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

Filing 72

OPINION AND ORDER re: 34 MOTION to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6) filed by Viber Media, Inc. For the reasons stated above, IT IS HEREBY ORDERED THAT Defendant's motion to dismiss is GRANTED on Plaintiffs' mi sappropriation of a business idea claim, but DENIED as to their misappropriation of trade secrets, breach of contract, and unjust enrichment claims. IT IS FURTHER ORDERED THAT the parties shall appear on April 29, 2016 at 10:30 a.m. for a post-discov ery conference. As referenced in the case management plan and scheduling order (Doc. No. 22), any party wishing to make a post-discovery motion shall submit a pre-motion letter by April 15, 2016; the non-moving party shall respond within three business days. The Clerk of the Court is respectfully directed to terminate the motion located at docket number 34. (As further set forth in this Opinion and Order.) (Signed by Judge Richard J. Sullivan on 3/30/2016) (mro)

Case 1:14-cv-08190-RJS Document 72 Filed 03/30/16 Page 1 of 11

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
_____________________
No. 14-cv-8190 (RJS)

_____________________

NEXT COMMUNICATIONS, INC. AND NXTGN, INC.,
Plaintiffs,
VERSUS

VIBER MEDIA, INC.,
Defendant.
___________________
OPINION AND ORDER
March 30, 2016

___________________
RICHARD J. SULLIVAN, District Judge:
Plaintiffs Next Communications, Inc.
and NxtGn, Inc. (collectively, “Next”) bring
this action against Defendant Viber Media,
Inc. (“Viber’), alleging that Defendant
misused confidential information that
Plaintiffs communicated to Defendant
pursuant to a non-disclosure agreement.
Now before the Court is Defendant’s motion
to dismiss the Amended Complaint for
failure to state a claim pursuant to Federal
Rule of Civil Procedure 12(b)(6). For the
reasons set forth below, Defendant’s motion
to dismiss is granted with respect to
Plaintiffs’ claim for misappropriation of a
business idea, but denied with respect to
their claims for misappropriation of trade
secrets, breach of contract, and unjust
enrichment.

I. BACKGROUND
A. Facts
This case concerns software and mobile
applications used in connection with
videoconferencing and messaging over the
internet. 1 Next is a provider of longdistance voice, data, and video services for
telecommunications carriers. Viber is the
maker of a well-known and widely used
mobile app that allows users to send voice
1

The following facts are taken from the Amended
Complaint, filed on July 16, 2015 (Doc. No. 61
(“Amended Complaint” or “Am. Compl.”).) In
ruling on Defendant’s motion, the Court has also
considered Defendant’s memorandum of law (Doc.
No. 57 (“Mem.”)), Plaintiffs’ opposition (Doc. No.
56 (“Opp’n”)), and Defendant’s reply (Doc. No. 59
(“Reply”)).

Case 1:14-cv-08190-RJS Document 72 Filed 03/30/16 Page 2 of 11

34-36.) Next also shared with Viber its
confidential business idea for a Celebrity
Event Management platform (“CEM”) (id. ¶
37), which would enable “millions of
simultaneous users to participate in an
interactive videoconference with a celebrity
from any device while choosing their own
unique vantage point,” thus “allow[ing] for a
unique way to monetize a social media
experience, namely by charging users on a
per-minute basis for viewing a live, largescale videoconference” (id. ¶ 87).

and text messages internationally over a data
connection.
In 2012, NxtGn partnered with Telarix,
Inc. (“Telarix”) to develop a video platform
capable of delivering “high definition video
services” at “low fixed costs, and low perminute billing rates.” (Am. Compl. ¶ 10.)
The platform – named “AVYDA Powered
by Telarix” (“AVYDA”) – used NxtGn
technology to enable mobile devices to
participate
in
high-definition
videoconference calls.
Specifically,
AVYDA employed a “unique combination
of networking hardware, signaling servers,
and proprietary software” developed by
NxtGn (the “NxtGn Proprietary Services”).
(Id. ¶ 13.)

After the June 2013 meetings, the parties
exchanged emails and presentations but
never came to an agreement, as Viber
indicated that it was interested in the NxtGn
Proprietary Services, the NxtGn App, and
CEM, but not in Telarix’s services. (Id. ¶
39.) On July 8, 2013, Viber asked Next to
be the sole point of contact to develop a
video solution. (Id. ¶ 40.) Subsequently,
Viber ceased all communications with Next
until January 2014, when a Viber
representative arranged a meeting between
Next’s CEO, Arik Meimoun, and Viber’s
CEO. (Id. ¶ 42.)

After Viber initiated contact with Next,
the parties entered into a non-disclosure and
confidentiality agreement (the “NDA”) on
June 22, 2012 to discuss whether Next could
assist Viber in developing technology that
would enable transmission of video calls
over a wireless connection to mobile
devices.
(Id. ¶¶ 29-30.)
The NDA
prohibited the disclosure of proprietary
information to third parties and restricted its
use to the facilitation of a “possible business
transaction between Viber and Next.” (Id. ¶
30.)

On February 17, 2014, Japanese online
retailer Rakuten, Inc. announced its
intention to buy Viber for $900 million. (Id.
¶ 43.)
Plaintiffs’ Amended Complaint
alleges that, at the time of acquisition, Viber
did not have any videoconferencing abilities.
(Id.)

In May 2013, representatives of Next
and Viber met at a trade show in Chicago, at
which time Viber again expressed interest in
Next’s videoconferencing technology. (Id. ¶
32.) On May 21, 2013, Telarix contacted
Viber and sent an e-mail presentation, dated
September 21, 2012, about AVYDA. (Id. ¶
33.) On June 5, 2013, a Viber employee
contacted Telarix, and, over the course of
several meetings that month between
representatives of Viber and Next, Next
shared information about its technology and
demonstrated its software to Viber. (Id. ¶¶

In March 2014, Benny Shabtai, a large
investor in Viber before it was sold, met
with
Meimoun
and
other
Next
representatives. At that meeting, Meimoun
mentioned some of Next’s capabilities, and
Shabtai, who had not attended any of the
2013 meetings involving Next, Viber, and
Telarix, described what he called an
“unfinished feature” of Viber’s app that
Next alleges was a nearly verbatim
2

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unjust enrichment. (Doc. No. 54.) On July
20, 2015, Defendant filed an unredacted
version of its motion to dismiss (Doc. No.
57), which was fully briefed on July 28,
2015.

articulation of the confidential business idea
that Next had previously shared with Viber.
(Id. ¶ 48-49.)
In May 2014, Viber asked to meet with
Telarix about a potential business
transaction involving the use of the Telarix
services that are part of AVYDA. (Id. ¶ 53.)
Next alleges that Viber’s renewed interest in
Telarix “suggests that Viber is using the
information it learned about the NxtGn
Proprietary Services to develop its own
advanced videoconferencing technology.”
(Id. ¶ 54.)

II. LEGAL STANDARD
To survive a motion to dismiss pursuant
to Rule 12(b)(6) of the Federal Rules of
Civil Procedure, a complaint must “provide
the grounds upon which [the] claim rests.”
ATSI Commc’ns, Inc. v. Shaar Fund, Ltd.,
493 F.3d 87, 98 (2d Cir. 2007); see also Fed.
R. Civ. P. 8(a)(2) (“A pleading that states a
claim for relief must contain . . . a short and
plain statement of the claim showing that the
pleader is entitled to relief . . . .”). To meet
this standard, plaintiffs must allege “enough
facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). “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.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009).

Finally, on November 18, 2014, Viber
announced a new feature, “Public Chats,”
which Next alleges is “the first step toward
Viber’s implementation of Next’s Celebrity
Event Management Business Idea.” (Id. ¶¶
56-57.)
B. Procedural History
On October 14, 2014, Plaintiffs filed the
first complaint in this action. (Doc. No. 1.)
On March 13, 2015, the Court denied
Plaintiffs’ request to file an amended
complaint under seal, and directed Plaintiffs
to file unredacted versions of the original
Complaint, Amended Complaint, and all
briefing, exhibits, and declarations. (Doc.
No. 28.) On April 17, 2015, the Court
denied Plaintiffs’ motion for reconsideration
of that Order. (Doc. No. 41.) Plaintiffs
subsequently appealed the Order to the
Second Circuit, but on July 14, 2015, the
Second Circuit denied Plaintiffs’ motion for
a stay of the Court’s Orders. (Doc. No. 52.)
Plaintiffs
eventually
docketed
their
Amended Complaint on July 16, 2015.
(Doc. No. 54.)

In reviewing a Rule 12(b)(6) motion to
dismiss, a court must accept as true all
factual allegations in the complaint and draw
all reasonable inferences in favor of the
plaintiff. ATSI Commc’ns, 493 F.3d at 98.
However, that tenet “is inapplicable to legal
conclusions.” Iqbal, 556 U.S. at 678. Thus,
a pleading that offers only “labels and
conclusions” or “a formulaic recitation of
the elements of a cause of action will not
do.” Twombly, 550 U.S. at 555. If the
plaintiff “ha[s] not nudged [its] claims
across the line from conceivable to
plausible, [its] complaint must be
dismissed.” Id. at 570.

In the Amended Complaint, Plaintiffs
assert four claims: (1) misappropriation of
trade secrets; (2) misappropriation of a
business idea; (3) breach of contract; and (4)
3

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party fair notice of what the plaintiff’s claim
is and the grounds on which it rests.”
Alexander Interactive, Inc., 2014 WL
4651942, at *4. Moreover, 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
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); see also
Restatement (First) of Torts § 757, cmt. b
(Am. Law Inst. 1939) (“A trade secret may
consist of any formula, pattern, device or
compilation of information which is used in
one’s business, and which gives him an
opportunity to obtain an advantage over
competitors who do not know or use it.”).
In sum, “New York and Second Circuit law
establish that compilation trade secrets are
protectable but . . . the law requires the trade
secret claimant to 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) (emphasis added).

III. DISCUSSION
A. Misappropriation of Trade Secrets
Given that both parties rely on New
York law in their submissions, the Court
applies New York law to Plaintiffs’ claims.
Clarex Ltd. v. Natixis Sec. Am. LLC, No. 12cv-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))); cf. Celle v.
Filipino Reporter Enterp. Inc., 209 F.3d
163, 175 (2d Cir. 2000) (“Since no party has
challenged the choice of New York . . . law,
all are deemed to have consented to its
application.”). To succeed on a claim for
the misappropriation of trade secrets under
New York law, a party must show “(1) that
it possessed a trade secret, and (2) that the
defendants used that trade secret [(3)] 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).
As to the first element, a plaintiff must,
“at minimum, generally identify the trade
secrets at issue.” Alexander Interactive, Inc.
v. Leisure Pro Ltd., No. 14-cv-2796 (PKC),
2014 WL 4651942, at *5 (S.D.N.Y. Sept.
16, 2014). However, “specificity as to the
precise trade secrets misappropriated is not
required in order . . . to defeat . . . Motions
to Dismiss.” Medtech Prods. Inc. v. Ranir,
LLC, 596 F. Supp. 2d 778, 789 (S.D.N.Y.
2008); see also SD Prot., Inc. v. Del Rio,
498 F. Supp. 2d 576, 586 (E.D.N.Y. 2007)
(“Naturally, [plaintiff] has no obligation to
reveal those secrets in the Complaint simply
to prove that they exist.”). In other words,
“a plaintiff only need give the opposing

Plaintiffs’
Amended
Complaint
describes in substantial detail the
capabilities of the NxtGn Proprietary
Services – which they allege are their trade
secrets – without revealing the actual
technical details. Specifically, Plaintiffs
allege that the NxtGn Proprietary Services
use a “unique technique for routing calls,
allowing for detailed traffic monitoring,
reporting, and billing.” (Am. Compl. ¶ 19.)
This technology, Plaintiffs allege, allows for
a
number
of
improvements
in
videoconferencing
and
networking,
including the use of low-bandwidth
4

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description of trade secret as “manufacturing
processes used to create” security seals
sufficiently specific); but see Big Vision
Private Ltd. v. E.I. DuPont De Nemours &
Co., 1 F. Supp. 3d 224, 257 (S.D.N.Y. 2014)
(dismissing plaintiff’s complaint on
summary judgment because descriptions of
“varying structure compositions, a variety of
different
additives
in
differing
concentrations, an enormous range of Entira
amounts, and a wide variety of substrates
and finishing treatment” were too
generalized for the court to evaluate whether
plaintiff did in fact have a trade secret),
aff’d, 610 F. App’x 69 (2d Cir. 2015); SitUp Ltd., 2008 WL 463884, at *9 (granting
defendant summary judgment where
plaintiff’s complaint identified “more than
one hundred individual trade secrets in
varying degrees of specificity”).

networks, the ability to scale the number of
users to over a million, and the ability to
charge end-users on a per-minute basis. (Id.
¶ 20.) Plaintiffs characterize their “trade
secrets” as “the specific components used,
the way these components fit together as
building blocks to form a unique whole, and
the process by which these components
interact and work efficiently.” (Id. ¶ 21.)
Finally, Plaintiffs also allege that they
provided Defendant with an “in-depth
description of the NxtGn Proprietary
Services, including the process by which [it]
can be put to use to provide advanced
videoconferencing technology. . . .” (Id. ¶
36.) These descriptions are sufficient to
survive a motion to dismiss because they
enable the Court to generally define the
trade secrets at issue. In essence, Plaintiffs
are alleging that their trade secrets are the
technologies they have invented to improve
videoconferencing in specified ways.

Here, as in Medtech and Sorias,
Plaintiffs have offered descriptions of the
technology they seek to protect that are
sufficient for the Court to discern the
general contours of the alleged trade secrets
without compromising their secrecy and for
Defendant to be put on notice of the claim.
See Sit-Up Ltd., 2008 WL 463884, at *10
(“[T]he law requires the trade secret
claimant to describe the secret with
sufficient specificity that its protectability
can be assessed.”).
These descriptions
suffice on a motion to dismiss. Accordingly
while Plaintiffs’ claim for misappropriation
of trade secrets may eventually fail if
discovery reveals that the technology which
they seek to protect is not in fact unique, the
Court finds that the Amended Complaint
survives a motion to dismiss as to this first
element.

Courts have previously found similar
allegations sufficient to satisfy the first
element of a misappropriation of trade
secrets claim on a motion to dismiss. For
example, in Medtech Products Inc. v. Ranir,
LLC, Judge Karas found descriptions of
trade
secrets
that
included
the
“manufacturing cost details, drawings, test
data, and other information about the design
and manufacturing process for its dental
protectors” sufficient to state a claim for
misappropriation of trade secrets. 596 F.
Supp. 2d at 789 (S.D.N.Y. 2008). Similarly,
in Sorias v. National Cellular USA, Inc., the
court found it sufficient for a plaintiff to
describe its trade secret as “data and designs
of a specific phone charger with horizontally
folding A/C prongs.”
No. 14-cv-2897
(WFK) (SMG), 2015 WL 5093344, at *13
(E.D.N.Y. Aug. 27, 2015); see also E.J.
Brooks Co. v. Cambridge Sec. Seals, No. 12cv-2937 (LAP), 2015 WL 9704079, at *9
(S.D.N.Y. Dec. 23, 2015) (finding

As to the second element requiring use
of the trade secret, the Restatement (Third)
of Unfair Competition defines “use” of a
trade secret to include “any exploitation of
5

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omitted); see also Lindner v. Int’l Bus.
Machs. Corp., 06-cv-4751 (RJS), 2008 WL
2461934, at *16-17 (S.D.N.Y. June 18,
2008) (accepting allegations based on
“information and belief,” especially with
respect to information “peculiarly within the
opposing party’s knowledge”). At this
stage, without discovery, it is to be expected
that Plaintiffs would have limited
knowledge of the extent to which Defendant
has used their trade secrets. Accordingly,
the Court finds that Plaintiffs have
sufficiently alleged the second element of
their misappropriation of trade secrets claim
– that Defendant used their trade secrets in
developing a feature for its own app.

the trade secret that is likely to result in
injury to the trade secret owner or
enrichment to the defendant,” including
“marketing goods that embody the trade
secret, employing the trade secret in
manufacturing or production, relying on the
trade secret to assist or accelerate research
or development, or soliciting customers
through the use of information that is a trade
secret.” Restatement (Third) of Unfair
Competition § 40 cmt. c (Am. Law. Inst.
1995) (citation omitted); see Advanced
Analytics, Inc. v. Citigroup Glob. Mkts, Inc.,
No. 04-cv-3531 (LTS) (HBP), 2009 WL
7133660, at *17 (S.D.N.Y. Aug. 5, 2009)
(adopting Restatement definition of “use”),
report and recommendation adopted in part,
rejected in part, No. 04-cv-3531 (LTS)
(HBP), 2010 WL 4780772 (S.D.N.Y. Nov.
22, 2010). Here, Plaintiffs allege that
“Viber
misappropriated
the
NxtGn
Proprietary Services to develop its own
advanced videoconferencing technology like
that found in the NxtGn App. Indeed, Next
learned that this technology is currently an
unfinished feature in the Viber App.” (Am.
Compl. ¶ 79.)

Finally, as noted below with respect to
the breach of contract claim, Plaintiffs have
sufficiently alleged a breach of the NDA,
which was an agreement between the two
parties – thus satisfying the third element
that use of the trade secrets be “in breach of
an agreement, confidential relationship or
duty, or as a result of discovery by improper
means.” Faiveley Transp., 559 F.3d at 117.
Accordingly, because Plaintiffs have
described their trade secrets with sufficient
specificity and alleged that Defendant used
these trade secrets in breach of the NDA, the
Court denies Defendant’s motion to dismiss
Count II of Plaintiffs’ Amended Complaint.

Thus, under the Restatement’s broad
definition of “use,” Plaintiffs’ allegation in
the Amended Complaint that the Viber app
has an unfinished feature using Plaintiffs’
trade secrets is sufficient to allege “use”
because an unfinished feature constitutes use
of a trade secret in “manufacture or
production.”
In addition, although
Plaintiffs’ allegations with respect to
Defendant’s use of their trade secrets are
based on second-hand knowledge from
Shabtai, the Viber investor (see Am. Comp.
¶ 49), this Circuit has generally found that
“allegations may be based on information
and belief when facts are peculiarly within
the opposing party’s knowledge.” Boykin v.
KeyCorp, 521 F.3d 202, 215 (2d Cir. 2008)
(internal quotation marks and citation

B. Misappropriation of a Business Idea
To plead a claim of misappropriation of
a business idea under New York law, a
plaintiff must show “the requisite legal
relationship . . . between the parties” based
on “an express contract, an implied-in-fact
contract, or a quasi-contract,” and an “idea”
that is “novel and concrete.” McGhan v.
Ebersol, 608 F. Supp. 277, 284 (S.D.N.Y.
1985). Generally, “[t]he test for novelty is
rather stringent [and] the idea must show
true invention and not a mere adaptation of
6

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in the two paragraphs immediately
preceding Plaintiffs’ statement about the
CEM idea. (See id. ¶¶ 35-36.) Considering
Plaintiffs’ allegation about the sharing of the
CEM idea in the context of the paragraphs
that immediately precede it, the Court finds
that Plaintiffs have sufficiently alleged the
existence of a contract and that the issue of
whether or not any alleged misappropriation
took place while that contract was still
operative is a question of fact that may not
be resolved on a motion to dismiss.

existing knowledge.” Broughel v. Battery
Conservancy, No. 07-cv-7755 (GBD), 2010
WL 1028171, at *4 (S.D.N.Y. Mar. 16,
2010); see also Vent v. Mars Snackfood US,
LLC, 611 F. Supp. 2d 333, 338 (S.D.N.Y.
2009) (“An idea that is an adaptation of an
existing idea or that embodies elements long
in use may be novel if the adaptation or
combination would lead to a significantly
new and useful result.” (brackets and
internal quotation marks omitted)), aff’d,
350 F. App’x 533 (2d Cir. 2009). On a
motion to dismiss, a court may find that an
idea is not novel if it is “simply a variation
on a theme that already existed.” Zikakis v.
Staubach Retail Servs., Inc., No. 04-cv-9609
(NRB), 2005 WL 2347852, at *3 (S.D.N.Y.
Sept. 26, 2005); see also Lapine v. Seinfeld,
918 N.Y.S.2d 313, 321 (Sup. Ct. 2011)
(“[T]his issue may be determined on a
motion to dismiss, provided that the
documentary
evidence
conclusively
establishes lack of novelty as a matter of
law.”).

However, Plaintiffs have failed to satisfy
the second element of their misappropriation
of a business idea claim because they have
not sufficiently alleged that the CEM idea is
“a true invention and not a mere adaptation
of existing knowledge.” Broughel, 2010
WL 1028171, at *4. Plaintiffs allege that
“[t]here is nothing currently on the market
that allows for millions of simultaneous
users to participate in an interactive
videoconference with a celebrity from any
device while choosing their own unique
vantage point” and that this “allows for a
unique way to monetize a social media
experience, namely by charging users on a
per-minute basis for viewing a live, largescale videoconference.”
(Id. ¶ 87.)
However, these allegations, when compared
with documents available in the public
domain, are insufficient to establish that the
CEM idea is novel. See Schroeder v.
Pinterest Inc., 17 N.Y.S.3d 678, 692 (N.Y.
App. Div. 2015) (“As with the trade secret
claim, the idea misappropriation claim
cannot extend to material in the public
domain.” (citation omitted)).

As an initial matter, the NDA establishes
the necessary legal relationship between
Plaintiffs and Defendant.
Nevertheless,
Defendant argues that Plaintiffs have
insufficiently alleged that the NDA was
operative at the time of the alleged
misappropriation of a business idea because
the paragraph in the Amended Complaint
that refers to the sharing of the CEM idea
does not include a date and merely states
that “Next also shared its confidential
Celebrity Event Management business
idea.” (Am. Compl. ¶ 37.) In essence,
Defendant asks the Court to infer that the
sharing took place after the NDA expired on
June 22, 2013. (Id., Ex.1, ¶ 7.) However,
the more plausible inference is that Plaintiffs
told Defendant about the CEM idea at the
same time that they shared other
information, presumably in the June 11 and
June 13, 2013 discussions that are described

Specifically, Defendant identifies a
number of patent applications that pre-date
the events in the Amended Complaint for
inventions closely resembling Plaintiffs’
CEM idea. Significantly, these publicly
filed applications – of which the Court may
7

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or images.” (Am. Compl. ¶ 37.)

take judicial notice, see Telebrands Corp. v.
Del Labs., Inc., 719 F. Supp. 2d 283, 287
n.3 (S.D.N.Y. 2010) (“The Court may
properly take judicial notice of official
records of the United States Patent and
Trademark Office and the United States
Copyright Office.”) – include a 2007 patent
for a “method for providing multiple
viewing opportunities of events [which] . . .
may be communicated . . . over a cellular
network” (Doc. No. 37, Declaration of
Susan M. Schlesinger, dated April 20, 2015
(“Schlesinger Decl.”), Ex. D), a 2011 patent
for “establishing, via a mobile device, a
plurality of media streaming sessions with a
respective plurality of source devices” (id.,
Ex. E), and a 2006 patent for a “plurality of
digital video streams [that] enable an
attendee of the live concert to select which
of the plurality of digital video streams to
view using a portable digital device . . . such
that the attendee may choose from among
the different views of the live concert” (id.,
Ex. G). Plaintiffs attempt to distinguish
their idea from these applications by
emphasizing that CEM would allow the
broadcast of an event to “millions of
simultaneous fans over their mobile
devices.”
(Opp’n at 13 (emphasis in
original).) However, the mere use of bold
and italics cannot hide the fact that the idea
alleged
by
Plaintiffs
is
virtually
indistinguishable from those described in the
patent applications, and therefore is not
novel: indeed, it seems likely that anything
broadcast over a cellular network has the
potential to reach millions of viewers. At
most, Plaintiffs’ idea is “simply a variation
on a theme that already existed,” as
demonstrated by these existing patent
applications.
Zikakis, Inc., 2005 WL
2347852, at *3. Plaintiffs’ own description
of the CEM idea seems to recognize that the
idea is not novel, as they describe it as
“similar to major social services, but using
live HD video instead of short text messages

In short, the Court finds that Plaintiffs
have not alleged that the CEM idea satisfies
the “stringent” standard for novelty in a
misappropriation of a business idea claim,
since publicly filed applications for patents
reveal similar ideas which Plaintiffs are
incapable of distinguishing. Broughel, 2010
WL 1028171, at *4. Accordingly, the Court
finds that Plaintiffs have failed to state a
claim for misappropriation of a business
idea and Count III of the Amended
Complaint must be dismissed.
C. Breach of Contract
The elements of breach of contract are:
“(1) the existence of a contract; (2)
performance by the party seeking recovery;
(3) non-performance 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).
In determining a party’s
obligations under a contract, “the initial
interpretation of a contract is a matter of law
for the court to decide.” K. Bell & Assocs.,
Inc. v. Lloyd’s Underwriters, 97 F.3d 632,
637 (2d Cir. 1996) (internal quotation marks
and citation omitted). “Included in this
initial interpretation is the threshold question
of whether the terms of the contract are
ambiguous.” Alexander & Alexander Servs.,
Inc. v. These Certain Underwriters at
Lloyd’s, London, 136 F.3d 82, 86 (2d Cir.
1998). Only “if a contract is unambiguous
on its face” may a court construe it as a
matter of law. Metro. Life Ins. Co. v. RJR
Nabisco Inc., 906 F.2d 884, 889 (2d Cir.
1990). Moreover, a contract is unambiguous
if it “has a definite and precise meaning,
unattended by danger of misconception in
the purport of the contract itself, and
concerning which there is no reasonable
basis for a difference of opinion.” Id.
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(brackets and internal quotation marks
omitted).
Although the court is “not
constrained to accept the allegations of the
complaint in respect of the construction of
the Agreement,” it must “strive to resolve
any contractual ambiguities in [plaintiff’s]
favor.” Int’l Audiotext Network, Inc. v. Am.
Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir.
1995).

parties. Thus, under the language of the
NDA, the simple fact that Defendant might
have used the information in its own
research
and
development
of
videoconferencing technology is sufficient
to allege a breach of the contract.
As to the second alleged breach,
Defendant argues that Plaintiffs’ Amended
Complaint does not sufficiently plead that
the allegedly shared information, the CEM
idea (Am. Compl. ¶ 49), was Proprietary
Information – as it is defined in the NDA –
because it was available in the public
applications for patents. This argument,
which is essentially an affirmative defense,
is inappropriate on a motion to dismiss.
Specifically, the NDA prohibits the sharing
of “Proprietary Information” that is “not
generally available to the public and which
[Plaintiffs] designate[d] as such.” (Id., Ex. 1
at 1.) On a motion to dismiss, the Court
must accept as true Plaintiffs’ allegation that
Defendant “shar[ed] the Proprietary
Information with Rakuten” (id. ¶ 68), and it
cannot answer the factual question of
whether the CEM idea was “Proprietary
Information” as that term is defined under
the contract (id., Ex. 1 at 1). Defendant
once again relies on the publicly filed patent
applications to argue that the CEM idea was
not covered by the NDA.
However,
although the applications are relevant to
show that the CEM idea does not satisfy the
stringent novelty standard for Plaintiffs’
misappropriation claim, they do not impact
the Court’s interpretation of the terms of the
NDA, nor do they enable the Court to
evaluate whether the CEM idea was
“Proprietary Information,” as defined in the
NDA. In other words, while the patent
applications demonstrate that the CEM idea
is a variation of ideas in the public domain,
they do not compel the conclusion that the
CEM idea itself is not “Proprietary
Information” under the terms of the contract.

With respect to their breach of contract
claim, Plaintiffs cite to the NDA – which is
attached to the Complaint and thus may be
considered by the Court on a motion to
dismiss, see Chambers v. Time Warner, Inc.,
282 F.3d 147, 153 (2d Cir. 2002) – to allege
that Defendant has breached the contract in
two ways: (1) by “using the Proprietary
Information . . . to develop its own advanced
videoconferencing technology,” and (2) by
“sharing the Proprietary Information with
Rakuten.” (Am. Compl. ¶¶ 67-68.)
As to the first alleged breach, Defendant
argues that Plaintiffs’ allegations that the
proprietary information is part of “an
unfinished feature in the Viber App” is
inadequate to allege use in violation of the
NDA. (Id. ¶ 67.) However, the express
language of the NDA provides that the party
receiving the information may “[u]se the
Proprietary Information provided hereunder
only for the purposes directly related to the
purpose expressed herein above and for no
other purposes.”
(Id., Ex. 1 at 2.) In
addition, the NDA defines its purpose as
“assessing possible business transactions
between the Parties.” (Id., Ex. 1 at 1.)
Based on these definitions, and construing
any ambiguities in the NDA in favor of
Plaintiffs, Defendant’s alleged use of the
information provided by Plaintiffs to
develop a feature in its own app would
contravene the NDA’s requirement that the
shared information may only be used to
facilitate business transactions between the
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D. Unjust Enrichment

At this stage of the litigation, the Court
cannot conclude, as a matter of law, that the
sharing of the CEM idea was not a violation
of the NDA. Accordingly, the Court finds
that Plaintiffs have sufficiently alleged two
potential breaches of the NDA through their
allegations of both the use and sharing of
information protected by the NDA.

To state a claim for unjust enrichment
under New York law, a plaintiff must plead
that: “(1) defendant was enriched, (2) at
plaintiff’s expense, and (3) equity and good
conscience militate against permitting
defendant to retain what plaintiff 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.
(internal quotation marks omitted).

Finally, the Court finds that Plaintiffs’
allegations with respect to damages are also
sufficient.
Although the Amended
Complaint does not specify a dollar amount
of damages for the breach of contract claim,
it does provide factual support for Plaintiffs’
claim that Defendant harmed them.
Specifically, Plaintiffs allege that “being the
first competitor in an emerging market is a
business advantage of immeasurable value”
(id. ¶ 70), and seek both “permanent
injunctive relief to prevent Viber from using
and further disseminating Next’s Proprietary
Information” and damages “cause[d] [by]
Viber’s breach of the NDA” (id. ¶ 71).
These allegations are sufficient to plead
damages for the purposes of a motion to
dismiss because it is plausible that the loss
of the competitive advantage caused harm to
Plaintiffs. See, e.g., Xcellence, Inc. v. Arkin
Kaplan Rice LLP, No. 10-cv-3304 (HB),
2011 WL 1002419, at *5 (S.D.N.Y. Mar. 15,
2011) (“General pleading that [plaintiff]
suffered damages is sufficient to withstand a
motion to dismiss.”); see also Varghese v.
China Shenghuo Pharm. Holdings, Inc., 672
F. Supp. 2d 596, 611 (S.D.N.Y. 2009)
(“[D]amages issues are not properly
resolved at the motion to dismiss stage.”).

Here, as discussed above, the parties
dispute whether the alleged use and sharing
of information was covered by the NDA.
As such, Plaintiffs may proceed on their
unjust enrichment claim in the event that, at
a later stage of litigation, the NDA is found
not to cover the disputes in this case. See id.
Although Plaintiffs can ultimately recover
on only one of their two claims for breach of
contract and unjust enrichment, courts in
this district have routinely allowed plaintiffs
to advance past the pleading stage on an
alternate theory of unjust enrichment. See,
e.g., Transcience Corp. v. Big Time Toys,
LLC, 50 F. Supp. 3d 441, 452-53 (S.D.N.Y.
2014) (collecting cases); Maalouf v.
Salomon Smith Barney, Inc., No. 02-cv4770 (SAS), 2003 WL 1858153, at *7
(S.D.N.Y. Apr. 10, 2003) (finding that
plaintiff may plead both contract and quasi-

Accordingly, because the Court finds
that Plaintiffs’ Amended Complaint includes
factual allegations which, taken together,
satisfy the four elements of breach of
contract, Defendant’s motion to dismiss
Count I of the Amended Complaint is
denied.
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