United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO
Page Kelley United States Magistrate Judge
April 7, 2017, plaintiff Trust Safe Pay, LLC (Trust
Safe) filed the operative first amended
complaint (#48) against defendants Dynamic Diet, LLC
(Dynamic) and Vilma and Kostas Vadoklis (the
individual defendants) alleging copyright infringement, Count
I, contributory infringement, Count II, and vicarious
infringement, Count III, all in violation of the Copyright
Act of 1976, as amended, 17 U.S.C. § 101, et
seq.; misappropriation of trade secrets, Count IV, in
violation of Mass. Gen. Laws ch. 93, §§ 42 and 42A;
intentional fraud, Count V; common law misappropriation of
trade secrets, Count VI; and violation of Mass. Gen. Laws ch.
93A, § 11, Count VII. (#48.) This action stems from a
friendship gone awry between plaintiff's principal,
Evelina Juchneviciute, her partner and co-member of Trust
Safe, Darius Kersulis, and the individual defendants. The
problems allegedly resulted in the individual defendants
surreptitiously stealing proprietary information relating to
Trust Safe, which information was then used to open and
operate a competing company, Dynamic. Id.
before the court is defendants' motion to dismiss the
amended complaint for failure to state a claim (##52, 53).
Plaintiff has responded in opposition (#59), and defendants
have replied (#62).
facts as set forth in the amended complaint are as follows.
In 2007, plaintiff's principal, Evelina, hired defendant
Vilma to assist with a house cleaning business which Evelina
owned. (#48 ¶ 7.) For the next seven years, Evelina,
Darius, and the individual defendants interacted socially and
became friends. Id. ¶ 8.
2009, Evelina and Darius began a business “representing
weight loss products.” Id. ¶ 9. As part
of this process, they created an “algorithm” to
facilitate the online marketing of their business.
Id. ¶ 12. According to plaintiff, “the
algorithm had a significant value” because it
“generated substantially improved visitor intention
accuracy, visitor time retention on the websites, increased
percentage of sales for any given visitor amount (new end
users to Plaintiff's websites) and new sales
generated.” Id. ¶ 14. In an effort to
protect the algorithm, Evelina and Darius locked the basement
of their home - the room out of which the business was
operating - and password protected the computer that held
“the passwords to all the third party advertising
accounts and the secret words and word combinations that
formed the algorithm.” Id. ¶ 16.
April of 2012, Evelina and Darius needed someone to run the
packaging and shipping portion of the business while they
took a vacation. Id. ¶ 17. Vilma offered her
assistance and was paid for the work she performed.
Id. ¶¶ 18, 19. Vilma was afforded access
to confidential information to include: “revenues
generated, the costs of the business, the number of customers
Plaintiff had and was acquiring daily, the location of
Plaintiff's biggest customer base, and the profit margin
realized by Plaintiff.” Id. ¶ 20.
plaintiff's position that, after learning the inner
workings of the business, the individual defendants decided
to “misappropriate the algorithm and all other
proprietary information [that] made Plaintiff a successful
business” and “to start their own diet/supplement
internet business.” Id. ¶ 21. Thereafter,
Vilma offered repeatedly to babysit Evelina and Darius's
children and was allowed to do so. Id. ¶¶
23, 24. According to plaintiff, Vilma, who knew the location
of the key to the locked basement from her prior work for the
business, used her time babysitting to attempt to learn the
password to plaintiff's computers “by trying
combinations of numbers and/or letters and symbols until she
succeeded . . . .” Id. ¶ 26; see also
Id. ¶ 25. Once she gained access to plaintiff's
computers, Vilma began to purloin a substantial amount of
information and eventually used it “to create a copycat
business of Plaintiff's websites and business system
using the Plaintiff's algorithm.” Id.
April 2012 through January 2013, Kostas spoke with Darius
regularly regarding Kostas's intention to start an online
electronic cigarette business, asking Darius how to run such
a business and increase sales. Id. ¶ 28. During
this same period, Vilma spoke regularly with Evelina about
Trust Safe and what “solutions [Evelina] [was]
implementing to advance her business.” Id.
April and July of 2014, the individual defendants purchased
domain names for their “copycat” websites.
Id. ¶ 30. In January 2015, the individual
defendants incorporated Dynamic. Id. ¶ 32. At
this point plaintiff became aware of “a new competitor
that was bidding on the same keywords Plaintiff used in its
algorithms” Id. Through research, plaintiff
came to learn that the individual defendants were the owners
of these competing websites. Id. ¶¶ 33,
34. “Since January 2015, Plaintiff has monitored
Defendants and the company to whom they
outsourced their website build for visits to Plaintiffs
websites as well as the changes Defendants were making to
their websites based on Plaintiffs . . . changes on their
[sic] websites.” Id. ¶ 35. Based on this
information, plaintiff asseverates that, from January 2015
through the date the amended complaint was filed,
“Defendants and/or the website build company has
visited Plaintiffs website several times per week, sometimes
multiple times per day, accounting for hundreds of separate
visits and tens of thousands of page views[, ]” and
that “Defendants' websites would be changed in the
exact ways Plaintiff would change its website.”
Id. ¶ 36.
contends that since the launch of defendants' competing
websites, in January 2015, Trust Safe's revenue generated
from California, which is the location from which it obtains
the largest portion of its customer base and sales, has shown
the “largest decline.” Id. ¶¶
Standard of Review.
12(b)(6) motion to dismiss challenges a party's complaint
for failing to state a claim. In deciding such a motion, a
court must “‘accept as true all well-pleaded
facts set forth in the complaint and draw all reasonable
inferences therefrom in the pleader's favor.'”
Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir.
2011) (quoting Artuso v. Vertex Pharm., Inc., 637
F.3d 1, 5 (1st Cir. 2011)). When considering a motion to
dismiss, a court “may augment these facts and
inferences with data points gleaned from documents
incorporated by reference into the complaint, matters of
public record, and facts susceptible to judicial
notice.” Haley, 657 F.3d at 46 (citing In
re Colonial Mortg. Bankers Corp., 324 F.3d 12, 15 (1st
order to survive a motion to dismiss under Rule 12(b)(6), the
plaintiff must provide “enough facts to state a claim
to relief that is plausible on its face.” See Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The
“obligation to provide the grounds of [the
plaintiff's] entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.”
Id. at 555 (internal quotation marks and alteration
omitted). The “[f]actual allegations must be enough to
raise a right to relief above the speculative level, ”
and to cross the “line from conceivable to
plausible.” Id. at 555, 570.
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citing Twombly, 550 U.S. at 556). However,
the court is “‘not bound to accept as true a
legal conclusion couched as a factual allegation.'”
Id. at 678 (quoting Twombly, 550 U.S. at
555). Simply put, the court should assume that well-pleaded
facts are genuine and then determine whether such facts state
a plausible claim for relief. Id. at 679.
Copyright Infringement - Count I.
establish copyright infringement under the Copyright Act,
‘two elements must be proven: (1) ownership of a valid
copyright, and (2) copying of constituent elements of the
work that are original.'” Johnson v.
Gordon, 409 F.3d 12, 17 (1st Cir. 2005) (quoting
Feist Publ'ns, Inc. v. Rural Tel. Serv.
Co., 499 U.S. 340, 361 (1991)). Plaintiff bears the
burden of proof on both elements. Id.
Ownership of a Valid Copyright.
(A) of 17 U.S.C. § 411 states that “no civil
action for infringement of the copyright in any United States
work shall be instituted until preregistration or
registration of the copyright claim has been made in
accordance with this title.” Nowhere in the amended
complaint does Trust Safe claim to be the owner of a validly
registered copyright. Thus, plaintiff's claim, if viable,
must satisfy the “preregistration” component of
the statute. The amended complaint asserts that
“Plaintiff is the assignee of three (3) applications
for copyright registrations in works of visual art, which
include various web-pages of Plaintiff's websites,
application numbers 1-3998164856; 1-3998164250; 1-4018230311
. . . .” (#48 ¶ 41.) Trust Safe takes the position
that this allegation is sufficient to pass muster under
§ 411. See #59 at 10. While the court need not
decide the issue at this juncture - plaintiff's claim
fails on other grounds, see infra Section 2 - it
notes that a plaintiff relying on the “application
approach” must demonstrate that it “sent the
requisite application (together with deposit and fee) to the
Copyright Office.” Alicea v. Machete Music,
744 F.3d 773, 779 (1st Cir. 2014) (internal citation
omitted); see also Concordia Partners, LLC v. Pick,
No. 2:13-CV-415-GZS, 2013 WL 6817627, at *2 (D. Me. Dec. 23,
2013) (“As Defendants acknowledge, Plaintiff has
alleged that they have applied for copyright registration and
satisfied all of the necessary formalities to obtain the
registration certificates.”). Contrary to Trust
Safe's assertion that such information is “readily
verifi[able] . . . through the Copyright Office website[,
]” (#59 at 10), should plaintiff choose to replead its
copyright infringement claim, such a showing must be made in
the repleader or via documents attached to it.
Copying of Constituent Elements.
mere allegation that a defendant copied the work of a
plaintiff is insufficient, on its own, to establish a claim
for copyright infringement. See Johnson, 409 F.3d at
18 (“copying does not invariably constitute copyright
infringement”) (citing Feist, 499 U.S. at
To show actionable copying ‘involves two steps: (a)
that the defendant actually copied the work as a factual
matter, . . . and (b) that the defendant's copying of the
copyrighted material was so extensive that it rendered the
infringing and copyrighted works “substantially
similar.”' Situation Mgmt. Sys., Inc. v. Asp.
Consulting LLC, 560 F.3d 53, 58 (1st Cir. 2009)
(citation and quotation marks omitted). ‘The plaintiff
bears the burden of proof as to both elements.'
Johnson v. Gordon, 409 F.3d 12, 17 (1st Cir. 2005).
McGee v. Benjamin, No. CIV.A. 08-11818-DPW, 2012 WL
959377, at *5 (D. Mass. Mar. 20, 2012) (alteration in
original); Calden v. Arnold Worldwide LLC, No.
CIV.A. 12-10874-FDS, 2012 WL 5964576, at *4 (D. Mass. Nov.
copying may be shown via direct or circumstantial evidence.
Johnson, 409 F.3d at 18 (citing Segrets, Inc. v.
Gillman Knitwear Co., 207 F.3d 56, 60 (1st Cir. 2000)).
Plagiarists rarely work in the open and direct proof of
actual copying is seldom available. To fill that void, the
plaintiff may satisfy his obligation indirectly by adducing
evidence that the alleged infringer enjoyed access to the
copyrighted work and that a sufficient degree of similarity
exists between the copyrighted work and ...