United States District Court, N.D. New York
UNIVERSAL INSTRUMENTS CORPORATION: ARLEN L. OLSEN, ESQ.,
CHRISTOPHER E. BLANK, ESQ., JARED L. DUJACK, ESQ., VICTOR J.
MISCROSYSTEMS ENGINEERING, INC. and MISSOURI TOOLING AND
AUTOMATION, DAVID P. COOPER, ESQ., DESMOND J. KIDNEY, ESQ.,
OWEN W. DUKELOW, ESQ., JEFFREY S. BAKER, ESQ., JOSEPH F.
MEMORANDUM-DECISION AND ORDER
L. SHARPE SENIOR DISTRICT JUDGE.
defendant Universal Instruments Corporation commenced this
action against defendant/consolidated plaintiff Micro System
Engineering, Inc. (MSEI) and defendant Missouri Tooling and
Automation (MTA) for copyright infringement, breach of
contract, misappropriation of trade secrets, unfair
competition, unjust enrichment, and promissory estoppel.
(See generally 3d Am. Compl., Dkt. No.
103.) MSEI commenced a separate action against
Universal alleging breach of the duty of confidentiality,
unfair competition, misappropriation of trade secrets, and
“an injunction.” (See generally Compl.,
Dkt. No. 1, 3:13-cv-1144.) The two actions were consolidated,
and the earlier-filed designated as the lead. (Dkt. No. 26.)
Pending are MSEI and MTA's motions for judgment on the
pleadings, to dismiss, to strike, and for summary judgment.
(Dkt Nos. 80, 97, 107, 196.) Also pending is Universal's
cross motion for partial summary judgment. (Dkt. No. 209.)
manufactures and tests components used in pacemakers and
defibrillators that are implanted into patients' chests.
(Defs.' Statement of Material Facts (SMF) ¶ 1, Dkt.
No. 200.) Universal develops automation platforms for
companies, like MSEI, in the electronic manufacturing
industry. (Pl.'s Supplemental (Supp.) SMF ¶ 1, Dkt.
No. 213; 3d Am. Compl. ¶¶ 3-4.) MTA is a competitor
of Universal and also designs machine automation and provides
system upgrades, retrofits, and custom tooling. (3d Am.
Compl. ¶¶ 12, 247; Dkt. No. 67 ¶¶ 12,
owned machines that manually tested its products and wanted
to upgrade this equipment to operate automatically.
(Defs.' SMF ¶ 2.) MSEI planned to introduce the
upgraded machines in phases to gradually create a fully
automated system to be called the Test Handling System (THS).
(Id. ¶¶ 8, 10.) In order to do so, MSEI
initially developed an automation design in 2002.
(Id. ¶ 3.) MSEI contends that this design
contained intellectual property consisting of trade secrets,
some of which were eventually implemented into the THS.
(Id. ¶¶ 3, 4.) Universal, however,
disputes that MSEI created any intellectual property.
(Pl.'s SMF ¶ 3.)
detailed its specifications for the THS and solicited bids to
build the first phase of the project. (Defs.' SMF
¶¶ 8, 10; Pl.'s Supp. SMF ¶ 10.)
Interested suppliers, including Universal, signed a
Confidential Disclosure Agreement (CDA) and were provided
access to MSEI's specifications. (Defs.' SMF
¶¶ 133-34; Dkt. No. 196, Attach. 39.) The CDA
outlined Universal's obligations to keep the
specifications confidential under section five of the
agreement. (Dkt. No. 196, Attach. 39 § 5.) It also
included a sunset provision which stated that Universal's
“obligations under Section 5(a) stop at the end of the
[p]rotection [p]eriod” and that the protection period
ended on December 30, 2012. (Id. § 4(a), (d).)
selected Universal to construct the first THS line
(hereinafter “THS1A”). (Defs.' SMF ¶
12.) MSEI and Universal memorialized their contract in an
Equipment Purchase Agreement (EPA) in June 2007.
(Id. ¶ 17; Pl.'s Supp. SMF ¶ 16; Dkt.
No. 196, Attach. 7.)
contained several provisions regarding intellectual property.
(Dkt. No. 196, Attach. 7.) The EPA defined the term
“Pre-Existing Intellectual Property” to mean
“any trade secret . . . or protectable design that
ha[d] already been conceived or developed by anyone other
than MSEI before [Universal] render[ed] any services.”
(Id. § 8.2(a).) If Universal incorporated
Pre-Existing Intellectual Property in the THS1A, it
“grant[ed] MSEI, MSEI's subcontractors, or
suppliers, a non-exclusive . . . license” to use such
property “for MSEI's internal use only.”
(Id. § 8.2(d).) As also relevant, section 8.4
explained that Universal was not providing customized
equipment for MSEI. (Id. § 8.4.) The section
also contained a carve out provision permitting MSEI to keep
previously created intellectual property and any property
created using MSEI's intellectual property.
(Id.) Specifically, the section provided that if
Universal customized “equipment” for MSEI, MSEI
owned the intellectual property created “during the
course of th[e EPA]” that would be “customized
for MSEI” where Universal “[wa]s given access to
MSEI owned intellectual property to complete the
had previously developed automated machines called the
Polaris MP and Polaris Jr. robots. (Pl.'s Supp. SMF
¶¶ 3-5.) These robots contain software and source
code developed by Universal's employees. (Id.
¶ 7, 9.) Universal contends that these robots were part
of a standard platform it used in automation lines that it
supplied to its customers. (Id. ¶¶ 1-2.)
MSEI asserts that Universal does not have a standard platform
and always customizes software and source code in the Polaris
robots to meet a customer's needs. (Defs.' Supp. SMF
¶¶ 2, 9; Dkt. No. 217, Attach. 1; Defs.' SMF
Universal was developing the THS1A, MSEI requested that
Universal provide it with source codes upon delivery of the
THS1A in order to provide long-term support for the THS
system. (Pl.'s Supp. SMF ¶¶ 133-34.) Universal
initially refused because it contended that the EPA did not
require it to provide MSEI with access to its source codes.
(Pl.'s Supp. SMF ¶¶ 132, 135.) However,
Universal ultimately provided MSEI with the codes citing
threats by MSEI to withhold payment for the project.
(Id. ¶¶ 136-38.) MSEI contests that it
threatened to withhold payment. (Defs.' Supp. SMF ¶
136.) Rather, MSEI asserts that Universal had an obligation
to provide the customized source codes, which it claims it
owned according to the terms of the EPA. (Id.;
Defs.' SMF ¶¶ 33-36, 48.) Universal delivered
the THS1A line to MSEI with the source codes, which MSEI
signed for in a Final Customer Acceptance letter (hereinafter
“FCA letter”). (Dkt. No. 209, Attach. 27.)
then requested bids for the THS1B and the THS2, the
subsequent phases of the THS. (Pl.'s Supp. SMF
¶¶ 49-50.) Universal bid on these projects, but
MSEI awarded the contracts to MTA, Universal's
competitor. (Id. ¶¶ 49-50, 144.) Universal
maintains that MSEI had already promised it would award
Universal the contracts in exchange for a discounted quote
for a separate project called the separate surface mount line
(hereinafter “SMT”). (3d Am. Compl. ¶ 292.)
order to complete the THS1B and THS2, MSEI provided MTA with
all of the source code from the THS1A. (Pl.'s Supp. SMF
¶ 29.) MTA then used the THS1A source code to build the
THS2 and the source code from the THS2 to build the THS1B.
(Id. ¶ 30; Defs.' Supp. SMF ¶ 32.)
During the course of this litigation, MSEI requested bids to
build the THS3, which Universal again bid on. (Pl.'s
Supp. SMF ¶ 51.) MSEI awarded MTA the contract and MTA
used source code from the THS2 to build the THS3.
(Id. ¶ 31, 144; Defs.' Supp. ¶ 31.)
The parties dispute whether the software and source codes
that were used in the THS1B, THS2, and THS3 were identical to
the software and source code created by Universal for the
THS1A. (Pl.'s Supp. SMF ¶¶ 29-31; Defs.'
Supp. SMF ¶¶ 29-31.) MSEI asserts that the source
code is different because it modified the software in the
THS1A before it provided it to MTA. (Defs.' Supp. SMF
¶ 78.) Universal acknowledges that MSEI modified the
source code but contends the modification was minor.
(Pl.'s Supp. SMF ¶ 103.)
has registered certificates with the United States Copyright
Office for its server and station software from the THS1A.
(Pl.'s Supp. SMF ¶¶ 68, 77.) Universal did not
complete any of this copyrighted software until 2008 or 2009,
and the registrations do not identify the works as derivative
works. (Defs.' SMF ¶¶ 63-64.) Universal did not
register the copyrights until after it filed this lawsuit,
which were first registered in September 2014. (Id.
¶ 67; 3d Am. Compl., Attachs. 3-10.) MSEI had access to
the copyrighted source code and software; however, the
parties dispute whether MTA had access to the same
copyrighted works. (Pl.'s Supp. SMF ¶ 78; Defs.'
Supp. SMF ¶ 78.) Additionally, MSEI disputes the
conclusion of Universal's experts Terry Wolfe and Richard
Hooper who opine that the copyrighted material from the THS1A
was copied or was “predominately line-by-line
identical” in the subsequent lines and server.
(Defs.' Supp. SMF ¶¶ 79-102.) MSEI's
expert, Timothy Rickard, opines the source code was
customized for MSEI and is substantially different from
Universal's pre-existing code. (Defs.' SMF ¶ 15;
Dkt. No. 208 ¶ 25, Item Nos. 6, 8, 10, 18, 20, 22.)
commenced this action on July 15, 2013, alleging breach of
contract, misappropriation of trade secrets, unfair
competition, unjust enrichment, and promissory estoppel.
(Compl., Dkt. No. 1.) MSEI commenced a separate action
against Universal on September 13, 2013, alleging breach of
the duty of confidentiality, unfair competition,
misappropriation, and “injunction.” (Compl., Dkt.
No. 1, 3:13-cv-1144.) The actions were then consolidated and
as noted earlier, the instant action was designated as the
lead action. (Dkt. No. 26.)
amended its complaint three times and included claims of
copyright infringement. (Dkt. Nos. 63, 93, 103.) MSEI and MTA
answered Universal's first amended complaint and
counterclaimed for a declaratory judgment that MSEI and MTA
either owned or had a license to the intellectual property
used in the THS1A and sought specific performance of the EPA.
(Dkt. No. 67.) In two currently pending motions, MSEI and MTA
move for partial judgment on the pleadings against the first
amended complaint and move to dismiss the entire second
amended complaint. (Dkt. Nos. 80, 97.) Following
Universal's third amended complaint, the parties
stipulated that the motions for partial judgment on the
pleadings and to dismiss would apply to Universal's third
amended complaint. (Dkt. No. 106.) Also pending is MSEI and
MTA's motion to strike portions of Universal's third
amended complaint. (Dkt. No. 107.)
the court resolved the above motions, MSEI and MTA moved for
summary judgment. (Dkt. No. 176.) Following an in-court
conference, the court denied that motion with leave to renew.
(Minute Entry of Oct. 19, 2016.) Now pending is MSEI and
MTA's renewed motion for summary judgment on
Universal's third amended complaint and its complaint in
the member case as well as Universal's cross motion for
summary judgment on its complaint and MSEI and MTA's
complaint in the member case. (Dkt. Nos. 196, 209.)
Standards of Review
standard for addressing a Rule 12(c) motion for judgment on
the pleadings is the same as that for a Rule 12(b)(6) motion
to dismiss for failure to state a claim.” Wright v.
Monroe Cmty. Hosp., 493 F. App'x 233, 234 (2d Cir.
2012) (internal quotation marks and citation omitted). For a
full discussion of the governing standard, the court refers
the parties to its prior decision in Ellis v. Cohen &
Slamowitz, LLP, 701 F.Supp.2d 215, 218 (N.D.N.Y. 2010),
abrogated on other grounds by J.C. Christensen &
Assocs., Inc., 786 F.3d 191 (2d Cir. 2015).
the standard of review pursuant to Fed.R.Civ.P. 56 is well
established and will not be repeated here. For a full
discussion of the standard, the court refers the parties to
its decision in Wagner v. Swarts, 827 F.Supp.2d 85,
92 (N.D.N.Y. 2011), aff'd sub nom. Wagner v.
Sprague, 489 F. App'x 500 (2d Cir. 2012).
court first addresses MSEI and MTA's motion to strike
portions of the third amended complaint. (Dkt. No. 107.)
Next, it addresses arguments raised in MSEI and MTA's
Rule 12(b)(6) and 12(c) motions that are not mooted by their
subsequent motion for summary judgment. (Dkt. Nos. 80, 97.)
Finally, the court addresses the parties' summary
judgment motions. (Dkt. Nos. 196, 209.)
Motion to Strike
and MTA argue that the court should strike as redundant
certain copyright registrations that are attached to
Universal's third amended complaint. (Dkt. No. 107,
Attach. 1 at 2-4, 8-10.) In their reply, MSEI and MTA also
ask the court to strike certain copyright registrations that
purportedly falsely list the year that Universal created its
software. (Dkt. No. 119 at 1-2.) In addition, MSEI and MTA
seek sanctions and attorney's fees against Universal.
(Dkt. No. 107, Attach. 1 at 10-11.) In response, Universal
asserts that duplicative registrations do not render a
copyright invalid and that MSEI and MTA have not met their
burden on this motion. (Dkt. No. 116 at 4-12.)
limited situations, a party may move the court to
“strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous
matter.” Fed.R.Civ.P. 12(f). To prevail on a motion to
strike, the movant must show, among other things, that
allowing the challenged allegations to stand would result in
prejudice to the moving party. See Roe v. City of New
York, 151 F.Supp.2d 495, 510 (S.D.N.Y. 2001).
Additionally, the movant must demonstrate that “the
allegations have no bearing on the issues in the case.”
Id. (internal quotation marks and citation omitted).
Moreover, “it is settled that the motion will be
denied, unless it can be shown that no evidence in support of
the allegation would be admissible.” Lipsky v.
Commonwealth United Corp., 551 F.3d 887, 893 (2d Cir.
1976). Thus, “courts should not tamper with the
pleadings unless there is a strong reason for doing
MSEI and MTA have not shown that the duplicative registration
certificates would be inadmissible. Rather, they assert that
“[t]he [duplicative] registrations cannot be infringed
because they are invalid, and so [they] are not
admissible.” (Dkt. No. 119 at 3.) However, as Universal
correctly notes, multiple registrations of the same work do
not render a copyright invalid. See Iris Arc v. S.S.
Sarna, Inc., 621 F.Supp. 916, 920-21 (E.D.N.Y. 1985).
While Universal ultimately cannot recover on multiple claims
of copyright infringement for the same work, see Sparaco
v. Lawler, Matusky, Skelly Eng'rs LLP, 313 F.Supp.2d
247, 250 (S.D.N.Y. 2004) (“A plaintiff is not entitled
to recover twice for the same injury”), this does not
render the duplicative registrations inadmissible.
and MTA also argue that the court should strike certain
copyright registrations which purportedly contain false
software creation dates. These registrations are clearly
relevant to the issue of copyright infringement. Whether the
creation dates are false is a matter for trial and is not a
ground to strike a pleading.See Roe, 151 F.Supp.2d
at 510. Accordingly, MSEI and MTA's motion to ...