Digital Mentor, Inc. v. Ovivo USA, LLC et al

Filing 35

ORDER granting in part and denying in part Plaintiff Digital Mentor, Inc.'s 11 Motion for TRO and Preliminary Injunction and Motion for Expedited Discovery. The Court GRANTS Plaintiff's Motion for Temporary Restraining Order and DENIES P laintiff's Motion for Expedited Discovery. The parties are instructed to submit a preliminary injunction briefing schedule to the Court within two days of the issuance of this order. The Court sets a preliminary injunction hearing at 10:00 a.m. on Monday, February 12, 2018. Signed by Judge Richard A Jones. (TH)

HONORABLE RICHARD A. JONES

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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DIGITAL MENTOR, INC.,

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Plaintiff,
v.

Case No. C17-1935-RAJ
ORDER

OVIVO USA, LLC; OVIVO US
HOLDING INC.; VALERE
MORISSETTE; MARC BARBEAU;
DOES 1-20,

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Defendants.

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This matter comes before the Court on Plaintiff Digital Mentor, Inc.’s (“Digital”)
Motion for Temporary Restraining Order and Preliminary Injunction and Motion for
Expedited Discovery. Dkt. # 11. For the reasons that follow, the Court GRANTS
Plaintiff’s Motion for Temporary Restraining Order and DENIES Plaintiff’s Motion for
Expedited Discovery.
I.

BACKGROUND

Digital is an engineering consulting service with its principal place of business in
Incline Village, Nevada. Digital is registered to do business in the state of Washington.
Dkt. # 1 ¶ 1. Digital developed a mobile computing system, DigitalMentor, for the waste
and wastewater industry to allow companies to monitor and maintain their equipment on
ORDER – 1

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mobile devices. Id. Defendant Ovivo USA, LLC provides equipment for water and
wastewater treatment facilities throughout the United States and around the world.
Id. ¶ 2. Defendant Ovivo US Holding Inc. is a Delaware corporation that owns Ovivo
USA, LLC. Defendant Ovivo, Inc., is a Canadian corporation that owns Ovivo US
Holding Inc. Id. ¶ 3. Defendant Valere Morissette is Vice President of Ovivo USA,
LLC. Id. ¶ 6. Defendant Marc Barbeau is President of Ovivo USA, LLC, and President
and CEO of Ovivo, Inc. Id. ¶ 7.
In March of 2014, Digital marketed DigitalMentor to Defendants for use in their
facilities and in conjunction with the sale of their equipment. The parties then entered
into a licensing agreement. Pursuant to that licensing agreement, Digital agreed to create
and license DigitalMentor for Defendants’ facilities and customers under the name
“digitalOPS” and Defendants granted Digital a non-exclusive limited license to
Defendants’ Standard Operating Procedures (“SOP”), manuals, technical drawings, etc.
Dkt. # 11-1 at 10; Dkt. # 23 at 5. On or about November 1, 2014, Digital and Ovivo
entered into a Non-Disclosure Agreement (“NDA”). Digital claims that, while under
these contracts, Defendants copied DigitalMentor and created a “pirated” version of this
product called, WaterExpert.
On December 29, 2017, Digital filed a Complaint against Defendants seeking
injunctive relief, alleging that Defendants violated the Defend Trade Secrets Act, 18
U.S.C. 1836, et seq. (“DTSA”), the Racketeer Influenced and Corrupt Organizations Act
("RICO”), 18 U.S.C. 1961, et seq., and committed trademark and copyright infringement.
Digital also brings a breach of contract claim and several other state law claims.
II.

A temporary restraining order is an “extraordinary remedy that may only be
awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Nat.

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DISCUSSION

ORDER – 2

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Res. Def. Council, Inc., 555 U.S. 7, 22 (2008).1 To obtain a temporary restraining order,
Digital must show that (1) it is likely to succeed on the merits, (2) it is likely to suffer
irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in its
favor, and (4) an injunction is in the public interest. Stormans, Inc. v. Selecky, 586 F.3d
1109, 1127 (9th Cir. 2009).
The Court finds that Digital demonstrated a likelihood of success on its breach of
contract claim.2 The parties entered into a Master Agreement in conjunction with the
NDA. The NDA states that information that Digital revealed to Defendants regarding
DigitalMentor is confidential and that Defendants are not to copy the software disclosed
by Digital to Defendants under the terms of the agreement. Dkt. # 11 Ex. A. Digital
contends that Defendants used their access to DigitalMentor pursuant to the Master
Agreement to steal Digital’s technology in violation of the NDA. Defendants do not
dispute that there was a contract between the parties, only that the development of
WaterExpert does not violate the contract. Defendants argue that they did not breach the
NDA because any information used by them was not confidential because Digital was
“extensively” marketing DigitalMentor, or was their intellectual property to use based on
the terms of the Master Agreement.
Based on the information available on the record at this time, Defendants’
arguments are not convincing. Demonstrating and marketing a product does not
immediately make the underlying technology of that product publicly available and free
from the designation of confidential or proprietary. Defendants’ claim that similarities
between WaterExpert and DigitalMentor are merely a result of similar subject matter is

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The standard for issuing a temporary restraining order is identical to the standard for
issuing a preliminary injunction. New Motor Vehicle Bd. of California v. Orrin W. Fox Co., 434
U.S. 1345, 1347 (1977).
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As the Court need only find likelihood of success on one claim to grant a temporary
restraining order, Digital’s remaining claims will not be analyzed at this time. See League of
Wilderness Defs./Blue Mountains Biodiversity Project v. Connaughton, 752 F.3d 755, 760 (9th
Cir. 2014).

ORDER – 3

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similarly unconvincing. Digital’s claim alleges similarities beyond the utility of both
mobile computing systems in the water and wastewater treatment industries. Dkt. # 11-1
at 18.
Digital will also suffer irreparable harm if its motion for a temporary restraining
order is not granted. Digital is a small software engineering startup that developed
DigitalMentor through personal labor, financial investment and development of expertise
in the industry. Digital argues that Defendants’ dominant position in the water and
wastewater treatment industry has the potential to push Digital out of the market and has
already substantially negatively impacted Digital’s revenue and sales. In the absence of a
temporary restraining order, the future of Digital as a company might be in danger.
Considering Defendants’ competitive advantage over Digital, the balance of
equities tips in Digital’s favor. A temporary restraining order would preserve the status
quo until the preliminary injunction hearing is held. Further, granting the temporary
restraining order would be in the public interest. There is a public interest in upholding
NDA’s, protecting intellectual property, and discouraging unfair business practices.
Accordingly, the Court GRANTS Digital’s Motion for a Temporary Restraining Order.
Dkt. # 11.
The Court ORDERS that each properly served Defendant and their officers,
agents, servants, employees and attorneys, and all those acting in concert or participating
with them, are restrained and enjoined from engaging in, committing or performing,
either directly or indirectly, any and all of the following:
1. Using, disclosing, reproducing, summarizing, distributing, reverse engineering,
decompiling and/or disassembling Digital Mentor's confidential trade information,
trade secrets and/or copyrights;
2. Marketing, selling, using, offering for sale or otherwise distributing its product
known as WaterExpert and any other products, applications, databases or systems
designed and developed using Digital Mentor's intellectual property, confidential
information, trade secrets and/or copyrights;

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ORDER – 4

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3. Using any WaterExpert systems, platforms, products, applications or devices that
have already been distributed by Ovivo.

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4. Destroying, concealing, altering, removing, altering, erasing, transferring or
deleting any and all documents, records or writings evidencing transactions,
communications or activities of or, in any way, related to the theft and infringement
of Digital Mentor's intellectual property and/or confidential information

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This temporary restraining order is granted on a nationwide basis. The Court
declines to authorize a civil seizure of copies of WaterExpert and mobile devices
containing WaterExpert, and declines to Order deactivation of mobile applications for or
relating to WaterExpert, as it would be premature at this stage in the proceedings. The
parties are instructed to submit a preliminary injunction briefing schedule to the
Court within two days of the issuance of this order. The Court sets a preliminary
injunction hearing at 10:00 a.m. on Monday, February 12, 2018. The Court reserves
the matter of whether a bond must be posted until this hearing.
The Court DENIES with leave to refile, Digital’s Motion for Expedited
Discovery. Dkt. # 11. A party may seek expedited discovery prior to a Rule 26(f)
conference for good cause. Am. LegalNet, Inc. v. Davis, 673 F. Supp. 2d 1063, 1066
(C.D. Cal. 2009). When considering whether good cause exists, courts consider “(1)
whether a preliminary injunction is pending; (2) the breadth of the discovery requests; (3)
the purpose for requesting the expedited discovery; (4) the burden on the defendants to
comply with the requests; and (5) how far in advance of the typical discovery process the
request was made.” Id. at 1067. Digital requests written discovery that will include
nineteen (19) Requests for Admissions, twenty-seven (27) Requests for Document
Production, and thirty-three (33) Special Interrogatories. Additionally, Digital requests
that the Court authorize depositions of ten (10) current and former employees of
Defendants, and issue subpoenas to compel the attendance of two witnesses at the
evidentiary hearing for preliminary injunction. The breadth of these discovery requests
as currently requested are not “narrow and targeted” and would be extremely burdensome
ORDER – 5

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on Defendants within the requested timeframe. However, considering Digital’s
contention that expedited discovery is necessary to allow them to prepare for the next
stage in these proceedings, the possibility of spoliation and destruction of evidence, and
Digital’s desire to determine the extent of and to mitigate its alleged injuries, the Court
will allow Digital to attempt to cure the above deficiencies and refile its motion for
expedited discovery.

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DATED this 24th day of January, 2018.

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A

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The Honorable Richard A. Jones
United States District Judge

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ORDER – 6