Delaware Patent Litigation Report : Delaware Intellectual Property Lawyer & Attorney : Morris James Law Firm : Delaware Patent Litigation Report

The parties are competitors in the consulting and technology services industry.  Among other things, the parties provide computer software and consulting services to help design tools and to aid insurance companies in their management and processing of information.  Plaintiffs brought action against defendant on December 18, 2007 alleging that defendant has infringed on the ‘284 patent which describes a computer program for developing component-based software capable of performing tasks relating to insurance transactions such as claims processing.  Plaintiffs also assert claims for trade secret misappropriation, unfair competition and violations of the Delaware Trade Practices Act, common law unfair competition and tortuous interference with business relations.  Defendant asserts several affirmative defenses including, invalidity, unenforceability, failure to mark, unclean hands and patent misuse.  Defendant also brings counterclaims for declaratory judgments of non-infringement, invalidity, and unenforceability, breach of contract as well as claims of bad faith litigation under the Lanham Act.  This is the Court’s decision on defendant’s motion to dismiss plaintiffs’ state law claims and trade misappropriation claims and plaintiffs’ motion to dismiss or in the alternative to bifurcate and stay plaintiffs’ bad faith counterclaims.  With respect to the trade secret misappropriation claims, the Court notes that it is not common for a plaintiff to know prior to discovery the details surrounding the purported theft.  That being said, the Court must strike a balance between the notice required by Rule 8 with the reality that plaintiffs may have minimal facts available to them at the pleading stage.  However, in this case the Court finds that the complaint presents nothing more than conclusion and a formulaic recitation of elements of a cause of action.  Notably there is no allegation that defendant obtained the information by improper means or the nature of such means.  Moreover, there is no allegation that defendant either disclosed or used the secrets in developing its product.  Thus the Court dismisses defendant’s DUTSA claims.  The Court also finds that plaintiffs have failed to sufficiently plead their tortuous interference claim. Specifically the complaint does not allege that defendant interfered with plaintiffs’ dealings with its customer.  Nor have plaintiffs alleged that its customer elected to terminate its relationship with plaintiffs due to any wrongful or improper conduct on defendants’ part.  Similarly, plaintiffs’ unfair competitions claims which are derived from their interference claims must fail for the same reason.  In addition, because plaintiffs fail to allege that defendant has made false or misleading representations of fact or created confusion in the marketplace, their DPTA claims must also be dismissed.
With respect to the defendant’s bad faith claims, defendant’s claims are based on allegations that plaintiffs, in a press release, made misleading statements regarding defendant’s infringement of the ‘284 patent and misappropriation of trade secrets.  The Court finds that defendant has failed to allege facts sufficient to make plausible its contentions that the statements at issue, when analyzed in context, were literally false.  Similarly, defendant has failed to allege that any of its customers or potential customers were actually misled by these statements or that the statements constitute commercial speech under U.S. v. Edge Broad Co.  Defendant also contends that plaintiffs’ statements violate the DPTA but fails to plead facts sufficient to make a plausible claim. Specifically, the statements do not discuss the characteristics of defendant’s product, express only plaintiffs’ opinion as to the alleged infringement, and defendant offers no facts to support its contention that the statements likely caused confusion or misunderstanding in the marketplace.  Defendant’s common law unfair competition claim is dismissed for the same reason.