The opinion of the court was delivered by: PETER K. LEISURE
This is an action alleging breach of a confidentiality agreement and unfair competition. Plaintiff is Sacody Technologies, Inc. ("Sacody"), a New York corporation. Sacody's principal place of business is City Island, County of Bronx, State of New York. Defendants are Avant, Incorporated ("Avant"), a Massachusetts corporation, and Roger Kuhns ("Kuhns"), Avant's President. Avant's principal place of business is Concord, County of Middlesex, Commonwealth of Massachusetts. Kuhns resides in Lincoln, Massachusetts. Sacody alleges that the amount in controversy exceeds $ 50,000 exclusive of interest and costs. This Court has subject matter jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a)(1).
Defendants have moved this Court to dismiss the action for lack of personal jurisdiction or improper venue or, alternatively, to dismiss or stay the action in light of an action instituted by Avant against Sacody in Massachusetts state court. For the reasons stated below, defendants' motion is denied in its entirety.
During 1988 and 1989, Sacody designed and developed a photographic-identification security system called the SA1200, consisting of a terminal and a supporting software program. During December 1990 or January 1991, Kuhns saw a Sacody advertisement for the SA1200 and telephoned Sacody in New York to inquire about the system. During January 1991, Kuhns travelled to Sacody's research lab in Bellmore, New York, on Avant's behalf. In New York, Kuhns received a demonstration of the SA1200, and according to Sacody,
he requested that Sacody provide Avant with an SA1200 prototype so that Avant could demonstrate it at trade shows. Sacody responded by explaining that it would not allow a potential competitor to have such access to the SA1200, absent a confidentiality agreement. Either at this New York meeting, or during a telephone call from Kuhns to Sacody shortly thereafter, Kuhns orally agreed to treat all information about the SA1200 as proprietary and confidential and to sign a written confidentiality agreement when one was prepared. In reliance on this oral agreement, Sacody delivered an SA1200 prototype to Avant in Massachusetts. Kuhns executed a written confidentiality agreement concerning the SA1200 on Avant's behalf in Massachusetts, on April 8, 1991 (the "Confidentiality Agreement") and faxed an executed copy to Sacody's New York office.
Avant proceeded to display the prototype at several trade shows in the United States and Europe. During the period of its custodianship over the prototype, Avant returned the system to Sacody in New York several times for repairs. In May, 1991, Kuhns again visited Sacody in New York, this time in order to introduce Sacody to a potential customer for the SA1200. However, neither this visit, nor Avant's other promotional efforts, resulted in any SA1200 sales.
During late 1991, Sacody became suspicious that Avant was not respecting the confidentiality of the SA1200 technology, and requested that Avant return the prototype. Avant did so, and Sacody did not provide Avant with further access to the SA1200. By letter dated June 24, 1993, Sacody, through counsel, accused Avant of using Sacody's confidential information to develop a competing product and threatened legal action. In response to this letter, Avant commenced a declaratory judgment action against Sacody in Massachusetts Superior Court on July 1, 1993 (the "Massachusetts Action"). There, Avant seeks a declaration that no binding confidentiality agreement exists between the parties or that if such an agreement does exist, Avant has not breached it.
Sacody filed this action on July 9, 1993.
Avant and Kuhns first argue that they are not subject to personal jurisdiction in New York under C.P.L.R. § 301, which provides general jurisdiction over defendants who are "doing business" in New York; nor under C.P.L.R. § 302, which provides long-arm jurisdiction over defendants for a specific cause of action based on the relationship among the parties, the cause of action, and the State of New York.
Sacody responds that Avant and Kuhns are subject to long-arm jurisdiction in New York under C.P.L.R. § 302(a)(1) because Sacody's claims arise from conduct by Kuhns on Avant's behalf that constitutes a transaction of business within New York.
Section § 302(a)(1) provides in relevant part:
As to a cause of action arising from any of the acts enumerated in the section, a court may exercise personal jurisdiction over any non-domiciliary . ...