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LINKCO, INC. v. FUJITSU LTD.

October 29, 2002

LINKCO, INC., PLAINTIFF
V.
FUJITSU LTD., DEFENDANT.



The opinion of the court was delivered by: Shira A. Scheindlin, United States District Judge

OPINION AND ORDER

Fujitsu has moved for a judgment as a matter of law ("JMOL") at the close of LinkCo's case, arguing that LinkCo failed to present sufficient evidence for a jury to find in its favor on any of the remaining three causes of action: (1) tortious interference with contract, (2) misappropriation of trade secret, and (3) unfair competition.*fn1 The parties have fully briefed the issue and this Court has heard oral argument.*fn2

Fujitsu submits that a JMOL is required because LinkCo has failed to offer sufficient proof on at least one element of each claim. See Def. Outline at 1. Fujitsu further argues that LinkCo has presented insufficient proof of damages, which is a necessary element of each of its claims. See Id. at 2. LinkCo contends that there are numerous grounds upon which a reasonable jury could find Fujitsu liable on each of its claims. See Pl. Mem. at 1. For the reasons set forth below, the tortious interference with contract and misappropriation of trade secret claims are dismissed. The unfair competition claim, however, must be decided by the jury.

I. STANDARD FOR JUDGMENT AS A MATTER OF LAW

After a party presents its case, judgment as a matter of law is appropriate when "there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue . . . ." Fed.R.Civ.P. 50(a)(1). Such motions "should be granted cautiously and sparingly." Meloff v. New York Life Ins. Co., 240 F.3d 138, 145 (2d Cir. 2001) (citing 9A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2524, at 252 (2d ed. 1995)). The evidence must be viewed "in the light most favorable to the opposing party" and "the court must give deference to all credibility determinations and reasonable inferences of the jury . . . ." Galdieri-Ambrosini v. National Realty & Dev. Corp., 136 F.3d 276, 289 (2d Cir. 1998). The court itself may not weigh the credibility of witnesses or consider the weight of the evidence. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).

II. FACTUAL BACKGROUND

According to Webster, LinkCo's system architecture was comprised of 26 elements. See id. at 1193. The system was divided into three parts: "investor relations, corporate financial disclosure, and public relations . . . within the context of database management." Id. at 1194. The goal of the end product was to create a database of information in the public and commercial domain and assist companies with their regulatory filings. LinkCo then intended to market this program to the business community. See id. Ultimately, LinkCo never commercialized any product related to its designs and the company ceased operations in December 1997. See LinkCo, 2002 WL 237838 at *2.

LinkCo took substantial steps to keep its development efforts secret. It required all employees and consultants to sign confidentiality and nondisclosure agreements. See Testimony of David Israel-Rosen ("Israel-Rosen Testimony"), Tr. at 724. It also required prospective customers and corporate partners to sign confidentiality agreements before giving them access to its confidential information. See Testimony of Oded Maimon ("Maimon Testimony"), Tr. at 370, 492.

In May 1996, LinkCo hired Kyoto Kanda. LinkCo alleges that it entered into an Employment, Noncompetition, Nondisclosure and Nonsolicitation Agreement ("Employment Agreement") with Kanda. See Complaint ("Compl.") ¶ 21. Kanda was the Chief Executive Officer of LinkCo Japan and remained with LinkCo until December 31, 1997. See LinkCo, 2002 WL 237838, at *1.

In June 1997, Professor Ajit Kambil, a Management Information Systems expert at the Stern Business School of New York University ("NYU"), entered into a Mutual Confidential Nondisclosure Agreement ("Nondisclosure Agreement") with LinkCo, in which he agreed not to disclose "confidential information" to any third party. See 11/20/02 Letter from Irving B. Levinson, plaintiff's attorney, Plaintiff's Exhibit ("Pl. Ex.") 9 at L00744-45.

In September 1997, LinkCo met with Fujitsu to discuss a possible collaboration, but those negotiations were unsuccessful. See LinkCo, 2002 WL 237838, at *1. Although LinkCo and Fujitsu met without a confidentiality agreement, LinkCo only provided Fujitsu with a general overview of its business strategy and objectives. See Pl. Exs. 1, 67.

Several months later, Fujitsu met secretly with Kanda and Kambil in New York. See LinkCo, 2002 WL 237838, at *1. LinkCo alleges that Fujitsu obtained trade secrets and confidential information about LinkCo's technology, at these meetings, in violation of Kanda and Kambil's contracts. See id. at *2. In 1998, Fujitsu hired Kanda to conduct research and provide consulting services. Id. Kambil also eventually became a consultant for Fujitsu. See 10/1/02 Testimony of Takeshi Ito ("Ito Testimony"), Tr. at 229-31.

III. DISCUSSION

A. Tortious Interference with Contract Claim

Fujitsu submits that judgment as a matter of law is appropriate on LinkCo's claim of tortious interference with the following two contracts: (1) the Employment Agreement between LinkCo and Kanda, and (2) the Nondisclosure Agreement between LinkCo and Kambil.

Under New York law, the elements of a tortious interference with contract claim are: "[1] that a valid contract exists, [2] that a `third party' had knowledge of that contract, [3] that the third party intentionally and improperly procured the breach of the contract, and [4] that the breach resulted in damage to the plaintiff." Albert v. Loksen, 239 F.3d 256, 274 (2d Cir. 2001) (citing Finley v. Giacobbe, 79 F.3d 1285, 1294 (2d Cir. 1996).

"The existence of a valid contract is an essential element of the cause of action, and the courts have consistently rejected claims of tortious interferences in its absence." Mobile Data Shred, Inc. v. United Bank of Switzerland, No. 99 Civ 10315, 2000 WL 351516, at *7 (S.D.N.Y. Apr. 5, 2000). "`Although a defendant need not be aware of all the details of a contract, it must have actual knowledge of the specific contract.'" Sovereign Bus. Forms v. Stenrite Indus. Inc., No. 00 Civ. 3867, 2000 WL 1772599, at *9 (S.D.N.Y. Nov. 28, 2000) (quoting International Mineral & Res. Inc. v. Pappas, No. 87 Civ. 3988, 1992 WL 354504, at *3 (S.D.N.Y. Nov. 17, 1992)). Defendant's actions must also be the "but for" cause of the alleged breach of contract. See Sharma v. Skaarup Ship Mgmt. Corp., 916 F.2d 820, 828 (2d Cir. 1990) ("A plaintiff must allege that `there would not have been a breach but for the activities of the defendants.'") (quoting Special Event Entm't v. Rockefeller Center, Inc., 458 F. Supp. 72, 78 (S.D.N.Y. 1978)). See also Michele Pommier Models, Inc. v. Men Women N.Y. Model Mgmt., 14 F. Supp.2d 331, 335-36 (S.D.N.Y. 1998) (finding that the element of inducement "requires the plaintiff to establish that but for the allegedly tortious conduct of the defendant, the third party would not have breached her contract"), aff'd, 173 F.3d 845 (2d Cir. 1999).

1. Kanda Contract

a. Is There a Valid Contract?

Fujitsu argues that LinkCo has failed to provide a sufficient evidentiary basis upon which a reasonable jury could: (1) conclude that Kanda was a party to a "valid" contract with LinkCo, and (2) determine the nature of ...


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