Genasys Inc. v. Vector Acoustics, LLC
| Decision Date | 01 November 2022 |
| Docket Number | 22-CV-152 TWR (BLM) |
| Parties | GENASYS INC., a Delaware corporation, Plaintiff, v. VECTOR ACOUSTICS, LLC, a Delaware limited liability company; HERNAN FREDERICK LOPEZ, an individual; MARCEL NAUJOK, an individual; and DOES 1 through 10. Defendants. |
| Court | U.S. District Court — Southern District of California |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS
Presently before the Court is Defendant Marcel Naujok's Motion to Dismiss (“Naujok MTD,” ECF No. 10) and Defendants Vector Acoustics, LLC and Hernan Frederick Lopez's Motion to Dismiss. (“Vector Lopez MTD,” ECF No. 11.) Plaintiff Genasys Inc. (“Genasys”) filed an Opposition to each Motion to Dismiss (ECF Nos. 14 (“Naujok Opp'n,”), 15 (“Vector Lopez Opp'n”)), and Defendants Naujok (“Naujok Reply,” ECF No. 17) and Vector Lopez (“Vector Lopez Reply,” ECF No. 16) filed Replies. In response to a Supplemental Request for Judicial Notice, (see ECF No 16-1), Plaintiff filed a response. (“Response,” ECF No. 18.) The Court held a hearing on May 19, 2022. (See ECF No. 19.) Having carefully considered the parties' arguments, the law, and the pleadings, the Court GRANTS IN PART AND DENIES IN PART both Naujok's and Vector Lopez's Motions to Dismiss.
BACKGROUND[1]
Genasys is a “leader in the Acoustic Hailing Device Industry” (the “AHD Industry”). Plaintiff “develops and manufactures large-scale communication systems,” for example, “emergency warning systems and public safety mass notification systems that are used by various governmental and commercial organizations.” (Id.) Engineers and business development employees “regularly hold confidential product development meetings” to discuss design improvements to Genasys products. (Id. ¶ 13.)
Genasys “requires both its engineering employees and its business development employees to sign a Proprietary and Inventions Agreement and other employment agreements.” (Id. ¶ 14.) The employment agreements require employees to promptly disclose complete information concerning each and every invention (including a new contribution, concept, idea, development, formula, composition, technique, machine and improvement thereof, or know-how related thereto), discovery, improvement, device, design, apparatus, practice, process, method or product made, developed, perfected, devised, conceived or first reduced to practice by them, either solely or in collaboration with others, during the period of their employment by Genasys, and up to and including a period of one (1) year after termination of employment that relates to the business, produces, practice or techniques of Genasys, or to Genasys' actual or demonstrably anticipated research or development, or resulting from any work performed by them for Genasys. (Id.) The employment agreements further require employees to agree that any and all Inventions made, developed, perfected, devised, conceived or reduced to practice by the employee during the period of employment and any other Inventions made, developed, perfected, devised, conceived or reduced to practice by them during the period of one (1) year after termination of their employment, relating directly or indirectly to the business, products, practices or techniques of Genasys or Genasys' actual or demonstrably anticipated research or development, or resulting from any work performed by them for Genasys, are the sole property of Genasys, and they assigned any and all right title and interest in and to any and all such Inventions to Genasys. (Id. ¶ 15.) The employment agreements “provide for the recovery of attorneys' fees and costs incurred in any controversy or claim arising out of or relating to the Agreements or breach thereof.” (Id. ¶ 16.)
In connection with the use of Genasys products, Genasys receives confidential information from clients, which provides a competitive edge in the industry. (Id. ¶¶ 18-19, 21.) Genasys limits access to the confidential information and, through the employment agreements, requires its employees to “hold ‘customer information' and information relating to ‘the business, products, practices and techniques' of its clients in the strictest confidence and not to use, publish, or disclose such information without Genasys' Board of Directors written authorization.” (Id. ¶ 22.)
Genasys monitors the pricing of its products and does not publicize the information. (Id. ¶ 25.) Instead, Genasys “strategically and selectively discloses its prices” and requires, in the employment agreements, employees to maintain the confidence of its business and financial information. (Id. ¶ 27.)
Marcel Naujok worked for Genasys as Vice President of Business Development from June 2013 through October 2018. (Id. ¶¶ 41, 45.) He signed the employee agreements and thereafter “assumed the confidentiality commitments.” (Id. ¶ 42.) He attended many “Confidential Product Development Meetings”[2] and was very familiar with the “Customer Network,”[3] “Genasys' Pricing Information,”[4] and “Confidential Client Data.”[5] (Id. ¶¶ 43-44.)
After his termination, “Naujok continued to provide various consulting services for Genasys from October 2018 until May 2021.” (Id. ¶ 46.) Throughout the consulting period, Naujok “continued to receive information regarding the Customer Network, Confidential Client Data, Proposed Product Modifications, and other proprietary information of Genasys.” (Id.)
Hernan Lopez worked for Genasys as Vice President of Product Development from 2003 through 2019. (Id. ¶¶ 28, 38.) He also signed the employee agreements and “assumed the confidentiality commitments,” (Id. ¶ 29), and he attended many Confidential Product Development meetings and was very familiar with the Customer Network, Genasys' Pricing Information, and Confidential Client Data. (Id. ¶¶ 30-31.)
In May 2019, the United States Army made a presentation to Genasys regarding its use of Genasys products and provided a copy of some of the slides to Genasys. (Id. ¶¶ 32-33.) The Army emailed the presentation slides with the instruction: (Id. ¶ 35.) Lopez received a copy of the Army's presentation. (Id. ¶ 37.)
In June 2019, Lopez terminated his employment with Genasys. (Id. ¶ 38.) Following his departure, Lopez retained the Army presentation slides as well as “information related to Genasys' Pricing Information, Customer Network, Confidential Client Data, and other proprietary information of Genasys.” (Id. ¶ 39.)
In January 2020, Lopez founded Vector Acoustics (“Vector”). (Id. ¶ 47.) Naujok is “currently assisting Lopez with respect to” Vector's business.” (Id. ¶ 49.) Vector describes its business as “Design and Manufacturing of Loudspeakers and Audio Systems for Challenging Applications.” (Id. ¶ 48.) Vector's products appear to be a “mere reproduction of Legitimate Genasys Products with the addition of the Proposed Product Modifications and/or superficial alterations.” (Id. ¶ 50.)
Genasys believes that, in designing Vector's products, Lopez and Naujok “relied on Genasys' Confidential Client Data, including, but not limited to, the Army Confidential Presentation Materials, and Proposed Product Modifications, as well as other proprietary information of Genasys.” (Id. ¶ 51.) For example, Lopez and Naujok utilized the Army's slides, which had been provided to Genasys, in a presentation with at least one of Genasys' international customers. (Id. ¶ 54.) Further, Vector has been spreading misinformation about Genasys' products to Genasys' customers, including that Genasys' patents on their products have expired. (Id. ¶ 55.)
Genasys asserts the following claims: (1) breach of contract against Lopez; (2) breach of contract against Naujok; (3) violation of California's Uniform Trade Secrets Act (“CUTSA”), Cal. Civ. Code §§ 3426 et seq.; (4) violation of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. §§ 1836 et seq.; (5) unjust enrichment; and (6) Unfair Business Practices (“Section 17200”), California Bus. & Prof. Code §§ 17200 et seq. (See generally Compl.)
Defendant Naujok moves to dismiss all claims pursuant to Federal Rule of Civil Procedure 12(b)(6) or, in the alternative, moves for a more definite statement pursuant to Federal Rule of 12(e), as well as a request for judicial notice pursuant to Federal Rule of Evidence 201. (Naujok MTD at 11-12.) Defendants Vector and Lopez filed an independent motion moving to dismiss all claims pursuant Federal Rule of Civil Procedure 12(b)(6) and a request for judicial notice. (Vector Lopez MTD at 7, 25.)
“A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.'” Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). “A district court's dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is proper if there is a ‘lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.'” Id. at 1242 (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)).
“Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a ‘short and plain statement of the claim showing that the pleader is entitled to relief.'” Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009) (quoting ...
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