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Niederhauser v. Paradigm Geophysical Corp.

Superior Court of Massachusetts, Suffolk, Business Litigation Session

May 25, 2016

Joel L. Niederhauser
v.
Paradigm Geophysical Corp. et al No. 134120

          MEMORANDUM OF DECISION AND ORDER ON THE DEFENDANTS', PARADIGM GEOPHYSICAL CORP. AND PARADIGM, B.V., MOTION TO DISMISS

          Mitchell H. Kaplan, Justice

         This action arises out of plaintiff Joel J. Niederhauser's contention that on October 23, 2009 he submitted a solution to a challenge problem posted by defendants Paradigm Geophysical Corp. and Paradigm, B.V. (collectively, Paradigm)[1] on defendant Innocentive, Inc.'s crowd-sourcing challenge/solution website. According to the complaint, Niederhauser's solution met all of the requirements of the challenge, he was therefore entitled to the posted prize ($100, 000), but Paradigm wrongfully failed to accept his solution and pay the award. The court previously allowed InnoCentive's motion to dismiss. This memorandum of decision will address Paradigm's motion to dismiss for failure to state a claim on which relief may be granted. See Mass.R.Civ.P. 12(b)(6). For the reasons that follow, Paradigm's motion is ALLOWED.

         FACTS

         The following facts are taken from the allegations of the complaint and for purposes of this motion assumed to be true. Because the complaint relies on written agreements, copies of which have been provided by Paradigm, the terms of those agreements are also referenced.

         Niederhauser lives in Switzerland. He holds advanced degrees in electrical engineering and is president of a firm that provides engineering support to technology companies. Paradigm develops and markets software used in the oil and gas industries to interpret seismic data. InnoCentive is based in Waltham, Massachusetts. It maintains a so-called crowd sourcing website that allows individuals or firms seeking solutions (called " Seekers") to problems (called " Challenges") to post the Challenges, where they will be viewed by many potential problem solvers over the internet. Individuals who submit proposed solutions to the Challenges are called Solvers.

         InnoCentive's website contains Terms of Use that anyone seeking to solve a Challenge must accept. The Terms of Use clearly state, among other things, that:

Your use of the site forms a legally binding contract with [InnoCentive] based on these Terms of Use. If you have registered as a Solver, you will be bound to these Terms of Use as well as additional terms in the applicable Solver Agreement or Challenge Specific Agreement.
. . . [Y]ou acknowledge that InnoCentive does not control in any manner the nature, quality, legality or timing of InnoCentive Challenges. You agree that InnoCentive is a neutral forum for InnoCentive Challenges and Solver Proposed Solutions . . .
InnoCentive has no control over, and is not responsible for the acts or omissions of Seekers [those submitting Challenges].
To be able to solve [Challenges] and access information in the Project Rooms, you must register as a Solver and agree to the additional terms and conditions set forth in the Challenge-Specific Solver Agreement that may be applicable to individual [Challenges].

         Paradigm's Challenge Specific Agreement posted on the InnoCentive website included the following terms:

The Seeker for this InnoCentive Challenge has required that you accept these special terms, so please take the time to understand them.
If you click " I agree" and proceed to the Project Room for this [Challenge], the Challenge-Specific Agreement will be a valid and binding agreement for all purposes relating to this InnoCentive Challenge and in addition to your agreement to abide by the Terms of Use when you registered as a Solver.
The Seeker has absolute and sole discretion to determine whether to Accept your Proposed Solution, or any Proposed Solution. The meeting of the Solution Acceptance Criteria does not mean that the ...

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