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Scienton Technologies, Inc., Ni Group, Inc., Secure-It, Inc v. Computer Associates International Inc

May 1, 2013

SCIENTON TECHNOLOGIES, INC., NI GROUP, INC., SECURE-IT, INC., PLAINTIFFS,
v.
COMPUTER ASSOCIATES INTERNATIONAL INC., DEFENDANT.



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

MEMORANDUM & ORDER

Pending before the Court is Plaintiffs Scienton

Technologies, Inc., NI Group, Inc., and Secure-IT, Inc.'s (together, "Plaintiffs" or "Scienton") motion for reconsideration of the Court's September 25, 2012 Memorandum and Order (the "Summary Judgment Order," Docket Entry 347) granting in part and denying in part Defendant Computer Associates International Inc.'s ("Defendant" or "CA") motion for summary judgment. For the following reasons, Plaintiffs' motion is DENIED.

BACKGROUND

The Court assumes familiarity with the underlying facts and procedural history of this case, which are discussed in detail in the Summary Judgment Order. In brief, Plaintiffs commenced this action in June 2004 against Defendant asserting claims for, inter alia, misappropriation of a trade secret. Plaintiffs, however, had difficulty articulating what their alleged trade secret was and what they believed Defendant misappropriated. (See Summary Judgment Order 11-12.) On July 28, 2005, Defendant moved for an order pursuant to Rule 26(c) of the Federal Rules of Civil Procedure requiring Plaintiffs, as a condition of proceeding with trade secret discovery, "to identify with adequate specificity the trade secrets they claim were misappropriated." (Notice of Mot., Docket Entry 41.) In opposition, Plaintiffs asserted that they had already defined their alleged trade secret:

Scienton's trade secrets consist not of a piece of computer source code, a discrete formula, or a single software program.

Rather, it is far more sophisticated.

Scienton created a complex methodology for enterprise security by combining numerous elements and programs into a powerful and unified security solution previously unknown to the industry. Scienton used certain of CA's existing programs as some of the building blocks because of the relationship it has entered into with CA. In effect, Scienton conceived and disclosed ways to use CA's programs in combination with its own and others that neither CA nor anyone else in the field had foreseen or understood. (Pls. Opp., Docket Entry 50, at 6.) Magistrate Judge Michael L. Orenstein held a hearing on the motion on November 2, 2005, where Plaintiffs' counsel, in describing their alleged trade secret, stated that "[i]t's not the source code that's at issue. It's the overall unique concept of combining all of these elements . . . ." (Walsh Decl. Ex. 48, Nov. 2, 2005 Tr. 27 (emphasis added); see also Hunt Aff. in Opp., Docket Entry 48, ¶¶ 4-6 (describing the trade secret as a "conception" and a "vision"); cf. Zivic Aff. in Opp., Docket Entry 49, ¶ 6 (describing the trade secret as "architecture" and comparing it "building a Frank Lloyd Wright home").)

Judge Orenstein did not grant Defendant's motion but instead ordered Defendant to provide Plaintiffs with working copies of the programs that Plaintiffs believed incorporated their alleged trade secret and ordered Plaintiffs to identify, with specificity, which aspects of their trade secret were in fact incorporated in those programs. (Walsh Decl. Ex. 48, Nov. 2, 2005 Tr. 42.) Defendant provided Plaintiffs with working copies of their programs, and, in response, Plaintiffs served a letter, drafted by counsel, giving a "summary" of the "concepts that [Plaintiffs] say[] [were] stolen." (Walsh Decl. Ex. 49, Jan. 18, 2006 Tr. 25-26 (emphasis added).) The parties again appeared before Judge Orenstein on January 18, 2006 to discuss the sufficiency of Plaintiffs' response. Judge Orenstein held that counsel's letter was "not what th[e] Court ordered in November. [The] Court ordered specificity, not [Plaintiffs'] interpretation of what [they] felt was enough." (Walsh Decl. Ex. 49, Jan. 18, 2006 Tr. 28.) Thus, he ordered Plaintiffs to provide a more detailed explanation of their alleged trade secret to Defendant. (Walsh Decl. Ex. 49, Jan. 18, 2006 Tr. 33.)

On March 6, 2006, Plaintiffs produced a document titled "Trade Secret Disclosure," which described their alleged trade secret as follows: a unique and previously unknown collection, combination, refinement and enhancement of a number of previously unrelated computer programs and software functionalities to create an 'enterprise security solution' encompassing physical and digital security ('Scienton's ESS') and having far greater capabilities than any prior single security system or pre-existing combination of security systems. (Walsh Decl. Ex. 6, Trade Secret Disclosure at 1.) At a hearing before Judge Orenstein on March 16, 2006, Plaintiffs' counsel clarified that their trade secret was "not the how [sic] you particular[ly] wire one program to the other . . . , it's the actual combination of programs 1, 4, and 6 to perform a particular function." (Walsh Decl. Ex. 50, Mar. 16, 2006 Tr. 10; see also id. at 10-11 ("How they operate together is not the trade secret.").) Judge Orenstein ultimately found that this Trade Secret Disclosure was sufficient for discovery to proceed.

Defendant moved for summary judgment on February 27, 2012, arguing, inter alia, that Plaintiffs failed to articulate a legally cognizable trade secret. (Def. Mot., Docket Entry 308, at 15.) Specifically, Defendant argued that Plaintiffs' trade secret was insufficiently vague and otherwise not actionable because a trade secret may not "consist merely of an idea to combine publicly known products into a single product, without defining how those products will work together." (Id. at 15-19.) In opposition, Plaintiffs, completely contradicting their earlier representations to Judge Orenstein, argued that its Trade Secret Disclosure did identify how the different products work together. (Pls. Opp., Docket Entry 339, at 19.)

The Court granted summary judgment in favor of Defendant on the trade secret claim. (Summary Judgment Order 28-32.) The Court, citing to LinkCo, Inc. v. Fujitsu Ltd., 230 F. Supp. 2d 492 (S.D.N.Y. 2002), explained that because Plaintiffs' purported trade secret was the idea or concept of combining certain program functionalities--and not the source code or technical details regarding how those different programs would interact with one another--it was not entitled to trade secret protection. (Summary Judgment Order 31-32.) The most important consideration in determining whether a trade secret exists is whether the information was actually a secret, and the Court found that the secrecy of Plaintiffs' "concept"--as opposed to the source code--would have necessarily been lost once the product was placed on the market. (Summary Judgment Order 29-32.) Accordingly, the Court dismissed Plaintiffs' trade secret claims. Plaintiffs were permitted to go to trial on their misappropriation of an idea, breach of the parties' nondisclosure agreement, and unfair competition claims--which also arose out of Defendant's alleged use of Plaintiffs' "concept."

Plaintiffs now move for reconsideration of the portion of the Summary Judgment Order granting summary judgment in favor of ...


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