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Ooyala, Inc. v. Dominguez

United States District Court, D. Massachusetts

July 10, 2018

OOYALA, INC., and OOYALA MEXICO, S. DE R.L. DE C.V., Plaintiffs,
v.
RAUL FRANCISCO GARCIA DOMINGUEZ, DARIO PEREZ REAL, and BRIGHTCOVE, INC., Defendants.

          OPINION AND ORDER

          George A. O'Toole, Jr. United States District Judge.

         The plaintiffs, Ooyala, Inc., and Ooyala Mexico, S. de R.L. de C.V. (collectively “Ooyala”), bring state and federal causes of action against the defendant, Brightcove, Inc. (“Brightcove”), and two of its now-former employees, alleging that Brightcove misappropriated Ooyala's trade secret business information and used that information improperly to solicit existing and prospective Ooyala customers.[1] Ooyala has moved for a preliminary injunction to enjoin Brightcove from communicating with customers whose information was stolen and from otherwise using, disclosing, or retaining that information.[2]

         I. Legal Standard

         In determining whether a party is entitled to a preliminary injunction, courts consider (1) the movant's likelihood of success on the merits of its claim; (2) the extent to which the movant will suffer irreparable harm if an injunction is not granted; (3) the balance of hardships as between the parties; and (4) the effect, if any, that an injunction (or the withholding of one) may have on the public interest. Corp. Techs., Inc. v. Harnett, 731 F.3d 6, 9 (1st Cir. 2013) (citing Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 15 (1st Cir. 1996)). The first of these factors, the movant's likelihood of success, is the “touchstone” of the inquiry. Philip Morris, Inc. v. Harshbarger, 159 F.3d 670, 674 (1st Cir. 1998). “[I]f the moving party cannot demonstrate that he is likely to succeed in his quest, the remaining factors become matters of idle curiosity.” New Comm Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d 1, 9 (1st Cir. 2002) (citation omitted).

         Ooyala, as the moving party, has the burden of providing a sufficient factual basis to justify a preliminary injunction. Nieves-Márquez v. Puerto Rico, 353 F.3d 108, 120 (1st Cir. 2003). Because the parties have submitted adequate documentary evidence and the basic facts about underlying events are not in dispute, an evidentiary hearing is not necessary, and the Court may accept as true well-pleaded allegations in the complaint and uncontroverted affidavits filed in support of the motion for a preliminary injunction. Elrod v. Burns, 427 U.S. 347, 350 n. 1 (1976); Campbell Soup Co. v. Giles, 47 F.3d 467, 470-71 (1st Cir. 1995); Avaya, Inc. v. Ali, No. CIV.A. 12-10660-DJC, 2012 WL 2888474, at *1 (D. Mass. July 13, 2012).

         II. Factual Background

         A. The Parties

         Ooyala is a California-based technology company that markets cloud-based video platform services and products which allow its customers to curate, publish, monetize, measure and analyze video content on a variety of electronic devices. Brightcove, a Massachusetts company, is the leading provider of such cloud-based video services and Ooyala's biggest competitor. Both companies do significant international business and compete for the same customer base, which generally consists of large media and/or broadcasting companies. Relevant to this case are the companies' respective business dealings in Latin America prior to 2017, when the alleged misappropriation at issue took place.

         Internet use in Latin America is growing, with an estimated 375 million internet users and internet penetration that exceeds the global average by more than ten percent.[3] The typical sales cycle for these cloud-based services is longer in Latin America than in other regions, including the United States, averaging approximately nine months between first contact with a potential customer and final sale. This cycle entails a long process of meetings and client development in order to identify each client's business model, service needs, and key decision makers, which is then followed by client pitches, product demonstrations, and contract negotiations. The considerable expenditure of time and resources devoted to each sale makes customer-specific information particularly valuable to businesses in the region.

         Ooyala derives more than half its business from international clients, including a now-significant customer base in Latin America. Over the past decade, Ooyala has expended substantial resources toward understanding the delivery methods, content preferences, and service needs of the regional markets, and has developed various genres of proprietary business information, including current and prospective customer lists and contact information, client-specific needs and pitches, sales/marketing plans and materials, and contract pricing methods, among others. Ooyala accordingly protects this proprietary information through confidentiality agreements, an updated internal security policy, password-protected internet environments that are monitored by an information security team, two-fact authentication for email and shared document access, and annual third-party security audits. Access to this information is provided on a need-to-know basis.

         Brightcove serves approximately four thousand customers in seventy countries. But there is no evidence in the record to suggest that Brightcove had a significant presence in Latin America prior to 2017, when it announced plans to expand into the region through the establishment of a new office in Mexico.

         Raul Francisco Garcia Dominguez (“Garcia”) and Dario Perez Real (“Perez”) were employees of Ooyala's Latin America division, working out of its offices in Mexico, for several years before leaving Ooyala to join Brightcove as part of its Latin America expansion team.[4]Between October 2012 and April 2016, Garcia served as Ooyala's Regional Vice President for Latin America, and was responsible for growing, maintaining, and overseeing Ooyala's client relationships throughout the region. Perez, who reported directly to Garcia, served as the business development manager in Ooyala's Latin America division from November of 2014 until February of 2017. Because Garcia and Perez necessarily had access to Ooyala's confidential business information throughout their employment-indeed, it was their job to cultivate and develop this information-both were bound by Ooyala's confidentiality policies and agreements prohibiting the use or disclosure of such information during their employment and after their termination.

         B. The Alleged Misappropriation

         Garcia left his position at Ooyala in April, 2016, and joined Brightcove the following November to serve as its General Manager for Latin America, a position comparable to the one he held at Ooyala. In this role, he was responsible for overseeing Brightcove's expansion into Latin America's markets, which Brightcove had not previously targeted, and for developing business and hiring a team to staff the new office in Mexico which Brightcove was planning to open as part of this expansion. On December 1, 2016, Perez, who was then employed at Ooyala, sent his resume to Garcia's Brightcove email address, initiating the communications that are central to the parties' present dispute. (Cummins Decl., Ex. D (dkt. no. 19-4).)

         Between December 1, 2016 and February 23, 2017, Perez sent dozens of emails containing Ooyala's purportedly confidential business information to his personal email account and to Garcia's Brightcove email address.[5] In December, these emails included a collection of internal communications between Ooyala and various prospective customers, including a large company that was impatiently waiting for a proposal from Ooyala and beginning to look for an alternative servicer, (Cummins Decl., Exs. E & F (dkt. no. 36)), a company that was in the process of reviewing a proposal Ooyala had recently submitted (id., Ex. G), and a potential referral partner inquiring about a business opportunity, (id., Exs. I & J). In January, the emails included a contract between Ooyala and a current client that was marked “Confidential” and described services, prices, renewal dates, and fees, (id., Ex. K). In February, the emails included a “battlecard” document outlining Ooyala strategies for competing with Brightcove, (id., Ex. M); communications with a prospective customer and the eighty-one-page slide-deck presentation addressing that customer's specifications, (id., Ex. N); communications with a prospective customer concerning its video platform needs, (id., Ex. O); an email report to Garcia-in an email titled “Plan”-identifying eight current and prospective Ooyala customers with notes and contact information for their decision makers (id., Ex. P); and the link to a salesforce report showing the customer needs, pricing information, and client development status of three dozen current and prospective corporate customers, (id., Ex. U.).

         Additionally, there was a February 16 email from Perez to his own personal email account titled “PRETOUR NAB, ” which contained a schedule for Ooyala's March, 2017 Latin America “roadshow.” (Id., Ex. AA.) This roadshow was Ooyala's month-long sales tour during which it travelled to different countries throughout Latin America to meet with prospective customers. The schedule identified which companies Ooyala planned to meet with in each country, as well as the week in March these meetings where scheduled to occur.[6] This schedule included many of the companies whose key decision makers had been identified by Perez in prior emails, including the “Plan” email.

         Subsequent emails between Garcia and Perez during the month of February show that they contacted several of the decision makers at these companies on behalf of Brightcove and attempted to arrange meetings in March before Ooyala was scheduled to do so.[7] (Id., Exs. DD-FF.) One such email shows that Garcia was arranging for top Brightcove executives, including two vice presidents, to be in attendance at one of these meetings. (Id., Ex. LL.) Ooyala discovered during the roadshow that several of the prospective customers it met with had already been approached by Brightcove, sometimes just days before, and representatives of one of these customers even noted how surprised they were by the similarity between the Ooyala and Brightcove slide decks.

         Perez also was seeking employment at Brightcove throughout the time he was sending these emails. Towards the end of January, after sending Garcia a revised resume on December 21, Perez received an email from Carrie Walecka, a Brightcove recruiter, about joining Brightcove as part of Garcia's Latin America team. (Cummins Decl., Ex. H (dkt. no. 19-5); Ex. L (dkt. no. 19-6).) Perez eventually accepted an offer to join Brightcove and formally signed the Brightcove employment contract on February 21, while still employed at Ooyala. (Id., Ex. X (dkt. no. 19-8).)

         Ooyala's standard practice when employees announce that they are leaving the company is to ask where they plan to work next. If the employee is planning to join a competitor, they are immediately escorted from the building in order to protect Ooyala's confidential information. On February 14, Perez informed Ooyala's regional sales director that he was leaving Ooyala to join Amazon Web Sales, and made the same representation to Ooyala's Regional Vice President, Patricio Cummins, two days later. Because Amazon Web Services was not a competitor, Perez was permitted to remain at Ooyala until he voluntarily resigned. However on February 23, after Cummins learned that Perez was in fact going to work for Brightcove, Perez was escorted from the building after turning over his devices and signing a termination and confidentiality agreement.

         Shortly thereafter, Ooyala reviewed Perez's Ooyala-issued computer and discovered the above-described emails. On March 1, it sent a cease and desist letter to the attention of Brightcove's CEO, David Mendels, describing Perez and Garcia's alleged misconduct and requesting that Brightcove take corrective measures. Although this letter was sent by overnight delivery, there was no response from Brightcove until two weeks later, on March 15. David Plotkin, Brightcove's General Counsel, states in his affidavit that he believes Mendels was traveling during the beginning of March, and that it is his “understanding that the ...


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