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Iconics, Inc. v. Massaro

United States District Court, D. Massachusetts

July 19, 2017

ICONICS, INC. Plaintiff,
v.
SIMONE MASSARO, CHRISTOPHER VOLPE, VENTO INDUSTRIES, INC., BAXENERGY GmbH And BAXENERGY ITALIA S.r.L., Defendants.

          MEMORANDUM AND ORDER

          DOUGLAS P. WOODLOCK, Judge.

         Defendants Simone Massaro, BaxEnergy GmbH, Christopher Volpe, BaxEnergy Italia, and Vento Industries have moved [Dkt. No. 543] for summary judgment as to plaintiff Iconics' trade secret misappropriation claims.[1]

         Iconics alleges that defendants misappropriated its trade secrets in developing the Energy Studio Pro product. To establish misappropriation of trade secrets under Massachusetts law, a plaintiff must show “1) the information is a trade secret; 2) the plaintiff took reasonable steps to preserve the secrecy of the information; and 3) the defendant used improper means, in breach of a confidential relationship, to acquire and use the trade secret.” Incase Inc. v. Timex Corp., 488 F.3d 46, 52 (1st Cir. 2007); see also J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc., 260 N.E.2d 723, 730-32 (Mass. 1970).[2] For the core first element, Massachusetts defines a trade secret as “any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” J.T. Healy & Son, Inc., 260 N.E.2d at 729 (citing Restatement (First) of Torts § 757, comment b). But, as the name suggests, a trade secret must be a secret; “[m]atters of public knowledge or of general knowledge in an industry cannot be appropriated by one as his secret.” Id.

         There are three asserted trade secrets remaining at issue in this case; these relate to the core architecture, data intake, and workflow. In their motion for summary judgment, defendants open two lines of attack. First, they argue that they did not misappropriate Iconics' asserted trade secrets. Second, defendants argue that the asserted subjects are not in fact trade secrets, either because Iconics publicly disclosed them or because they involve the sort of public or general knowledge beyond trade secret protection.

         I consider the arguments concerning each of the asserted trade secrets in turn.

         I. CORE ARCHITECTURE

         Iconics' first asserted trade secret concerns its core architecture. In its Narrative Description of asserted trade secrets, Iconics defines the core architecture trade secret as “the presence and arrangement of” several specified components, “the functionality of those components, and how they interact with and relate to one another.” The narrative description provides a graphic representation of how Iconics implements the core architecture trade secret and lists the eight components that are a part of the implementation. Iconics explains how its core architecture “has been developed over a number of years” and therefore “reflects innumerable small tradeoffs and optimizations.” According to Iconics, the core architecture trade secret would be particularly useful to a software developer in the early stages of development, because the new developer could utilize these benefits without having to invest the time and energy it took Iconics to realize them.

         A. Misappropriation

         Iconics does not dispute that its core architecture trade secret was publicly disclosed on April 9, 2009, when an earlier Iconics patent application was published. Atl. Research Mktg. Sys., Inc. v. Troy, 659 F.3d 1345, 1357 (Fed. Cir. 2011) (applying Massachusetts law and concluding “[t]hat which is disclosed in a patent cannot be a trade secret”). Iconics claims, however, that Massaro misappropriated the core architecture trade secret during the brief window of time between his departure from Iconics in January 2009 and the public disclosure on April 9, 2009.

         Defendants argue that Iconics has presented no direct evidence that Massaro worked on any code employing the core architecture trade secret before April 9, 2009. They note that the earliest code potentially relevant to the asserted trade secret was not checked in until February 2010. Responding to Iconics' claim that Massaro's company AnteaSoft may have written some code incorporating three of the eight components of the core architecture before April 2009, defendants assert that use of three components would not qualify as misappropriation of the trade secret. Defendants contend the core architecture trade secret must be viewed as all eight components and their interrelations. See American Airlines, Inc. v. KLM Royal Dutch Airlines, Inc., 114 F.3d 108, 111-12 (8th Cir. 1997) (expert's testimony that “the specific combination of all five elements constituted a trade secret” meant combination of fewer than five elements would not constitute the trade secret).

         In response, Iconics adduces evidence it contends indicates that the full core architecture was misappropriated between January 2009 and April 9, 2009. It points to several communications between Massaro and Mr. Bax in February 2009 regarding software Massaro was developing for Bax Wind Power, including one email where Massaro stated he was working on the “architectural overview” of the software. Iconics also explains that it cannot identify any relevant code developed before February 2010 because defendants have failed to turn over any code or early design documents from that time period. Finally, setting aside the question whether defendants misappropriated before April, 9, 2009, Iconics' expert Christian Hicks opines that BaxEnergy employs the core architecture trade secret in Energy Studio Pro, basing his conclusion on both BaxEnergy's source code and its technical design. In their initial motion for summary judgment, defendants by contrast cite the report of their expert Arthur Zatarain, who concludes that BaxEnergy does not employ the core architecture trade secret.

         Drawing all inferences in Iconics' favor, a reasonable jury could find that defendants misappropriated the core architecture trade secret before April 9, 2009. Even if Iconics lacks direct evidence in the source code showing misappropriation, a jury could reasonably rely on the February 2009 communications to support the view that Massaro had employed the core architecture trade secret to structure the new software he was developing for Bax Wind Power before April 9, 2009. Data Gen. Corp. v. Grumman Sys. Support Corp., 825 F.Supp. 340, 358-59 (D. Mass. 1993), aff'd in relevant part, 36 F.3d 1147 (1st Cir. 1994) (jury permitted to find trade secret misappropriation even if plaintiff failed to identify the source code embodying the alleged trade secret).[3] That evidence, coupled with the Hicks expert report, is sufficient to defeat defendants' motion for summary judgment on this claim. The competing interpretations of BaxEnergy's architecture arrangements between Hicks and Zatarain, as well as the rivaling views of the February 2009 communications, must be resolved by the jury at trial.

         B. Public Knowledge and Disclosure

         Defendants reference two sets of materials that they assert disclose the core architecture trade secret. The first set comes from a 2008 presentation Iconics demonstrated at a customer event and includes diagrams of the Genesis64 architecture. Defendants assert that this presentation discloses six or seven of the components in the core architecture trade secret, as well as their relationships. The second set comes from an April 2008 release of Genesis 32 version 9.1, which has manuals and presentations that defendants claim disclose every component of Iconics' system. Although defendants concede that Iconics expert has raised two or three distinctions between these 2008 materials and a diagram showing the implementation of the core architecture trade secret, they argue that these 2008 materials collectively disclose the core architecture trade secret.

         Iconics responds that its expert Hicks testified at his deposition that none of these 2008 materials disclose the core architecture trade secret and further notes that defendants fail to explain how these documents disclose the core architecture trade secret. Iconics asserts that even assuming these documents disclose aspects of the core architecture trade secret individually, defendants do not explain how these documents could logically be combined to arrive at the complete core architecture trade secret. Sutra, Inc. v. Iceland Exp., No. CIV.A. 04-11360-DPW, 2008 WL 2705580, at *4 (D. Mass. July 10, 2008) (“‘A trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret.'”) (quoting Integrated Cash Mgmt. Servs. v. Digital Transactions, Inc., 920 F.2d 171, 174 (2d Cir. 1990)). In their reply brief, defendants provide no further explanation of how the 2008 diagrams in combination disclose the full core architecture and instead retreat to the conclusory assertion that “the pictures don't lie.”

         Drawing all inferences in Iconics' favor, a reasonable jury could find that the assorted 2008 documents do not disclose the core architecture trade secret. In his deposition, Hicks explained how the 2008 materials do not contain sufficient technical information to disclose the core architecture trade secret and also noted that the diagrams in these materials at times conflict with each other. Such reliable and grounded expert opinion distinguishing customer-oriented mass-market materials from the full technical details of the core architecture trade secret is sufficient by itself to raise a genuine dispute of material fact to defeat summary judgment.[4]

         Based on defendants' failure to explain adequately how the documents can be read together, a reasonable jury could independently find that the 2008 documents disclose only aspects of the core architecture and not the full core architecture trade secret. Sutra, Inc., 2008 WL 2705580, at *4.

         I therefore deny defendants' motion for summary judgment as to the ...


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