Inteum Co. v. Nat'l Univ. of Sing.

• Decision Date: 05 March 2019
• Docket Number: CASE NO. C17-1252-JCC
• Parties: INTEUM COMPANY, LLC, a Washington Limited Liability Company, Plaintiff, v. NATIONAL UNIVERSITY OF SINGAPORE, a Foreign, Non-Profit Entity, Defendant.
• Court: U.S. District Court — Western District of Washington

371 F.Supp.3d 864

INTEUM COMPANY, LLC, a Washington Limited Liability Company, Plaintiff,

v.NATIONAL UNIVERSITY OF SINGAPORE, a Foreign, Non-Profit Entity, Defendant.

CASE NO. C17-1252-JCC

United States District Court, W.D. Washington, at Seattle.

Signed March 5, 2019

Nicholas Ryan-Lang, Paul R. Taylor, Joshua Bacon Selig, Byrnes Keller Cromwell LLP, Seattle, WA, for Plaintiff.

Ian Rogers, Joseph M. McMillan, Ulrike Buschbacher Connelly, Perkins Coie, Seattle, WA, for Defendant.

ORDER

John C. Coughenour, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on Defendant National University of Singapore's motion for summary judgment (Dkt. No. 45). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS in part and DENIES in part the motion for the reasons explained herein.

I. BACKGROUND

Plaintiff is a Washington limited liability company that develops and supports intellectual property management software, commonly referred to as Knowledge Management Software ("KMS"). (Dkt. Nos. 35 at 4, 45 at 7, 63 at 3.) Defendant is headquartered in Singapore, and licensed Plaintiff's KMS from 1996 to August 2016. (Dkt. No. 35 at 8.) At all times relevant to this case, the parties' contractual relationship was governed by an August 2012 License Agreement (the "License Agreement"), a 2015 Software Maintenance Plan ("SMP"), and a non-disclosure agreement ("NDA"). (Dkt. No. 51-1 at 2–4, 6–8, 10–12.)

The SMP gave a nonexclusive license to Defendant to use Plaintiff's Inteum C/S® software program (the "Inteum Software"). (Id. at 7.) The Inteum Software is composed of the software application and a relational database, which is used to store and display a large amount of the client's data. (Dkt. No. 46 at 1, 3.) A relational database stores data in tables that capture different types of information, and is capable of combining information from separate tables. (Id. at 2.) Under the terms of the SMP, the parties' contractual relationship expired on August 6, 2016, and Defendant was not obligated to subscribe to another SMP with Plaintiff. (Dkt. No. 51-1 at 7–8, 27–28.)

The License Agreement governed Defendant's use of the Inteum Software. (Dkt. No. 51-1 at 2.) The License Agreement provided that the Inteum Software "is owned by [Plaintiff] ... and is protected by United States trade secret and copyright laws ... [,]" and that Defendant could "either (a) make one copy of the [Inteum Software] solely for backup or archival purposes, or (b) transfer the [Inteum Software] to a single hard disk provided that [Defendant] keeps the original solely for backup or archival purposes." (Id. ) The License Agreement further provided that Defendant "may not transfer the [Inteum Software] on any basis whatsoever. [Defendant] may not reverse engineer, decompile, or disassemble the [Inteum Software]." (Id. ) The License Agreement was to be read in conjunction with the NDA and SMP. (Id. at 3.)

The NDA states that Plaintiff was "the owner of certain proprietary, trade secret and copyrighted information relating to the" Inteum Software. (Id. at 10.) The NDA applied to the Inteum C/S® Data Dictionary (the "data dictionary"); data dictionaries are common database reference tools used to identify information stored in a database's tables. (Dkt. No. 46 at 32.) The NDA was intended to ensure that Defendant would maintain the Inteum Software under strict confidentiality, and required that written or graphical presentations, as well as written summaries of oral presentations, of the Inteum Software be marked "confidential." (Dkt. No. 51-1 at 10.) The NDA permitted Defendant to make one copy of the Inteum Software, and required that any disclosed information carry proprietary and copyright notices. (Id. ) Under the NDA, Defendant could use the Inteum Software "only to develop management reports and to otherwise enjoy use of the software to the fullest extent of its capabilities." (Id. at 11.) The NDA did not apply to output reports of the Inteum Software that did not reveal data structure, which generally means "tables and file names and the relationships between them." (Id. ; Dkt. No. 64 at 3.)

Beginning in 2015, Defendant began exploring KMS of other vendors, including Wellspring Worldwide, Inc.'s ("Wellspring") "Sophia" product. (Dkt. No. 47 at 3–5.) In January 2016, Defendant posted an invitation to tender on GeBIZ, a Singapore Government website. (Id. at 5–6.) Defendant received four bids, including bids from Plaintiff and Wellspring. (Id. at 6.) Defendant selected Wellspring as its new KMS provider, and signed license documents with Wellspring in March 2016. (Id. )

Defendant and Wellspring worked together to migrate Defendant's data from the locally-hosted Inteum Software's database to Wellspring's Sophia product. (Dkt. No. 48 at 2.) Several events related to the data migration are relevant to this case. Wellspring told Defendant that a backup of the Inteum Software's database and related files were needed for the purpose of data migration, and later communications indicate that Defendant provided the backup to Wellspring in April 2016. (Dkt. No. 62-1 at 32, 11–12.) Also prior to the data migration, Defendant sent Wellspring a list of the database objects contained in Defendant's version of the Inteum Software (the "Filename List"). (Dkt. No. 52 at 24–63.) During the data migration itself, Defendant's employees extracted data from 399 tables in Defendant's version of the Inteum Software's database and exported the data from each into a comma separated value (".csv") file. (Dkt. Nos. 46 at 6, 48 at 3.) These files store data as a plain text file and do not store any code, and therefore cannot be used to restore the Inteum Software's database or launch the Inteum Software. (Dkt. No. 46 at 7–8, 11–12.)

In August 2016, the 399 .csv files were uploaded to a secure file transfer portal hosted by Wellspring for a data audit, at which point the data would be evaluated to determine where it should be placed in the Sophia database. (Dkt. No. 48 at 4.) After the data audit was completed, Defendant transferred 233 .csv files to Wellspring, representing the final migration of data. (Dkt. No. 48 at 4.) Plaintiff claims that a number of the .csv files sent were of "secondary" tables proprietary to Plaintiff, as they contain "materialized data" produced by applying the Inteum Software's algorithms to Defendant's data to generate customized combinations of data. (Dkt. Nos. 45 at 12, 64 at 4.)¹ Plaintiff has filed suit against Defendant, alleging that Defendant breached its contracts with Plaintiff and that Defendant misappropriated Plaintiff's trade secrets. (Dkt. No. 35 at 17.) Defendant now moves for summary judgment dismissing Plaintiff's claims. (Dkt. No. 45.)

II. DISCUSSION

A. Motion to Strike Expert Declaration

Plaintiff moves to strike the declaration of Dr. Rajeev Surati pursuant to Federal Rule of Civil Procedure 37(c)(1). (Dkt. No. 63 at 3.) Plaintiff contends that Defendant wrongfully refused to make Dr. Surati available for a deposition because his expert report had not been served. (Id. ) "If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion ... unless the failure was substantially justified or is harmless." Fed. R. Civ. P. 37(c)(1). An expert's report must be disclosed at least 90 days before the trial date. Fed. R. Civ. P. 26(a)(2)(D). If an expert is required to provide a report under Rule 26(a)(2)(B), a deposition of that expert "may be conducted only after the report is provided." Fed. R. Civ. P. 26(b)(4)(A).

Trial in this matter is set to begin on March 18, 2019. (Dkt. No. 28.) Dr. Surati's report had to be disclosed by December 18, 2018. Fed. R. Civ. P. 26(a)(2)(D). Defendant served Plaintiff with Dr. Surati's expert report on December 18, 2018. (Dkt. No. 70 at 2.) Therefore, Defendant timely disclosed Dr. Surati's expert report, and Plaintiff did not have a right to depose Dr. Surati prior to that date. Fed. R. Civ. P. 26(a)(2)(D), (b)(4)(A). Plaintiff's motion to strike Dr. Surati's declaration pursuant to Rule 37(c)(1) is DENIED.

B. Washington Uniform Trade Secrets Act ("WUTSA") Preemption

On January 11, 2019, the Court ordered Plaintiff to show cause why its breach of contract claims were not preempted by the WUTSA, as its breach of contract and trade secret misappropriation claims are premised on the same operative facts. (Dkt. No. 76.) Both parties submitted supplemental briefing on this issue. (Dkt. Nos. 80, 82.)

The controlling case on this issue is the Washington Supreme Court's decision in Boeing Co. v. Sierracin Corp. , 108 Wash.2d 38, 738 P.2d 665 (1987). In Boeing , the Washington Supreme Court held that the WUTSA did not displace a party's ability to bring a breach of contract claim independent from a trade secret misappropriation claim. Id. at 673–74 (citing Uniform Trade Secrets Act of the National Conference of Commissioners on Uniform State Laws, at 6 (Aug. 3, 1978) ). Notwithstanding Boeing , the state of the law in Washington became less clear following the Washington Court of Appeals' decision in Thola v. Henschell , 140 Wash.App. 70, 164 P.3d 524 (2007). In Thola , the Washington Court of Appeals stated that a civil claim was preempted by the WUTSA if the facts supporting the claim "are the same as those that support the plaintiff's WUTSA claim." Id. at 530. Thola did not differentiate between tort- and contract-based civil claims. See id. Following Thola , courts were divided about whether contract claims premised on the same operative facts as a trade secret misappropriation claim were preempted by the WUTSA. Compare Cen Com Inc. v. Numerex Corp. , 2018 WL 1182240, slip op. at 2 (W.D. Wash. 2018) (applying Thola to dismiss a breach of contract claim that was "not factually independent from" the plaintiff's WUTSA claim); wi...