N.Y. June 11, 2013)
(“Where “[t]he parties’ briefs assume that New York
law controls . . . such ‘implied consent . . . is
sufficient to establish choice of law.’” (quoting
Wolfson v. Bruno, 844 F. Supp. 2d 348, 354
(S.D.N.Y. 2011))).

4

combination,
affords
a
competitive
advantage and is a protectable secret.”
Integrated Cash Mgmt. Serv., Inc. v. Dig.
Transactions, Inc., 920 F.2d 171, 174 (2d
Cir. 1990) (citation omitted). A trade secret
claimant must, however, “describe the secret
with sufficient specificity that its
protectability can be assessed and to show
that its compilation is unique.” Sit-Up Ltd.
v. IAC/InterActiveCorp., No. 05-cv-9292
(DLC), 2008 WL 463884, at *10 (S.D.N.Y.
Feb. 20, 2008); see Heyman v. AR.
Winarick, Inc., 325 F.2d 584, 590 (2d Cir.
1963). In addition, New York courts have
approvingly cited the First Restatement’s list
of suggested factors to help determine
whether information constitutes a trade
secret, e.g., id., which includes:

Lehman v. Dow Jones & Co., 783 F.2d 285,
298 (2d Cir. 1986).
Having considered the materials
produced in Phase I of discovery, the Court
finds that Viber is entitled to judgment as a
matter of law on Next’s first cause of action,
since Next has failed both to identify its
alleged trade secrets with sufficient
specificity and to adduce adequate evidence
that its information was in fact secret.
First, Next must demonstrate with
particularity the trade secrets that it
allegedly disclosed to Viber.
At the
pleading stage, “specificity as to the precise
trade secrets misappropriated is not
required.” Medtech Prods. Inc. v. Ranir,
LLC, 596 F. Supp. 2d 778, 789 (S.D.N.Y.
2008).
In order to survive summary
judgment, however, the plaintiff must
describe the secrets with greater precision;
“vague and indefinite” illustrations will not
suffice. Big Vision Private Ltd. v. E.I.
DuPont De Nemours & Co., 1 F. Supp. 3d
224, 257 (S.D.N.Y. 2014) (citing Heyman,
325 F.2d at 588–90); Sit-Up, 2008 WL
463884, at *9–10. Although Next’s general
descriptions of its alleged secrets were
enough to survive a motion to dismiss, the
purpose of Phase I discovery in this case
was for Next to identify those secrets more
specifically. (See Doc. No. 87 ¶¶ 9–10.)

(1) the extent to which the
information is known outside of the
business; (2) the extent to which it is
known by employees and others
involved in the business; (3) the
extent of measures taken by the
business to guard the secrecy of the
information; (4) the value of the
information to the business and its
competitors; (5) the amount of effort
or money expended by the business
in developing the information; (6)
the ease or difficulty with which the
information could be properly
acquired or duplicated by others.

As an initial matter, Next seems not to
have been entirely consistent in how it has
characterized its putative secrets. At the
motion-to-dismiss stage, Next identified
NxtGn Proprietary Services, the NxtGen
App, and Celebrity Event Management as
the bases for its trade-secret claim. During
Phase I of discovery, however, Next
identified its putative secrets as the “GSMIP Mobile Network,” “Secure Financial
Network,” and “HD Video Cloud
Architecture” – as reflected in three slide

Restatement (First) of Torts § 757, cmt b;
see also Ashland Mgmt. Inc. v. Janien, 82
N.Y.2d 395, 407 (1993) (“There is no
generally accepted definition of a trade
secret[,] but that found in section 757 of
Restatement of Torts, comment b has been
cited with approval by this and other
courts.”) The first factor, of course, is
crucial: “the most important consideration
[is] whether the information was secret.”
5

decks:
“2012
NxtGn
Technology
Offerings,” “NxtGn HD Video Cloud,” and
“NxtGn HD Video Cloud 2013.” (Def. 56.1
¶¶ 17, 18, 19, 42, 45, 47; Pl. 56.1 ¶¶ 18, 19,
42, 45, 47, 58; Maimon Decl. ¶ 4; Doc. No.
114-6 (“Yurchenko Decl.”)). In its response
to Viber’s statement of material facts, Next
concedes that the GSM-IP Mobile Network
and the Secure Financial Network are
components that Next identified as trade
secrets for the first time during Phase I
discovery. (Def. 56.1 ¶ 42; Pl. 56.1 ¶ 42.)
But none of the three components are named
in Next’s Amended Complaint. Nor does
the complaint reveal the titles of the
supposedly crucial slide presentations that,
Next now alleges, contain Next’s trade
secrets and proprietary information. The
complaint does allege that Next’s partner,
Telarix, sent Viber two presentations that
contained Next’s confidential information,
but whether those presentations contained
the slides now at issue is unclear. Thus,
Next appears to have presented Viber with a
moving target.

pages 14 and 15 of “2012 NxtGn
Technology Offerings”) is “designed in a
way that software-defined radio controls
sending/receiving electronics in [Base
Transceiver System] and all other functions
are done via [Session Initiation Protocol]
infrastructure,” which “reduces cost . . .
while preserving all expected functions.”
(Yurchenko Decl. ¶ 6.) But Yurchenko fails
to identify what specific aspects of this
design are supposedly unique, valuable, and
secret. See Sit-Up, 2008 WL 463884, at
*10.
Meanwhile, Viber has produced
undisputed evidence that the diagram on
page 14 of the presentation is “virtually
identical” to a diagram that is publicly
available online from a third party, Range
Networks, Inc., in a user manual bearing a
2011 copyright designation. (See Def. 56.1
¶ 62; Doc. No. 114-1)
As already
established, “a trade secret can exist in a
combination
of
characteristics
and
components, each of which, by itself, is in
the public domain, but the unified process,
design and operation of which, in unique
combination,
affords
a
competitive
advantage and is a protectable secret.”
Integrated Cash Mgmt., 920 F.2d at 174.
But it is equally clear that “information that
is public knowledge or that is generally
known in an industry cannot be a trade
secret,” including information that is
available in publications. Ruckelshaus v.
Monsanto Co., 467 U.S. 986, 1002 (1984)
(internal citation omitted); Speedry Chem.
Prod., Inc. v. Carter's Ink Co., 306 F.2d 328,
331 (2d Cir. 1962) (“Matters of . . . general
knowledge in an industry cannot be
appropriated by one as his secret.” (internal
citation omitted)). Significantly, Yurchenko
does not explain how, if at all, the diagrams
on pages 14 and 15 combine to form a trade
secret. This failure is fatal, since “New
York and Second Circuit law establish that
compilation trade secrets are protectable but
. . . the law requires the trade secret claimant

To make matters worse, Next’s Phase I
discovery materials offer little clarification
about how the GSM-IP Mobile Network,
Secure Financial Network, and HD Video
Cloud Architecture, alone or in combination,
constitute trade secrets. To begin with, the
slide decks themselves merely consist of
vague descriptions and rudimentary graphics
and concepts; they neither describe trade
secrets with particularity nor explain how
various components fit together to form
compilation
trade
secrets.
Perhaps
recognizing this problem, Next also
provided an affidavit from its technical
advisor, Yurchenko, which purports to
interpret the information in the slides. But
those interpretations are hardly illuminating.
For example, according to Yurchenko, the
GSM-IP Mobile Network (allegedly
depicted in two cartoonish diagrams on
6

to describe the secret with sufficient
specificity that its protectability can be
assessed and to show that its compilation is
unique.’’ Sit–Up, 2008 WL 463884, at *10.

what protected materials were disclosed to
Viber during the relevant time period.
Logically, to make out a claim for the
misappropriation of a trade secret, a plaintiff
must show not only that it possessed a secret
but that the secret was misappropriated. See
Faiveley Transp. Malmo AB, 559 F.3d at
116–17. That requires identifying “the route
through which [the alleged secret] was
provided to the defendants.” Sit-Up, 2008
WL 463884, at *8. Here, Next does not
contend that its alleged secrets were readily
ascertainable from the slides themselves,
which consist only of elementary diagrams
and barebones descriptions. (See, e.g., Doc.
No. 114-12.) And Next concedes that
Yurchenko himself never had direct
communication or contact with Viber. (Def.
56.1 ¶ 26.)
Yurchenko’s Declaration
purports to “detail the information found” in
the slide presentations, but does not
represent that he gave that information to
Viber. (Yurchenko Decl. ¶ 3.) According to
De Prado, Yurchenko did not speak Hebrew,
so Next’s primary liaisons to Viber were
two Hebrew-speaking technologists, Ariel
Dayan and Yitzhak Greenberg. (Def. 56.1
¶¶ 26—27.) In his deposition, De Prado
ultimately conceded that he had no direct
knowledge of what Yurchenko said to
Greenberg and Dayan, or what they in turn
told Viber, because De Prado never
participated in those conversations. (See id.
¶ 25.) Thus, although De Prado testified
that the “ideas and abstracts” referenced in
the Yurchenko Declaration were conveyed
to Viber (De Prado Tr. at 147), that appears
to be mere speculation.

As for the Secure Financial Network and
HD Video Cloud Architecture, Yurchenko’s
descriptions are similarly unilluminating.
Regarding the Secure Financial Network, for
instance,
Yurchenko
states
that
“[e]ncapsulation of multiple encryptions,
one inside of another, creates unique type
[sic] of secure networks, which insures the
security
of
financial
transitions.”
(Yurchenko Decl. ¶ 12.) But that general
description does not reveal how the
encryptions are encapsulated, what elements
of that process (if any) are secret or
proprietary, or how those elements “in
unique combination, afford[] a competitive
advantage.” Integrated Cash Mgmt., 920
F.2d at 174; see BondPro Corp. v. Siemens
Power Gen., Inc., 463 F.3d 702, 710 (7th
Cir. 2006) (“One expects a trade secret to be
rich in detail, because a process described in
general terms [...] will usually be widely
known and thus not worth incurring costs to
try to conceal and so not a trade secret.”).
Regarding
the
HD
Video
Cloud
Architecture, Yurchenko describes a “video
router” that “produces several types of audio
or video streams, rather than a single one,
alleviating congestion.” (Yurchenko Decl. ¶
16). But again, Yurchenko does not explain
how the video router does this, or what
aspects of that process, if any, are unique
and therefore protectable. And finally,
Yurchenko offers no hint of how, if at all,
the GSM-IP Mobile Network, Secure
Financial Network, and HD Video Cloud
Architecture function together as a unique,
competitively advantageous compilation.

Obscuring matters even further, Next’s
opposition brief reflects yet another
evolution in Next’s trade-secret claim.
There, Next makes only a passing reference
to Yurchenko and instead zeroes in on a
single, allegedly “crucial slide” that
supposedly demonstrates Next’s “secret

Furthermore, even if Yurchenko had
described Next’s alleged secrets with
adequate specificity, Next has not shown
7

recipe” for “teleconferencing with upwards
of 10,000 individuals . . . with the ability to
monetize[.]” (Pl. Opp’n at 6 (citing Doc.
No. 114-12 at 30).)
The slide itself,
however, merely depicts a simplistic
diagram illustrating connections between
various
telecommunications
devices.
Relying on another post-hoc exegesis, this
time from expert Roger Marks, Next
conclusorily asserts that this slide contains a
“unique blueprint” for a concept allegedly
“so novel no one else has previously been
capable of performing [sic].” (Pl. Opp’n at
7.) According to Next, this network design
is unique because it uses a “completely
different module (video router), but utilizes
[it] in a way not traditionally applied or
known to be applied previously.” (Id.) But
Next does not specify what that “way” is or
how that “way” can be ascertained from the
generic graphics on the slides.

billing indicates an approach that is
not a typical [sic] in the
videoconference and video delivery
business. Some providers use other
models; for example, I earlier
referenced information indicating
that the Vidyo business is or was
based on charges for hardware and
for an annual per-line access license.
(Pl. Opp’n at 8.) But the slide, which
consists merely of an array of icons
clustered in blue and yellow boxes, neither
demonstrates how Next generates “Call
Detail Records” nor how Next uses CDRs
to monetize its videoconferencing products.
And obviously, Marks’s “belief” that
Next’s focus on accounting and billing is
“not typical” because “some providers use
other models” is hardly evidence of a trade
secret – that is, a unique formula generally
unknown in the industry, Big Vision, 1 F.
Supp. 3d at 259 – much less one that was
actually conveyed to Viber.

Next also briefly discusses another slide,
which supposedly depicts a “novel and
distinctive business model associated with
the telecommunications system.” (Id. at 8.)
To support that claim, Next relies solely on
the following quotation from Marks:

In sum, after more than two years of
litigation, including several months of Phase
I discovery in which the Court ordered Next
to define its alleged trade secrets with the
required particularity (Doc. No. 87), Next
still has not done so. The contours of Next’s
alleged secrets, and the means by which they
were supposedly conveyed to Viber, remain
“vague and indefinite.” Big Vision, 1 F.
Supp. 3d at 270. Meanwhile, as Viber
justifiably complains, the Court and the
parties have been forced to play a game of
trade-secret “whack-a-mole.” (Def. Mem. at
24); see Big Vision, 1 F. Supp. 3d at 263 (“It
does not require a [science] degree to realize
that the putative trade secret has differed
meaningfully and materially throughout the
litigation.”) Next offers no reason why that
game should continue – only more evasion
and obfuscation. Thus, Viber is entitled to

This slides [sic] . . . indicate [sic]
that Payments and Accounting SVC
are part of the Accounting and CDR
Service Clusters, which includes
“CDRs.” In the telecommunication
industry, “CDR” is understood to
mean “Call Detail Record, which is a
record of a service event typically
used as the basis of billing. The
generation of CDRs is essential to
the development of traditional prepaid and post-paid billing services.
Thus, the technical capability to
generate CDRs underlies various
opportunities to monetize the
network capabilities. I believe that
this focus on service accounting and
8

summary judgment on Next’s trade-secret
misappropriation claim.

unavailable
information
designated as proprietary.

B. Breach of Contract

that

Next

The parties do not dispute that the NDA
is a valid contract, so the only question is
whether Viber violated its terms. In its
complaint, Next alleged that Viber breached
the NDA in two ways. First, Next alleged,
Viber “used the Proprietary Information to
develop
its
own
advanced
videoconferencing technology like that
found in the NxtGn App.” Second, Viber
allegedly
“shar[ed]
the
Proprietary
Information with Rakuten before Rakuten
acquired Viber.” (Am. Comp. ¶¶ 67-68.)

Next brings a similar claim against Viber
on a breach-of-contract theory.
The
elements of breach of contract are: “(1) the
existence of a contract, (2) performance by
the party seeking recovery, (3) nonperformance by the other party, and (4)
damages attributable to the breach.” RCN
Telecom Servs., Inc. v. 202 Centre St. Realty
LLC, 156 F. App’x 349, 350–51 (2d Cir.
2005) (citation omitted). “Because [Next]
must prove each of these elements, the
absence of a genuine issue of material fact”
as to whether Next has established “any one
of them will require an award of summary
judgment in favor of [Viber.]” Marks v.
N.Y. Univ., 61 F. Supp. 2d 81, 88–89
(S.D.N.Y. 1999).

As with Next’s putative trade secrets,
however, Next still has not identified
precisely what proprietary information Viber
(1) allegedly received and (2) used or
transferred to a third party. De Prado,
Next’s 30(b)(6) witness, testified in his
deposition that the only pages of Next’s
Phase I production that contain proprietary
information or trade secrets are the slide
presentations
and
the
Yurchenko
Declaration. (Def. 56.1 ¶ 45.) As discussed
above, the slide presentations contain only
rudimentary
graphics
and
vague
descriptions. Next has not identified what
specific information in those presentations is
“not generally available to the public” (Doc.
No. 67-1 at 1).
For example, in its
complaint, Next alleged that the NxGn App
“is not currently available for use by the
general public” and “cannot be used without
a code that is provided by Next.” (Am.
Comp. ¶¶ 16, 35.) As Viber points out,
however, Next now appears to concede that
the NxtGn App has been publicly available
for download “99 percent of the time” since
around 2012, the year before Next
demonstrated the NxGn App to Viber. (See
Def. 56.1 ¶ 72; Am. Compl. ¶ 35.) In his
deposition, De Prado acknowledged that
people who downloaded the app could “use

Here, the contract at issue is the NonDisclosure Agreement, which purports to
govern the exchange of “Proprietary
Information” between Next and Viber. (See
Doc. No. 67-1 at 2.)
“Proprietary
Information” is defined as “that Information
which the Party disclosing such Information
(hereinafter the “Disclosing Party”) desires
to protect against unrestricted disclosure or
competitive use, which is not generally
available to the public and which the
Disclosing Party designates as such.” (Doc.
No. 54-1 at 1.) Under the terms of the
NDA, Viber was authorized to “[u]se the
Proprietary Information . . . only for the
purposes directly related to the purpose
expressed herein above and for no other
purposes.” (Id. at 2.) The NDA defines its
purpose as “assessing possible business
transactions between the Parties.” (Id. at 1.)
Thus, as relevant here, the NDA prohibited
Viber from disclosing to third parties, or
using in its own business, any publicly
9

it and see how it would work.” (Doc. No.
114-4 at 204.) To be sure, Next could
conceivably have showed Viber features of
the app that were unavailable to the public,
but Next has produced no “hard evidence”
to that effect, D’Amico, 132 F.3d at 149,
“from which a reasonable inference in
[Next’s] favor may be drawn,” Binder &
Binder, 481 F.3d at 148.

permitting [Viber] to retain what [Next] is
seeking to recover.” Ashland Inc. v. Morgan
Stanley & Co., 652 F.3d 333, 339 (2d Cir.
2011) (citation omitted). However, “when a
valid agreement governs the subject matter
of a dispute between parties, claims arising
from that dispute are contractual; attempts to
repackage them as sounding in . . . unjust
enrichment . . . are generally precluded,
unless based on a duty independent of the
contract.”
Poplar Lane Farm LLC v.
Fathers of Our Lady of Mercy, 449 F. App’x
57, 59 (2d Cir. 2011). Nonetheless, a claim
for unjust enrichment may still proceed
“where there is a bona fide dispute as to the
existence of a contract or where the contract
does not cover the dispute in issue.” Id.
(citation omitted).

Nor has Next shown how Viber
allegedly used proprietary information for
an impermissible purpose (e.g., enhancing
its own videoconferencing technology).
Next’s CEO, Maimon, stated in an affidavit
that in 2014 he observed a Viber investor
describing an “unfinished feature” on
Viber’s app in a way that sounded “nearly
identical to a presentation [Maimon] had
given to Viber regarding NxtGn’s
videoconferencing capabilities[.]” (Maimon
Decl. ¶ 30.)
Based on that vague
observation – which does not even identify
the presentation – Maimon concludes that
Viber must have stolen technology from
Next in violation of the NDA. (See id. ¶¶
31–32.) But such “[c]onclusory allegations,
conjecture, and speculation” cannot raise a
genuine dispute of material fact at this stage
of a litigation. Kerzer, 156 F.3d at 400.

Here, Next asserts vaguely that Viber
enriched itself at Next’s expense by
appropriating a “secret . . . of value.” (Pl.
Opp’n at 10.) But Next does not appear to
contest that any dispute regarding Viber’s
alleged misappropriation of secrets or
proprietary information is covered by a
contract – namely, the non-disclosure
agreement. Nor does Next contend that
Viber is bound by a “duty independent” of
that agreement. Poplar Lane, 449 F. App’x
at 59. Thus, Next’s attempt to repackage its
contractual claim as a claim for unjust
enrichment must fail. See id. Moreover, to
the extent that the dispute here falls outside
the scope of the non-disclosure agreement,
Next must still demonstrate specifically how
“[Viber] was enriched . . . at Next’s
expense.” Ashland Inc., 652 F.3d at 339.
Next has not done so. Because, as noted
above, Next cannot identify any trade
secrets or proprietary information with
sufficient particularity, it cannot adequately
identify an unjustly appropriated benefit.
Thus, Next’s unjust-enrichment claim fails.

In sum, Next has failed to provide
adequate support for its claim that Viber
breached the NDA by using Next’s
proprietary information in its own business
or disclosed that information to third parties.
The Court therefore grants summary
judgment to Viber on Next’s breach-ofcontract claim.
C. Unjust Enrichment
To prevail on its unjust enrichment claim
under New York law, Next must
demonstrate that:
“(1) [Viber] was
enriched, (2) at [Next’s] expense, and (3)
equity and good conscience militate against
10

D. Attorneys’ Fees and Sanctions

within the ambit of Rule 11, not Rule 37.
See Cooter & Gell v. Hartmarx Corp., 496
U.S. 384, 393 (1990) (noting that “the
central purpose of Rule 11 is to deter
baseless filings in district court”)
Accordingly, since Viber does not cite any
basis for sanctions other than Rule 37, which
is inapposite, the Court denies Viber’s
sanctions motion.

Having prevailed in this lawsuit, Viber
urges the Court to impose sanctions on Next
under Rule 37 of the Federal Rules of Civil
Procedure. (Def. Mem. at 34–35.) See Fed.
R. Civ. P. 37. Specifically, Viber requests
“dismissal of this [a]ction in its entirety with
prejudice” and “all of [Viber’s] attorneys’
fees and costs incurred in defending against
the [a]ction.” (Def. Mem. at 35.) The Court
has already held that Viber is entitled to
summary judgment on all of Next’s claims,
so that leaves only Viber’s request for fees
and costs.

Viber also contends that it is entitled to
its attorneys’ fees, costs, and expenses
pursuant to a fee-shifting provision in the
NDA. In relevant part, Paragraph 11 of the
NDA provides that “[i]f any action at law or
in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing
party shall be entitled to reasonable
attorney’s fees and paralegal fees, costs and
expenses[.]” (Doc. 67-1 at 3–4.) This case
appears to fall within the plain terms of that
provision, and indeed, Next does not appear
to contend otherwise. (See generally Pl.
Opp’n.) And where “a contract authorizes
an award of attorneys’ fees,” as the NDA
does here, such an award is mandatory.
McGuire v. Russell Miller, Inc., 1 F.3d
1306, 1313 (2d Cir. 1993). However, since
the fee-shifting provision here is contractual,
and since the Court is only now granting
summary judgment to Viber, Viber’s request
for fees under the NDA is premature. As of
this moment, neither party has had the
opportunity to exercise its rights under the
fee-shifting provision, and neither party is in
breach of that provision. Cf. Bellevue v.
Kafka, No. 92 C 4589, 1994 WL 127213, at
*2 (N.D. Ill. Apr. 7, 1994) (declining to treat
a claim for attorney’s fees as a compulsory
counterclaim because the claim was
“premature until after the original suit was
adjudicated”). Accordingly, if Viber wishes
to seek attorney’s fees pursuant to the NDA,
it should first demand them from Next; if
Next refuses the demand, then Viber may
file a complaint for breach of the fee-

Viber contends that Rule 37 sanctions
are appropriate here because, in Viber’s
view, “Plaintiffs have wasted this Court’s
resources and caused Viber to spend many
tens of thousands of dollars . . . to deal with
this frivolous lawsuit,” which was
“commenced and pursued . . . in bad faith.”
(Def. Mem. at 34–35.) Rule 37, however,
addresses sanctions for discovery violations.
See Roadway Exp., Inc. v. Piper, 447 U.S.
752, 763 (1980). And while it could be
argued that Next’s shifting theories of tradesecret misappropriation constituted a
discovery violation, since they persisted
throughout Phase I discovery, Viber’s
grievances seem more appropriate for a
motion pursuant to Rule 11, 28 U.S.C. §
1927, or the courts’ “inherent power to
control their own proceedings,” which
“includes the power to impose appropriate
monetary sanctions on counsel or a litigant,
including the assessment of attorney[s’]
fees.” Baker v. Urban Outfitters, Inc., 431
F. Supp. 2d 351, 362 (S.D.N.Y. 2006), aff’d,
249 F. App’x 845 (2d Cir. 2007) (citing
Chambers v. NASCO, Inc., 501 U.S. 32, 44–
45 (1991)). Indeed, Viber is principally
challenging Next’s good-faith belief at the
outset of this litigation that its claims were
not groundless, a charge that clearly falls
11