Opternative, Inc. v. JAND, Inc.

Filing 42

OPINION AND ORDER. For the reasons stated above, Warby Parker's motion to dismiss the complaint is DENIED in part and GRANTED in part. Warpy Parker's motion to dismiss Opternative's claims for breach and contract and specific performan ce is denied. Warby Parker's motion to dismiss the remainder of Opternative's claims is granted. Opternative's unjust enrichment claim is dismissed with prejudice. Opternative's claims for misappropriation of trade secrets and unf air competition under New York law, misappropriation of trade secrets under FDTSA, and correction of inventorship are dismissed without prejudice. The Clerk of Court is respectfully directed to terminate the motion docketed at ECF No. 25. SO ORDERED. re: 25 MOTION to Dismiss Complaint for Failure to State a Claim filed by JAND, Inc. (Signed by Judge John F. Keenan on 8/7/2018) (rjm)

Case 1:09-md-02013-PAC Document 57

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------ X
:
OPTERNATIVE, INC.,
UNITED STATES DISTRICT COURT
:
SOUTHERN DISTRICT OF NEW YORK :
Plaintiff,
-----------------------------------------------------------x
:
In re-against- 2008 SECURITIES : :
FANNIE MAE
LITIGATION
: :
JAND, INC. d/b/a WARBY PARKER, : :
: :
-----------------------------------------------------------x
:
Defendant.
------------------------------ X

Filed 09/30/10 Page 1 of 45
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 8/07/2018

No. 17 Civ. 7831 (PAC)
08 Civ. 6936 (JFK)
OPINION &(PAC)
09 MD 2013 ORDER
OPINION & ORDER

APPEARANCES
HONORABLE PAUL A. CROTTY, United States District Judge:
FOR PLAINTIFF OPTERNATIVE, INC.:
Barry F. Irwin, Esq.
1
Iftekhar A. Zaim, Esq. BACKGROUND
IRWIN IP LLC
The early years of this decade saw a boom in home financing which was fueled, among
FOR DEFENDANT JAND, INC. d/b/a WARBY PARKER:
other things, by low interest rates and lax credit conditions. New lending instruments, such as
Philip A. Irwin, Esq.
Gillian A. Kassner, Esq.
subprime mortgages (high credit risk loans) and Alt-A mortgages (low-documentation loans)
Richard L. Rainey, Esq.
Peter A. Swanson, Esq.
kept the boom going.BURLING LLP a role too; they took on unmanageable risks on the
COVINGTON & Borrowers played
assumption that the market would continue to rise and that refinancing options would always be
JOHN F. KEENAN, United States District Judge:
Before the Court is a motion lacking in the system. Mortgage d/b/a
available in the future. Lending discipline wasby Defendant JAND, Inc.originators did
Warby hold these high-risk mortgage loans. to dismiss Plaintiff Opternative,
not Parker (“Warby Parker”) Rather than carry the rising risk on their books, the
Inc.’s (“Opternative”) complaint for failure to state a claim
originators sold their loans into the secondary mortgage market, often as securitized packages
under Federal Rule of securities Procedure 12(b)(6). For the reasons
known as mortgage-backed Civil (“MBSs”). MBS markets grew almost exponentially.
stated below, the housing bubble burst. In 2006, the demand for housing dropped abruptly
But then Warby Parker’s motion is denied in part and
granted inprices began to fall. In light of the changing housing market, banks modified their
and home part.
I.
lending practices and became unwilling Background mortgages without refinancing.
to refinance home
Unless otherwise noted, the following facts and allegations
are1 Unless otherwise indicated, complaint, which,orfor “Complaint” are to the Amended Complaint,
drawn from the all references cited as “(¶ _)” to the the purposes of this
dated June 22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true.

1
1

motion, are presumed to be true.

Opternative is a healthcare

technology startup focused on developing innovative technology
for the provision of accurate, convenient, and affordable
corrective lens prescriptions based on eye exams, or
“refractions,” conducted via the internet. (Compl. ¶ 8.)
Opternative developed a “first-of-its-kind” system whereby
ophthalmologists generate a corrective lens prescription using
refraction technology:

an online eye-exam a patient can self-

administer from any location without the use of specialized
equipment. (Id. ¶ 9.)

Opternative launched its online

refraction system to the public in July of 2015. (Id. ¶ 11.)
Opternative’s system is protected by U.S. Patent Nos. 9,237,842,
9,492,074, and 9,504,378. (Id. ¶ 27.)
In 2013, Opternative met with Warby Parker to discuss
Opternative’s then in-development online refraction system and
the potential for partnership. (Id. ¶ 15.)

The parties entered

into three non-disclosure agreements to enable these
discussions. (Id.)

The first non-disclosure agreement (the

“First NDA”), effective May 2, 2013, provides that Warby Parker,
as the recipient of “Proprietary Information,” can use such
information “only for its consideration internally of a
potential business relationship or transaction between the
parties . . . but not for any other purpose.” (Id.)
“Proprietary Information” is defined as
2

all financial, business, legal and technical
information of Discloser . . . (including
information about research, development,
operations, marketing, transactions,
regulatory affairs, discoveries, inventions,
methods, processes, articles, materials,
algorithms, software, specifications,
designs, drawings, data, strategies, plans,
prospects, know-how and ideas, whether
tangible or intangible, and including all
copies, abstracts, summaries, analyses and
other derivatives thereof), that is marked
or otherwise identified as proprietary or
confidential at the time of disclosure, or
that by its nature would be understood by a
reasonable person to be proprietary or
confidential. Proprietary Information shall
not include any information that (a) was
rightfully known to Recipient without
restriction before receipt from Discloser,
(b) is rightfully disclosed to Recipient
without restriction by a third party, (c) is
or becomes generally known to the public
without violation of this Agreement by
Recipient or (d) is independently developed
by Recipient or its employees without access
to or reliance on such information.
(Compl. Ex. A at 1.)
Additionally, Warby Parker promised that it would not
“disclose the Proprietary Information to any third party” or
“decompile, disassemble or otherwise reverse engineer any
Proprietary Information, or use any similar means to discover
its underlying composition, structure, source code or trade
secrets.” (Id.)

Under the “Remedies” clause of the First NDA,

“the parties agree that any breach or threatened breach of this
Agreement will cause not only financial harm to Discloser, but
also irreparable harm for which money damages will not be an
3

adequate remedy.” (Id.)

The “Termination” clause provides that

the confidentiality obligations of the agreement survive
termination for five years, and that, upon termination or upon
Opternative’s request, Warby Parker was required to return all
originals and copies of any Proprietary Information, and to
destroy all information, records, and materials developed from
that information. (Id. ¶ 19.)

Because no termination notice was

issued, the First NDA was effective through May 2, 2016. (Id.)
Under the protection of the First NDA, Opternative provided
Warby Parker with confidential Proprietary Information,
including numerous demonstrations of the latest builds of its
in-development online refraction system and an explanation as to
how the system determined corrective lens prescriptions. (Id. ¶¶
16-17.)

On September 2, 2014, Opternative provided Warby Parker

with confidential correspondence between Opternative and the FDA
regarding the likely FDA classification of Opternative’s online
refraction system. (Id. ¶ 18.)

Opternative alleges that no

Proprietary Information has been returned, and Warby Parker has
not destroyed all information, records, and materials developed
from that information. (Id. ¶ 20.)
Discussions between Opternative and Warby Parker continued,
and on October 6, 2014, the parties entered into the second nondisclosure agreement (the “Second NDA”), with an effective date
of September 3, 2014. (Id. ¶ 21.)
4

The Second NDA provides that

all “Confidential Information” will be furnished solely for the
purpose of evaluation of each party’s potential interest for a
partnership or an acquisition of Opternative by Warby Parker
(the “Transaction”), and will not “affect, in any way, each
party’s relative competitive position to each party or to other
entities.” (Id. ¶¶ 22, 25.)

“Confidential Information” is

defined as
any and all confidential and/or proprietary
knowledge, data or information of each of
the parties in tangible or intangible form
whether or not in writing and whether or not
labeled or identified as confidential or
proprietary, including, patents, copyrights,
trade secrets, techniques, sketches,
drawings, models, inventions, products,
know-how, processes, apparatus, equipment,
algorithms, technology, software programs,
software source documents, formulae,
research, experimental work, development,
design details and specifications,
engineering, financial information,
procurement requirements, operations,
purchasing, manufacturing, customer lists,
business forecasts, sales and merchandising,
marketing plans and information, and the
existence and content of discussions between
the parties.
(Compl. Ex. B at 1.)
The Second NDA prohibits use of the Confidential
Information for purposes other than evaluating the Transaction,
and provides that Warby Parker is barred from “reverse
engineer[ing], decompil[ing], or disassembl[ing] any prototypes,
software, or other tangible or intangible objects” which embody

5

Opternative’s Confidential Information, and from attempting to
“derive the composition or underlying information, structure or
idea of any Confidential Information.” (Id. ¶ 23.)
Additionally, the Second NDA provides that ownership over
Opternative’s Confidential Information, and any “Derivatives” of
said material, “whether created by [Opternative] or [Warby
Parker],” remain property of Opternative. (Id. ¶ 26.)
“Derivatives” are defined as “for copyrighted material, any
translation, abridgement, revision or other form in which an
existing work may be recast, transformed or adapted . . . for
patented material, any improvement thereon; and . . . for
material which is protected by trade secret, any new material
derived from such existing trade secret material, including new
material which may be protected under copyright, patent, and/or
trade secret laws.” (Id.)
Under the Second NDA, Opternative continued to disclose
confidential Proprietary Information, including numerous
demonstrations of the latest builds of its still in-development
online refraction system and an explanation as to how the system
determines corrective lenses prescriptions. (Id. ¶ 24.)

Warby

Parker was permitted to use the in-development system. (Id.)

In

addition, between April 14, 2015 and June 24, 2015, Opternative
disclosed to Warby Parker’s leadership confidential trade secret
documents and information, including (1) a memorandum by
6

Opternative’s outside counsel detailing the proprietary
corporate structure by which Opternative effects compliance with
their legal and regulatory obligations, (2) a comprehensive
report detailing the results of Opternative’s clinical trials,
and (3) details regarding Opternative’s operating expenses,
disclosed at Warby Parker’s request. (Id. ¶ 25.)
On May 2, 2015, Opternative sought assurances that Warby
Parker was not developing its own competing online eye exam
system. (Id. ¶ 29.)

Opternative’s concerns were based on news

articles, including an April 30, 2015 Wall Street Journal
article featuring Warby Parker co-founder and co-CEO Dave Gilboa
(“Gilboa”), which indicated that Warby Parker was “investing
technology to let customers conduct eye exams using just their
mobile phones.” (Id. ¶ 30.)

In response to Opternative’s

inquiry, Gilboa reiterated that Warby Parker was “excited to
move forward with further testing of [Opternative’s] latest
exam” and indicated that he was “sensing a bunch of concern that
I think is misplaced,” suggesting a teleconference to “make sure
any concerns are addressed.” (Id. ¶ 31.)
On June 5, 2015, less than a month after Gilboa’s
“assurances” to Opternative, Warby Parker filed an application
for a patent, U.S. Patent Application Serial No. 14/732,435,
pertaining to technology directed towards online eye examination
systems, specifically a method of using a mobile camera, such as
7

a smartphone camera, paired with a computer screen, for
determining a user’s distance from the screen and guiding the
user to a particular distance so the user may take an eye exam
displayed using the computer screen. (Id. ¶¶ 42-43.)

That

patent application matured into U.S. Patent No. 9,532,709 (the
“709 Patent”). (Id. ¶ 44.)
Opternative alleges that Warby Parker’s pursuit of the 709
Patent arose directly from its exposure to and analysis of
Opternative’s Confidential and Proprietary information. (Id. ¶
51.)

Opternative alleges that Warby Parker falsely ascribed the

inventorship of the 709 Patent to Warby Parker employees,
despite the fact that it was conceived by Dr. Steven Lee of
Opternative (“Dr. Lee”) and relayed to Warby Parker employees
during a teleconference “regarding the user-experience aspects
of Opternative’s eye exam system.” (Id. ¶ 45.)

In addition, one

inventor of the 709 Patent, Molly Rhodes, Warby Parker’s
Director of Strategy and Corporate Development, served as
Opternative’s primary point of contact through the course of the
partnership, and was present when Dr. Lee relayed the claimed
invention of the 709 Patent to Warby Parker. (Id. ¶ 46.)
From the spring to the fall of 2015, Warby Parker requested
control of Opternative’s testing environment so that Warby
Parker could conduct its own independent comparative study of
Opternative’s online refraction system. (Id. ¶ 33.)
8

Warby

Parker also insisted on being granted access to the raw output
of Opternative’s refraction software, which Opternative was
reluctant to give, in part because of the need to protect its
confidential trade secret algorithm against reverse-engineering.
(Id. ¶¶ 34-35.)

Opternative agreed to provide access to a

testing environment, including Opternative software’s raw data
output, under the protection of an expanded version of the
Second NDA (the “Third NDA”). (Id. ¶ 37.)
The Third NDA, effective October 22, 2015, contains terms
substantially identical to those of the Second NDA, but
expressly incorporates a category of information entitled “Data
Output” into the definition of Confidential Information. (Id. ¶
38.)

“Data Output” is defined to include “data outputs that are

generated by an Opternative exam and that are provided . . . to
Warby Parker in the course of an internal patient study:

the

sphere, cylinder and axis data points for each patient that
participates in such study.” (Id.)

Data Output may only be used

for “the specific purpose of testing and evaluating the
Opternative technology,” and may only be shared with third
parties or the public upon written agreement. (Id.)
In December of 2015, Opternative provided Warby Parker
access to a testing environment and to the raw results of
Opternative’s eye exam software. (Id. ¶ 39.)

Warby Parker

conducted over sixty tests, and used data gleaned from this
9

testing environment to assess the viability of the online eye
exam market and further develop Warby Parker’s competing online
refraction system. (Id. ¶¶ 40-41.)

Following Warby Parker’s

testing of Opternative’s system, Warby Parker questioned
Opternative’s mechanism for determining the user’s distance from
the screen—i.e., by instructing the user to move a number of
heel-to-toe steps towards or away from the screen for different
stages of the refraction. (Id. ¶ 48.)

In response, Opternative

suggested a number of viable alternative methods of determining
the user’s distance from the screen, including the use of a
camera to determine the user’s distance from the screen and
guide the user into the desired position—the very invention and
technology that Warby Parker “eventually claimed as their own.”
(Id. ¶¶ 49-50.)

On May 23, 2017, Warby Parker launched a system

marketed under the name “Prescription Check” which operates in
direct competition with and bears substantial similarities to
Opternative’s online refraction system. (Id. ¶¶ 56-57.)
Opternative alleges that Warby Parker’s appropriation of
the invention of the 709 Patent and its refusal to assign the
709 Patent to Opternative, which is a Derivative of
Opternative’s Confidential Information, constitutes breach of
the NDAs. (Id. ¶¶ 53-54.)

Further, Warby Parker used the

Proprietary and Confidential Information provided by Opternative
“to inform its decision to enter the online refraction market”
10

and in the design and development of Warby Parker’s Prescription
Check system, also a Derivative of Confidential Information, in
contravention of the NDAs’ terms. (Id. ¶¶ 58-59.)

Opternative

has demanded delivery of all Confidential Information and
Derivatives thereof pursuant to Warby Parker’s breach, however,
no Confidential Information or Derivatives have been delivered
to Opternative, and Warby Parker has not provided any
certification that it has destroyed all Confidential Information
and Derivatives. (Id. ¶¶ 27-28.)
On September 12, 2017, Opternative filed the complaint
against Warby Parker, alleging seven claims:

(1) breach of

contract, (2) misappropriation of trade secrets under New York
common law, (3) misappropriation of trade secrets under the
Federal Defend Trade Secrets Act (“FDTSA”), 18 U.S.C. § 1836(b),
(4) unfair competition, (5) unjust enrichment, (6) correction of
inventorship, and (7) specific performance of Warby Parker’s
obligations under the NDAs. (Id. ¶¶ 71-106.)

On November 6,

2017, Warby Parker moved to dismiss the complaint for failure to
state claims under Rule 12(b)(6).
II.
A.

Discussion
Legal Standard

To survive a motion to dismiss under Rule 12(b)(6), a
complaint must contain “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
11

U.S. 544, 570 (2007).

A claim is plausible “when the plaintiff

pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d
Cir. 2011).

In determining the adequacy of the complaint, the

Court may consider any document attached to the complaint as an
exhibit or incorporated in the complaint by reference, as well
as documents which are integral to the complaint. Int’l
Audiotext Network, Inc. v. AT&T Co., 62 F.3d 69, 72 (2d Cir.
1995) (per curiam).

On a motion to dismiss, the Court must

accept the factual allegations in the complaint as true and draw
reasonable inferences in the plaintiff’s favor. Tsirelman v.
Daines, 794 F.3d 310, 313 (2d Cir. 2015).

In addition, the

Court “should resolve any contractual ambiguities in favor of
the plaintiff.” Subaru Distributors Corp. v. Subaru of Am.,
Inc., 425 F.3d 119, 122 (2d Cir. 2005).
B.
1.

Analysis

Opternative Has Plausibly Alleged Claims for Breach of
Contract and Specific Performance
Opternative has plausibly alleged claims for breach of

contract and specific performance against Warby Parker.

Under

New York law, to state a breach of contract claim, the plaintiff
must allege (1) the existence of a contract, (2) performance by
the party seeking recovery, (3) non-performance by the other

12

party, and (4) damages. RCN Telecom Servs., Inc. v. 202 Centre
St. Realty, LLC, 156 F. App’x 349, 350-51 (2d Cir. 2005).
Specific performance is an equitable remedy for breach of
contract. Deutsche Bank Nat’l Tr. Co. v. Morgan Stanley Mortg.
Capital Holdings LLC, 289 F. Supp. 3d 484, 495 (S.D.N.Y. 2018).
“At the motion to dismiss stage, a plaintiff need only plead
allegations from which damages attributable to defendant’s
[breach] might be reasonably inferred.” Bancorp Servs., LLC v.
Am. Gen. Life Ins. Co., No. 14-CV-9687 (VEC), 2016 WL 4916969,
at *6 (S.D.N.Y. Feb. 11, 2016) (citations and internal quotation
marks omitted).
In the NDAs, Warby Parker agreed to use Opternative’s
Confidential and Proprietary Information only for the purpose of
evaluating a business relationship with Opternative.

Pursuant

to the First NDA, Warby Parker agreed “to use the Proprietary
Information only for its consideration internally of a potential
business relationship or transaction between the parties, and
its performance in any resulting arrangement, but not for any
other purpose.” (Compl. ¶ 15; Compl. Ex. A ¶ 2 (emphasis
added).)

Under the Second NDA, Warby Parker agreed that all

“Confidential Information furnished pursuant to this Agreement
is done so solely for the purpose of evaluation of each party’s
current potential interest in the Transaction and not to affect,
in any way, each party’s relative competitive position to each
13

party or to other entities.” (Compl. ¶ 22; Compl. Ex B ¶ 1.)
Under the Third NDA, Warby Parker agreed that Data Output “may
only be used for the specific purpose of testing and evaluating
the Opternative technology.” (Id. ¶ 38; Compl. Ex. C ¶ 2.)
Opternative alleges that, under the protections of the
NDAs, it provided Warby Parker with “substantial confidential
Proprietary Information,” including numerous demonstrations of
the latest builds of its in-development online refraction
system, an explanation as to how the system operated to
determine corrective lenses prescriptions, and access to
Opternative’s raw data output. (Id. ¶¶ 16-17, 24, 37.)
Opternative also disclosed to Warby Parker highly confidential
materials including (1) a memorandum by Opternative’s outside
counsel detailing the proprietary corporate structure by which
Opternative effects compliance with its complex legal,
regulatory, and ethical obligations, (2) a comprehensive report
detailing the results of Opternative’s clinical trials, and (3)
details of Opternative’s operating expenses. (Id. ¶ 25.)
According to the complaint, Warby Parker used Opternative’s
Confidential Information to inform its decision to enter the
online refraction market and compete with Opternative, in breach
of the NDAs. (Id. ¶ 58.)

On June 5, 2015, Warby Parker filed

the 709 Patent application pertaining to technology directed
towards online eye examination systems—specifically, a method of
14

using a mobile camera paired with a computer screen, for
determining a user’s distance from the screen and guiding the
user to a particular distance so the user may take an eye exam
displayed using the computer screen. (Id. ¶ 43.)

Warby Parker

“falsely ascribed the inventorship of the ’709 Patent to Warby
Parker employees, even though it was conceived by [Dr. Lee].”
(Id. ¶ 45.)

Notably, a named inventor of the 709 Patent, Molly

Rhodes, was present for conversations where Dr. Lee related the
claimed invention of the 709 Patent to Warby Parker. (Id. ¶ 46.)
Opternative alleges that the 709 Patent is an improvement on
Opternative’s online refraction system and is a direct result of
Warby Parker’s exposure to and analysis of Opternative’s
Confidential Information. (Id. ¶¶ 51, 53.)
In addition, Opternative claims that Warby Parker used data
gleaned from Opternative’s testing environment to assess the
viability of the online refraction market, inform its business
strategy for entering the market, and further the development of
its competing system. (Id. ¶¶ 41, 64.)

Following Warby Parker’s

testing of Opternative’s online refraction system, “Warby Parker
questioned Opternative’s mechanism of determining the user’s
distance from the screen” and in response, “Opternative
suggested a number of viable alternative methods of determining
the user’s distance from the screen . . . includ[ing] the use of
a camera to determine the user’s distance from the screen and
15

guide the user into the desired position, which is the very
invention and technology that Warby Parker eventually claimed as
their own.” (Id. ¶¶ 48-50.)

Opternative alleges that

Prescription Check, Warby Parker’s online refraction system, is
derived from, operates in direct competition with, and bears
substantial similarities to Opternative’s online refraction
system. (Id. ¶¶ 27, 56-57.)

These allegations are sufficient to

plead a claim for breach of contract against Warby Parker.
In its motion to dismiss, Warby Parker first argues that
“[w]here the alleged breach involves the misuse of trade secret
or confidential information in violation of an NDA, a plaintiff
may not allege [] mere possession . . . rather, it must plead
facts from which the court can plausibly infer that the
defendant misused that information.” (Def.’s Mem. of L. in Supp.
of Mot. to Dismiss at 8, ECF No. 26 (filed Nov. 6, 2017)
[hereinafter Def.’s Mem.].)

Warby Parker contends that at most,

Opternative alleges that Warby Parker had access to
Opternative’s Confidential Information, which does not give rise
to an inference that Warby Parker “misused” that information in
violation of the NDAs. (Id. at 9.)

However, “[i]t is well

recognized with respect to trade secrets that . . . misuse can
rarely be proved by convincing direct evidence.

In most cases

plaintiffs must construct . . . circumstantial evidence from
which the trier of fact may draw inferences which convince him
16

that it is more probable than not that what plaintiffs allege
happened did in fact take place.” Q-Co Indus., Inc. v. Hoffman,
625 F. Supp. 608, 618 (S.D.N.Y. 1985) (quoting Greenberg v.
Croydon Plastics Co. Inc., 378 F. Supp. 806, 814 (E.D. Pa.
1974)).

As discussed above, Opternative alleges that Warby

Parker used Opternative’s Confidential Information—including
demonstrations of its in-development system, internal memoranda
and reports, and methods of distance determination using a
camera—to inform its decision to enter the online refraction
market, in making strategic and marketing decisions, in the
invention of the 709 Patent, and in the design and development
of Prescription Check.

These allegations are sufficient to

establish circumstantial evidence from which the factfinder
could infer that Warby Parker used Opternative’s Confidential
Information for purposes other than evaluating a business
relationship with Opternative, in breach of the NDAs.
Second, Warby Parker argues that “independent development”
of Prescription Check is an “obvious alternative explanation”
for Warby Parker’s launch of a competitive system bearing
substantial similarities to Opternative’s system. (Def.’s Mem.
at 9, 11.)

However, that two plausible inferences may be drawn

from factual allegations is not a choice to be made by the Court
on a Rule 12(b)(6) motion, and in such case, a breach of

17

contract claim must not be dismissed. Anderson News LLC v.
American Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012).
Third, Warby Parker argues that the idea of using a camera
to determine the user’s distance from the screen and guide the
user into the desired position “was already known in the prior
art” as Opternative’s Patent No. 9,237,842 (the “842 Patent”),
published nine months before the 709 Patent application,
discusses using a camera attached to a computerized screen to
determine the distance of the patient. (Def.’s Mem. at 12
(citing U.S. Patent No. 9,237,842, Irwin Decl. Ex. 1, ECF No.
27-1 at 35 (filed Nov. 6, 2017) [hereinafter 842 Patent]).)
Because this information was publicly available, Warby Parker
contends that it is not “Confidential Information” under the
NDAs.

The Court is unpersuaded.

First, it is not clear that

the method of using a camera to determine the user’s distance
from the screen described in the 842 Patent is the same as the
method described in the complaint.

The complaint alleges that

Opternative suggested using a “camera to determine the user’s
distance from the screen and guide the user into the desired
position.” (Compl. ¶ 50.)

The 842 Patent describes using “a

camera which may be attached to the computerized screen to
determine the distance of the patient from the computerized
screen.” (842 Patent at 35.)

Drawing all reasonable inferences

in Opternative’s favor, it is plausible that the method of using
18

a camera to “guide the user into the desired position” was not
included in the 842 Patent, and thus was not publicly available.
Moreover, even if Opternative’s distance-determination
method was made public prior to the 709 Patent application, it
was only one piece of the Confidential Information Opternative
divulged to Warby Parker.

Opternative alleges that it

“suggested a number of viable alternative methods of determining
the user’s distance from the screen” including using a camera to
“guide the user into the desired position,” which was not
included in the 842 Patent. (Compl. ¶¶ 49-50.)

Opternative also

alleges that it provided Warby Parker with demonstrations of its
in-development refraction system, internal memoranda and
reports, and raw outputs of the confidential algorithm in
Opternative’s system.

Thus, Opternative has plausibly alleged

that it disclosed non-public Confidential Information that Warby
Parker used to develop the 709 Patent and Prescription Check in
breach of the NDAs. See, e.g., Nat’l Elevator Cab & Door Corp.
v. H & B, Inc., No. 07CV1562 (ERK)(RML), 2008 WL 207843, at *12
& n. 28 (E.D.N.Y. Jan. 24, 2008) (finding likelihood of misuse
of confidential trade secret information where “at least some”
of the proprietary information disclosed to defendant was “not
publicly available” at the time).
Opternative has also sufficiently alleged breach of the
NDAs based on Warby Parker’s failure to return, deliver, and
19

assign to Opternative all Confidential Information and
Derivatives therefrom.

Under the NDAs, Warby Parker is required

to, upon request, destroy or deliver all materials furnished and
any Derivatives thereof. (Compl. ¶¶ 19, 26.)

Further, “[a]ll

Confidential [I]nformation of . . . [Opternative], and any
Derivatives . . . shall remain the property of [Opternative].”
(Id. ¶ 26.)

Opternative alleges that Warby Parker’s

Prescription Check “constitutes a Derivative of Opternative’s
Proprietary and Confidential Information pursuant to the Second
and Third NDA.” (Id. ¶¶ 60, 63.)

Opternative also alleges that

Warby Parker “developed . . . . possesses, has used, and has
disclosed to third parties Derivatives of Opternative’s
Confidential Information . . .

which, pursuant to ¶ 5 of the

Second NDA and Third NDA, are owned by Opternative.” (Id. ¶ 75.)
However, “[n]o Proprietary Information has been returned to
Opternative, and Warby Parker has not destroyed all information,
records and materials developed therefrom.” (Id. ¶ 20.)

Thus,

Opternative has alleged breach of contract based on Warby
Parker’s failure to return, assign, or destroy Confidential
Information.
Finally, Warby Parker argues that Opternative has failed to
allege that it suffered any damages from Warby Parker’s failure
to deliver, assign, or destroy all Confidential Information.
(Def.’s Mem. at 14.)

First, Warby Parker stipulated in the
20

First and Second NDAs that a breach of the NDAs would cause not
only financial harm, but also “irreparable harm” to Opternative.
(Compl. ¶¶ 15, 105.)

Second, Opternative alleges that Warby

Parker’s unauthorized use of Opternative’s Confidential
Information and its failure to assign the 709 Patent to
Opternative has resulted in irreparable damages. (Id. ¶¶ 77,
107.)

Thus, Opternative has adequately alleged claims for

breach of contract.
2. Opternative Has Failed to State a Claim for Unjust Enrichment
Under New York law, the existence of a valid contract
typically bars recovery based on the quasi-contract theory of
unjust enrichment. Agerbrink v. Model Serv. LLC, 155 F. Supp. 3d
448, 458-59 (S.D.N.Y. 2016).

However, when there is a bona fide

dispute as to the existence of a contract, an unjust enrichment
claim may be alleged in the alternative alongside a breach of
contract claim. Labajo v. Best Buy Stores, L.P., 478 F. Supp. 2d
523, 531 (S.D.N.Y. 2007).

Nevertheless, “a claim for unjust

enrichment will not survive a motion to dismiss unless a
plaintiff explains how the claim is not simply duplicative of
its other claims.” AFP Mfg. Corp. v. AFP Imaging Corp., No. 17CV-03292 (NSR), 2018 WL 3329859, at *11 (S.D.N.Y. July 6, 2018).
It follows that “where there is a valid and enforceable contract
between the parties, and the subject matter of the unjust
enrichment claim is covered by the contract” a court must
21

dismiss the unjust enrichment claim. ImagePoint, Inc. v.
JPMorgan Chase Bank, Nat. Ass’n, 27 F. Supp. 3d 494, 516
(S.D.N.Y. 2014) (internal quotation marks omitted).
Opternative and Warby Parker agree that the NDAs are valid
contractual agreements. (Compl. ¶¶ 72, 101; Def.’s Mem. at 16.)
Although Opternative pleads its unjust enrichment claim “in the
alternative,” the subject matter of its unjust enrichment claim—
Warby Parker’s alleged misuse of Opternative’s Confidential
Information—is covered by the NDAs. (See Compl. ¶¶ 93-95.)
Accordingly, because Opternative seeks to “simply duplicate” a
conventional contract claim for Warby Parker’s breach of the
NDAs, the unjust enrichment claim is dismissed with prejudice.
Marshall v. Hyundai Motor Am., 51 F. Supp. 3d 451, 472 (S.D.N.Y.
2014); see also AFP Mfg. Corp., 2018 WL 3329859, at *11
(dismissing unjust enrichment claim with prejudice where the
only evidence plaintiff offered in support of its claim was a
“restatement of the evidence that it provided in furtherance of
its breach of contract claim”).
3. Opternative Has Failed to Allege Claims for Misappropriation
of Trade Secrets and Unfair Competition Under New York Law
Under New York law, “[w]here the plaintiff and defendant
are parties to a contract, and the plaintiff seeks to hold the
defendant liable in tort, the plaintiff must prove that the
defendant breached a duty ‘independent’ of its duties under the

22

contract; otherwise plaintiff is limited to an action in
contract.” Carvel Corp. v. Noonan, 350 F.3d 6, 16 (2d Cir.
2003).

However, a defendant “may also breach an independent

duty in tort if the defendant goes beyond a mere breach of the
contract and acts in such a way that a trier of fact could infer
that it willfully intended to harm the plaintiff.” Id.
Opternative has not sufficiently alleged that Warby Parker
acted willfully in breaching the NDAs.

Opternative argues that

“Warby Parker actively misrepresented its intentions” and “used
deceit to procure Opternative’s Confidential Information in
willful and deliberate breach of its obligations under the
NDAs.” (Pl.’s Mem. in Opp’n to Mot. to Dismiss at 3, 21, ECF No.
36 (filed Nov. 29, 2017) [hereinafter Pl.’s Mem.].)

However,

the only evidence Opternative provides to support this
allegation is a May 2, 2015 email from Gilboa, which states only
that Warby Parker was “excited to move forward with further
testing of [Opternative’s] latest exam” and indicated that
Gilboa was “sensing a bunch of concern that I think is
misplaced.” (Compl. ¶ 31.)

Opternative’s allegation that “Warby

Parker assured Opternative that it was not developing its own
system” and thereby used deceit to gain access to Opternative’s
Confidential Information is not reflected in either of these
statements.

Thus, Opternative has not alleged that Warby Parker

willfully intended to harm Opternative. See, e.g., A Star Grp.,
23

Inc. v. Manitoba Hydro, No. 13 CIV. 4501 PAC, 2014 WL 2933155,
at *7 (S.D.N.Y. June 30, 2014) (dismissing tort claims as
duplicative of breach of contract claims where “the Complaint
relie[d] exclusively on the confidentiality provisions contained
in the contracts” and plaintiff did not show any willfulness on
the part of defendant).

Accordingly, Opternative’s New York law

tort claims are duplicative of its breach of contract claims and
must be dismissed.
4. Opternative Has Failed to Allege a Claim for Misappropriation
of Trade Secrets Under the Federal Defend Trade Secrets Act
To allege a claim for misappropriation of trade secrets
under FDTSA, the plaintiff must establish “an unconsented
disclosure or use of a trade secret by one who (i) used improper
means to acquire the secret, or (ii) at the time of disclosure,
knew or had reason to know that the trade secret was acquired
through improper means, under circumstances giving rise to a
duty to maintain the secrecy of the trade secret, or derived
from or through a person who owed such a duty.” Free Country Ltd
v. Drennen, 235 F. Supp. 3d 559, 565 (S.D.N.Y. 2016).

The

FDTSA’s definition of “improper means” includes
“misrepresentation, [and] breach or inducement of a breach of a
duty to maintain secrecy,” but expressly excludes “reverse
engineering” and “independent derivation.” Broker Genius, Inc.

24

v. Zalta, 280 F. Supp. 3d 495, 510 (S.D.N.Y. 2017) (quoting 18
U.S.C. § 1839(6)(A)–(B)).
Opternative has not alleged that Warby Parker acquired
Opternative’s trade secrets through improper means.

The only

evidence Opternative cites in support of its argument is the May
2015 email from Gilboa, which Opternative contends included
false and misleading statements assuring Opternative that Warby
parker was not developing its own competing system.

As

discussed above, these statements do not demonstrate deceit on
the part of Warby Parker and are not sufficient to allege that
Warby Parker acquired Opternative’s confidential information
through improper means. See, e.g., Broker Genius, Inc., 280 F.
Supp. 3d at 511 n.5 (plaintiff could not establish that
defendants improperly acquired trade secrets in claim for
misappropriation under FDTSA where defendants were customers of
plaintiff when they first acquired the relevant information).
Thus, Opternative has failed to state a claim for
misappropriation of trade secrets under FDTSA.
5.

Opternative Has Failed to Allege a Claim for Correction of
Inventorship
Correction of inventorship is governed by 35 U.S.C. § 256:

“[w]henever through error a person is named in an issued patent
as the inventor, or through error an inventor is not named in an
issued patent, the Director may, on application of all the

25

parties and assignees, with proof of the facts and such other
requirements as may be imposed, issue a certificate correcting
such error.” 35 U.S.C. § 256(a).

“A person who alleges that he

is a co-inventor of the invention claimed in an issued patent
who was not listed as an inventor on the patent may bring a
cause of action to correct inventorship in a district court
under 35 U.S.C. § 256.” Eli Lilly & Co. v. Aradigm Corp., 376
F.3d 1352, 1356 n.1 (Fed. Cir. 2004).
Opternative claims that inventorship of the 709 Patent
should be corrected pursuant to 35 U.S.C. § 256 to include Dr.
Lee as the sole inventor, or, in the alternative, as a joint
inventor of the 709 Patent.

“[A] claim of sole inventorship

necessitates that the proposed inventor conceived of the total
patented invention.” Ferring B.V. v. Allergan, Inc., 166 F.
Supp. 3d 415, 424 (S.D.N.Y. 2016); see also Univ. of Pittsburgh
of Commonwealth Sys. of Higher Educ. v. Hedrick, No 04-9014,
2008 WL 8627085, at *7 (C.D. Cal. June 9, 2008) (“Plaintiffs
must show that they conceived of every claim of the patent and
that any contribution by [the named inventors] to the conception
of each and every claim was insignificant.”).

As the inventors

named on a patent are presumed to be correct, a person seeking
to add his name “must meet the heavy burden of proving its case
by clear and convincing evidence.” Eli Lilly, 376 F.3d at 1358.

26

Alternatively, to establish joint inventorship, “there must
be some element of joint behavior, such as collaboration or
working under common direction . . . .” Kimberly–Clark Corp. v.
Procter & Gamble Distributing Co., Inc., 973 F.2d 911, 917 (Fed.
Cir. 1992).

A joint inventor must “(1) contribute in some

significant manner to the conception or reduction to practice of
the invention, (2) make a contribution to the claimed invention
that is not insignificant in quality, when that contribution is
measured against the dimension of the full invention, and (3) do
more than merely explain to the real inventors well-known
concepts and/or the current state of the art.” Yeda Research &
Dev. Co. v. Imclone Sys. Inc., 443 F. Supp. 2d 570, 617
(S.D.N.Y. 2006).

“[T]he test for conception is whether the

inventor had an idea that was definite and permanent enough that
one skilled in the art could understand the invention.”
Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223, 1228
(Fed. Cir. 1994).

“To establish joint inventorship by clear and

convincing evidence, a party may not rely solely on his own
testimony or that of his purported co-inventors, but rather must
offer corroborating evidence of conception.” Yeda Research &
Dev. Co., 443 F. Supp. 2d at 617.
Opternative alleges that Dr. Lee “conceived of the
invention of the ’709 Patent,” namely, the use of a camera to
determine the user’s distance from the screen and guide the user
27

into the desired position, and “related [it] to Warby Parker
employees during a teleconference.” (Compl. ¶¶ 45-46, 50, 9899.)

Beyond these conclusory and vague statements, the

complaint does not include any specific allegations that Dr. Lee
conceived of the total patented invention and that any
contribution by the named inventors in the 709 Patent was
insignificant.

Thus, Opternative has failed to state a claim

for sole inventorship.
Furthermore, Opternative fails to allege any facts showing
that Dr. Lee’s purported suggestion to use a camera constituted
a “complete and operative invention” as opposed to a “general
goal or research plan,” or that it was so clearly defined that
“only ordinary skill would be necessary to reduce the invention
to practice, without extensive research or experimentation.”
Burroughs Wellcome Co., 40 F.3d at 1228.

In addition,

Opternative has failed to provide sufficient corroborating
evidence of Dr. Lee’s inventorship.

Opternative claims that Dr.

Lee relayed the invention of the patent over a teleconference,
but fails to provide any further corroborating details or
documentation of this teleconference, including the date the
teleconference took place or Dr. Lee’s specific contribution.
See, e.g., Symantec Corp. v. Computer Assocs. Int’l, Inc., 522
F.3d 1279, 1295-96 (Fed. Cir. 2008) (affirming district court’s
holding that day-planner entry confirming telephone call related
28

to the disputed patent was insufficient as corroborating
evidence of co-inventorship because it failed to identify the
alleged co-inventor’s contribution); Gerawan Farming, Inc. v.
Rehrig Pac. Co., No. 1:11–CV–01273 LJO, 2013 WL 1414637, at *9–
10 (E.D. Cal. Apr. 8, 2013) (corroborating testimony
insufficient where co-inventor could not provide clear date of
corroboration and had general lack of knowledge about the
invention at issue).

Thus, Opternative has failed to allege

either sole or joint inventorship and its claim for correction
of inventorship is dismissed.
III. Leave to Amend
Opternative requests leave to replead any curable
deficiencies if all or part of the complaint is dismissed.
(Pl.’s Mem. at 25.)

Federal Rule of Civil Procedure 15

instructs a court to “freely give leave” to amend “when justice
so requires.” Fed. R. Civ. P. 15(a)(2).

However, amendment “is

not warranted absent some indication as to what [a plaintiff]
might add to [its] complaint in order to make it viable.”
Horoshko v. Citibank, N.A., 373 F.3d 248, 249 (2d Cir. 2004)
(internal quotation marks omitted).

Accordingly, should

Opternative wish to amend, its motion must demonstrate how it
will cure the deficiencies in its claims, that justice requires
granting leave to amend, and must be filed by September 15,
2018.
29

CONCLUSION
For the reasons stated above, Warby Parker's motion to
dismiss the complaint is DENIED in part and GRANTED in part.
Warpy Parker's motion to dismiss Opternative's claims for breach
and contract and specific performance is denied.

Warby Parker's

motion to dismiss the remainder of Opternative's claims is
granted.

Opternative's unjust enrichment claim is dismissed

with prejudice.

Opternative's claims for misappropriation of

trade secrets and unfair competition under New York law,
misappropriation of trade secrets under FDTSA, and correction of
inventorship are dismissed without prejudice.

The Clerk of

Court is respectfully directed to terminate the motion docketed
at ECF No. 25.
SO ORDERED.
Dated:

New York, New York
August
2018

7 ,

United States District Judge

30