Optos Inc. v. Topcon Med. Sys. Inc., Civil Action No. 10–12016–DJC.
| Citation | 777 F.Supp.2d 217 |
| Decision Date | 07 March 2011 |
| Docket Number | Civil Action No. 10–12016–DJC. |
| Parties | OPTOS, INC., Plaintiff,v.TOPCON MEDICAL SYSTEMS, INC., and Barry Schafer, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
OPINION TEXT STARTS HERE
Richard D. Hosp, Yvonne W. Chan, Goodwin Procter, LLP, Boston, MA, for Plaintiff.Michael Mankes, Littler Mendelson P.C., Marc C. Laredo, Laredo & Smith LLP., Boston, MA, for Defendants.
Plaintiff Optos, Inc. (“Optos”) has sued its former sales account manager Barry Schafer (“Schafer”), and Schafer's subsequent employer, Topcon Medical Systems, Inc. (“Topcon”), a rival corporation, alleging breach of contract, tortious interference with contractual relations, theft of trade secrets, and unfair and deceptive trade practices. Specifically, Optos alleges that Schafer, in violation of his non-disclosure and non-solicitation agreement with Optos, improperly retained a confidential list of Optos customers and used that list to help Topcon mount a campaign to steal Optos' customers. Topcon and Schafer (collectively, “Defendants”) have moved to dismiss for lack of personal jurisdiction or to transfer venue. Separately, Optos has moved for a preliminary injunction. For the reasons discussed below, Topcon and Schafer's motion to dismiss or transfer venue is DENIED and Optos' motion for a preliminary injunction is GRANTED IN PART and DENIED IN PART.
II. Factual Background 1
Optos is a foreign corporation incorporated under the laws of Delaware with its principal place of business in Massachusetts. Topcon is a New York corporation with its principal place of business in New Jersey. Topcon is not registered to do business in Massachusetts, but has two employees who sell directly to Massachusetts customers and derives approximately 2% of its total sales revenue from customers located in Massachusetts.2 Both Optos and Topcon are companies that develop, manufacture and market “retinal imaging devices,” which create diagnostic images of certain parts of the eye, including the retina. These devices aid in the screening, early detection and diagnosis of eye degeneration and disease, as well as other health problems that may manifest themselves in the eye, including diabetes, hypertension and certain cancers. The devices are marketed to both ophthalmologists and optometrists. The market for these devices is limited; according to the parties, there are approximately 22,000 optometric practices and fewer than 8,000 ophthalmology practices nationwide.
Optos provides most of its devices on a rental basis, with rental contract terms including either a fixed monthly payment or a pay-per-patient payment with a fixed minimum payment and with typical contract durations of either three or five years. Optos has rented approximately 4,000 devices worldwide, mostly in North America.
In February 2008, Optos hired Schafer as an Account Manager responsible for Optos' accounts in its Western Region. Optos has not specified what area was covered by the Western Region, but it is clear it did not include Massachusetts. This was Schafer's second stint as an Optos employee, having previously worked for Optos from 2000 until 2005. At all times during his employment with Optos, Schafer lived in California. Throughout his employment with Optos, Schafer had direct contact with customers, and during his time as an Account Manager, he had access to Optos' customer lists, information about customer accounts and contracts and business and marketing strategies.
On January 30, 2008, immediately prior to returning to Optos, Schafer signed a nondisclosure and non-solicitation agreement under which he agreed that he would neither reveal Optos' confidential information at any time nor use such information to injure or cause loss to Optos, and that, for one year following the termination of his employment, he would not directly or indirectly solicit or initiate business-related communications with any past or present Optos customer or prospective customer. The agreement was in consideration of Schafer's pending employment. This agreement is not the basis for the instant action.
On November 20, 2008, after nearly a year on the job, Schafer signed another Confidentiality, Non–Disclosure and Non–Solicitation Agreement (“Agreement”) with Optos. The Agreement promised that Schafer would have access to confidential and proprietary information belonging to the company and stated that it was in consideration of Schafer's continued employment. This Agreement is central to Optos' complaint, and included the following relevant clauses:
Confidentiality / Non–Disclosure / Return of Property: I acknowledge that, during my employment, I will be given and have access to confidential and proprietary information belonging to [Optos] and/or its customers. I agree to maintain the confidentiality of all such confidential or proprietary information, and I covenant that I will not use or disclose such information without [Optos'] express consent. Upon termination of my employment, I will promptly return to [Optos] all of its property, including but not limited to all documents, data, [and] files ....
Non–Solicitation of Customers: During the Term [which, by the terms of the Agreement, began when Schafer signed the Agreement and lasted until one year after Schafer's employment with Optos terminated], I will not, directly or indirectly, solicit or initiate communications for the purpose of transacting business with (a) any present or past customer of [Optos] with which I directly interacted on behalf of [Optos] during the Term or about which I possess confidential information; or (b) any prospective customer of the Company with which I directly interacted on behalf of [Optos] during the Term or about which I possess confidential information....
Applicable Law / Jurisdiction: This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to the conflict of laws principles thereof. In addition, I acknowledge that, because [Optos] is headquartered in Massachusetts, and I will have regular interaction with [Optos] representatives based in Massachusetts, any dispute concerning this Agreement shall be heard by a court of competent jurisdiction within Massachusetts. By signing below, I acknowledge that I am subject to the personal jurisdiction of the Massachusetts courts ....
The Agreement also included a standard severability clause, stating that if any provision of the Agreement is found unenforceable, the other clauses remain in effect. The Agreement did not include a non-competition covenant.
On July 9, 2009, Schafer informed Optos that he had accepted a sales position with Topcon and would be leaving Optos. The next day, Optos sent Schafer a letter noting that Optos did not object to Schafer's departure, since Optos had no non-compete agreement with Schafer, but reminding Schafer of his continuing obligations pursuant to the Agreement.3 Schafer terminated his employment with Optos on July 17, 2009.
In November 2009, Optos received unconfirmed reports that Schafer was using Optos confidential information in his work at Topcon. On November 12, 2009, Optos sent a cease-and-desist letter to Topcon, notifying Topcon of Schafer's contractual obligations to Optos, informing Topcon that Optos was aware Schafer was using confidential Optos customer information in violation of the Agreement and seeking assurances that both Topcon and Schafer would obey the terms of the Agreement. Optos referenced and attached a copy of the Agreement in its letter to Topcon. Topcon responded in writing on November 18, 2009, stating that it took Optos' allegations “very seriously” and reassuring Optos that “Topcon is extremely diligent and has necessary procedures in place to ensure the protection of third party propriety rights and does not knowingly infringe on those rights.”
In late 2010, Optos was contacted by a former Topcon employee who had also once worked for Optos and who provided Optos with copies of internal Topcon e-mails.4 Copies of the e-mails, spanning April 2010 to September 2010, have been filed under seal with this Court. Optos argues that these e-mails, with subject lines such as “Optos,” “Optos Cross Reference,” and “Gift,” show that, despite Topcon's representations to the contrary, Schafer had in fact shared Optos' confidential information with Topcon and that, at the times the e-mails were sent, Schafer and Topcon were using this information to attempt to recruit customers away from Optos to Topcon.
Specifically, Optos alleges that Schafer kept a confidential spreadsheet that included contact information for over 3,000 of its customers, as well as information about the prices paid by those customers for Optos' services, the extent of each customer's usage of Optos equipment, individual customers' complaints or service requests, and the dates when customers' contracts with Optos would expire and shared the information on that spreadsheet with Topcon. Optos alleges that Topcon and Schafer crafted a marketing and financing plan that they called the “Topcon Liberation Plan.” During a series of e-mails and weekly conference calls, Topcon management praised Schafer and relied on him to teach Topcon employees how to use the information he had circulated to identify Optos customers whose contracts with Optos would soon be up for renewal and to craft sales pitches tailored to each customer, including undercutting the price that a customer paid for Optos services and addressing that customer's service needs and complaints based on their history with Optos. Topcon does not deny the existence of the Topcon Liberation Plan, but disputes that it was based on any confidential information.
At some point after September of 2010, Topcon fired Schafer.5
III. Procedural History
On November 22, 2010, Optos filed the instant lawsuit against Defendants alleging breach of...
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