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Software for Moving, Inc. v. Frid

May 27, 2010

SOFTWARE FOR MOVING, INC., PLAINTIFF,
v.
YURI FRID, OZ MOVING AND STORAGE, INC., MEN ON THE MOVE SELF STORAGE CENTER, INC., JOHN/JANE DOES 1-100, AND XYZ CORP., DEFENDANTS.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION & ORDER

Plaintiff Software for Moving, Inc. ("SFM") brings this action for copyright infringement, trademark infringement, unjust enrichment, and breach of contract against defendants Yuri Frid ("Frid"), Oz Moving and Storage, Inc. ("Oz"), and Men on the Move Self Storage Center, Inc. ("Men on the Move"). Frid and Oz have moved to dismiss the amended complaint pursuant to Fed. R. Civ. P. 12(b)(6). For the following reasons, defendants' motions are granted in part.

BACKGROUND

The following facts are taken from the amended complaint and are assumed to be true for the purposes of this motion. SFM is a New York corporation in the business of developing and licensing software used by moving companies.*fn1 In 1990, SFM created a computer program called "Moving Manager" for storing, processing, and outputting tracking and billing information for moving companies. The original Moving Manager was written in the computer programming language Clipper for the database dBase, and operated on computers running DOS and Windows operating systems. In 1997, SFM registered Moving Manager with the United States Copyright Office.

In 1997, with the advent of the Windows 98 operating system, SFM created a new version of Moving Manager, called "Moving Manager for Windows." The new version of Moving Manager was identical in appearance, functionality, and output to the earlier version of Moving Manager, but was written in the computer programming language Visual Basic for the database Microsoft Access. Moving Manager underwent yet another revision in 2001. The new version, also called "Moving Manager," was identical in appearance, functionality, and output to the earlier versions of the program, but was written in the computer programming language ASP for the database SQL.

Defendants Oz and Men on the Move are moving companies which licensed Moving Manager from SFM. The licensing agreements provided that Oz and Men on the Move would stop using and destroy their copies of Moving Manager when their respective licenses expired. After the licenses expired, however, Oz and Men on the Move continued to use Moving Manager without compensating SFM.

Defendant Frid was the owner of a small moving company, North Star Moving, Inc., located in Brooklyn, New York. Frid created a basic computer program to assist with his moving business (the "North Star program"). After writing the North Star program, Frid sold the moving business and entered the software business. Frid began marketing the North Star program to various moving companies in the New York City/New Jersey metropolitan area.

In 1999, Frid obtained access to a copy of SFM's Moving Manager through a now-defunct company called "Nice Mover," which had licensed a copy of Moving Manager from SFM. Using Nice Mover's copy of Moving Manager, for which the license had expired in 1998, Frid reverse-engineered aspects of SFM's Moving Manager software to create his own moving software, which he called "eMover." On December 28, 1999, Frid registered eMover with the United States Copyright Office under the name "eMoverPro."

Frid began to market his eMover software to potential clients, including defendants Oz and Men on the Move. Oz and Men on the Move initially declined to purchase or license Frid's software because eMover's capabilities were insufficient to meet their needs. They advised Frid, however, that if he could incorporate additional features of SFM's Moving Manager software into eMover, then they would purchase or license eMover from Frid.

Oz and Men on the Move provided Frid access to their copies of Moving Manager, for which the licenses had expired. Frid circumvented the technical protections on Moving Manager, reverse-engineered the software, and modified eMover to incorporate certain features of Moving Manager. The amended complaint alleges that Frid's reverse-engineering included directly copying large portions of Moving Manager's computer code, as well as copying Moving Manager's "organization, structure, layout, report generation routines, field size design, transferred data forms, and number system." Frid registered the new version of eMover with the United States Copyright Office. Frid has sold and distributed copies of his eMover software.

On May 5, 2009, SFM initiated this action against Frid, Oz, and Men on the Move. On August 7, after having failed to answer or otherwise respond to the complaint, a default was entered against Men on the Move. On November 23, SFM filed an amended complaint against Frid, Oz, and Men on the Move for copyright infringement under the Copyright Act of 1976, 17 U.S.C. §§ 101 et seq. (the "Copyright Act"), and trademark infringement under N.Y. Gen. Bus. L § 360-k. The amended complaint also asserts claims for unjust enrichment and breach of contract under New York common law against defendants Oz and Men on the Move. On January 15, 2010, Frid and Oz separately moved to dismiss the amended complaint for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). The motions became fully submitted on March 5.

DISCUSSION "Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a 'short and plain statement of the claim showing that the pleader is entitled to relief.'" Ashcroft v. Iqbal, 556 U.S. --, 129 S.Ct. 1937, 1949 (2009) ("Iqbal"). This rule "does not require 'detailed factual allegations,'" id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)), but "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555); see also id. ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.").

A trial court considering a Rule 12(b)(6) motion "accepts all well-pleaded allegations in the complaint as true, drawing all reasonable inferences in the plaintiff's favor." Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt., LLC, 595 F.3d 86, 91 (2d Cir. 2010). To survive dismissal, "a complaint must allege a plausible set of facts sufficient 'to raise a right to relief above the speculative level.'" Id. (quoting Twombly, 550 U.S. at 555). In other words, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 570). "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 ...


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