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Cognitive Edge Pte Ltd. v. Code Genesys, LLC

United States District Court, D. Massachusetts

November 7, 2019

COGNITIVE EDGE PTE LTD., Plaintiff,
v.
CODE GENESYS, LLC, SPRYNG.IO, LLC, SPRYNG.IO ANTHROCOMPLEXITY, LLC, SPRYNG.IO EU LTD., Defendants.

          MEMORANDUM & ORDER

          Indira Talwani United States District Judge.

         I. Introduction

         On October 7, 2019, Cognitive Edge Pte Ltd. (“Cognitive Edge”) and Code Genesys, LLC, Spryng.io Anthrocomplexity, LLC, Spryng.io, LLC, and Spryng.io EU Ltd. (collectively, “Code Genesys”) entered into a Settlement Agreement to resolve their dispute relating to the action Code Genesys, LLC v. Cognitive Edge PTE LTD, Civ. A. 1:18-cv-12509-IT (“Related Action”), and voluntarily dismissed that action. One week later, Cognitive Edge brought this action, asserting that Code Genesys is in breach of the Settlement Agreement and is harming Cognitive Edge through disparaging statements, Compl. [#1], and sought a Temporary Restraining Order and Preliminary Injunction [#3], asking the court to order Code Genesys to follow the joint disclosure provisions of the Settlement Agreement and to refrain from posting web pages or to otherwise communicate in a matter disparaging Cognitive Edge during the pendency of the action. The court granted Cognitive Edge a Temporary Restraining Order (“TRO”) [#15] on October 15, 2019. After Code Genesys entered an appearance in the case, and did not oppose an extension of the TRO, the court extended the TRO to November 12, 2019. Order Extending TRO [#23]. The court heard argument on the Motion for Preliminary Injunction [#3] on November 6, 2019.

         After due consideration, the court GRANTS Cognitive Edge's Motion for Preliminary Injunction [#3] as set forth below.

         II. Discussion

         A. Jurisdiction

         Code Genesys opposed the Motion for Preliminary Injunction [#3] on the sole ground that the court lacks subject matter jurisdiction. See Opp'n to Mot. for Prelim. Inj. [#28]. Code Genesys argues that under Kokkonen v. Guardian Life Ins. Co. of America, absent an “independent basis for federal jurisdiction, ” enforcement of settlement agreements is generally a matter for state courts. 511 U.S. 375, 382 (1994).

         The court agrees that in this case, there must be an independent basis for jurisdiction. The subject matter jurisdiction challenge fails, however, as the Amended Complaint [#26] asserts a federal claim of False Advertising under 15 U.S.C. § 1125(a)(1)(B) (“the Lanham Act”). Am. Compl. 9-11 (Count IV) [#26].[1]

         B. The Merits of the Motion for Preliminary Injunction

         To succeed on a motion for preliminary injunction, a plaintiff “must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). The first factor, the likelihood of success on the merits, “is the main bearing wall of the four-factor framework.” Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 16 (1st Cir. 1996) (internal citations omitted). The party seeking the preliminary injunction bears the burden of “providing a factual basis sufficient to justify a preliminary injunction.” Aspect Software, Inc. v. Barnett, 787 F.Supp.2d 118, 121 (D. Mass. 2011) (relying on Nieves-Marquez v. Puerto Rico, 353 F.3d 108, 120 (1st Cir. 2003) .

         Because Code Genesys's Opposition [#28] focused entirely on the court's lack of subject matter jurisdiction, the facts presented by Cognitive Edge are uncontroverted for the purpose of this motion. Cognitive Edge states that on October 10, 2019, three days after the Settlement Agreement was reached in the Related Action, Cognitive Edge learned from its customers and network members that they had received an email from Spryng.io with a link to its website. Snowden Aff. ¶ 10 [#4-5]. The email contained links to a Spryng.io website maintained by Code Genesys. Id. ¶ 11. The linked web pages contained content and statements relating to “claims about the ownership of the Spryng.io platform and the technology underlying the platform”; “negative comments about Cognitive Edge's patents”; and comments which suggested that this court “considered the merits of the parties' dispute” and agreed with Code Genesys's position. Id. Cognitive Edge asserts that its counsel attempted to contact Code Genesys about this content, asking Code Genesys to remove the content and to make corrective disclosures, and that Code Genesys made changes but that the web pages continued to make false statements and to disparage Cognitive Edge. Id. ¶ 13; Counsel Aff., Exhibits A-C [##4-2, 4-3, 4-4]; Am. Compl. ¶ 43 [#26]. Code Genesys has not disputed any of these facts.

         i. Likelihood of Success on the Merits

         Cognitive Edge asserts that it is likely to succeed on the merits of its breach of contract claims and Lanham Act claims because Code Genesys materially breached the Settlement Agreement's non-disparagement and public disclosure provisions, and in doing so, caused confusion in the market. Mem. in Supp. of Mot. for Prelim. Inj. 11 [#4]; Snowden Aff. [#4-5]. “A plaintiff can succeed on a false advertising claim by proving either that an advertisement is false on its face or that the advertisement is literally true or ambiguous but likely to mislead and confuse consumers.” Clorox Co. P.R. v. Proctor & Gamble Commercial Co., 228 F.3d 24, 33 (1st Cir. 2000).

         In his Affidavit [#4-5], Snowden explains that the non-disparagement and public disclosure provisions of the Settlement Agreement were key aspects to the Agreement. Snowden Aff. ¶¶ 6-8 [#4-5]. Snowden asserts that Code Genesys violated these provisions through misrepresentations made to the market, and that the misrepresentations, relating to the circumstances surrounding the Settlement Agreement, the Related Action, and the validity of Cognitive Edge's patents, are likely to confuse consumers. Id. ΒΆ 11. Based on these uncontroverted facts, Cognitive Edge has met its ...


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