Swartz v. Schering-Plough Corp.

Decision Date17 June 1999
Docket NumberNo. Civ.A. 99-10177-WGY.,Civ.A. 99-10177-WGY.
Citation53 F.Supp.2d 95
PartiesMitchell SWARTZ, Plaintiff, v. SCHERING-PLOUGH CORPORATION, Plough U.S.A., Schering Plough Healthcare Products, Defendant.
CourtU.S. District Court — District of Massachusetts

Mitchell Swartz, Wellesley, MA, plaintiff pro se.

Arnold P. Messing, Choate, Hall & Stewart, Boston, MA, for Berlex Laboratories, defendant.

Alan F. Feeney, Fitzhugh & Associates, Boston, MA, for Schering-Plough Corp., Schering-Plough Healthcare Products, Inc., defendants.


YOUNG, Chief Judge.


The pro se plaintiff in this action, Mitchell Swartz ("Swartz"), brings a multi-count intellectual property action against the Schering-Plough Corporation ("Schering"), Plough U.S.A. ("Plough"), and Schering-Plough Healthcare Products ("Schering Healthcare") (collectively, the "Schering Defendants"). The gravamen of Swartz' complaint is that the Schering Defendants expropriated Swartz' idea for a "dual-protection" product to screen children and adults from harmful ultraviolet sunlight as well as insects. As a result, Swartz sues for (i) business and intellectual property misappropriation, (ii) trademark infringement, (iii) unfair competition, (iv) breach of contract, (v) negligence and substandard conduct, (vi) fraudulent misrepresentation, (vii) fraudulent conveyance, transfer, or sale, (viii) computer and mail fraud, (ix) civil rights violations, and (x) RICO violations.1 In response, the Schering Defendants have filed the instant motion to dismiss for failure to state claims pursuant to Fed.R.Civ.P. 12(b)(6).2


In reviewing the Schering Defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the Court "must take the allegations in the complaint as true and must make all reasonable inferences in favor of the plaintiffs." Monahan v. Dorchester Counseling Ctr., 961 F.2d 987, 988 (1st Cir.1992). The Court may grant dismissal only if "it appears beyond doubt that [Swartz] can prove no set of facts in support of his claim which would entitle him to relief." Roeder v. Alpha Indus., 814 F.2d 22, 25 (1st Cir.1987) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 [1957]). Despite this low threshold, the pleading requirement is "not entirely a toothless tiger." Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir.1989). In order to survive the motion to dismiss, Swartz must set forth "factual allegations, either direct or inferential, regarding each material element necessary to sustain recovery." Id. at 15. The Court need not accept Swartz' "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like." Doyle v. Hasbro, Inc., 103 F.3d 186, 190 (1st Cir.1996)


In 1975, Swartz invented and developed a marketing plan for a product called "SUN-BUG." See Am.Compl. ¶¶ 4-5. The general idea behind SUN-BUG was to combine the advantages of sun-screen and insect-repellant into a single topical product. See id. "After the idea, business, product and trademark were developed, and said trademark was used over a wide area," the Schering Defendants3 solicited information about SUN-BUG from three of Swartz' friends involved in the development of the product: (i) Dr. Robert Berlin ("Dr.Berlin"), (ii) Ms. Katharine Berlin ("Ms.Berlin"), and (iii) Ms. Elizabeth Solomon ("Solomon"). See id. at ¶ 6. Between 1975 and 1976, these three individuals had repeated discussions about SUN-BUG with high-level employees at Schering including President Abraham Plough,4 Board Member Harry Somson ("Somson"), and the Director of Product Development. See id. Moreover, Dr. Berlin "confidentially shared the entire concept" behind SUN-BUG with the Schering Defendants. See id.

In December, 1975, the parties reached a confidential agreement regarding SUN-BUG. See id. at 7. The Agreement was implicit in "the a priori extreme good will, and because of a successful friendship among the families of Dr. Berlin and ... Mr. Abraham Plough and Mr. Somson. ..."5 Id. As there was a history of successful verbal contracts between the parties, the agreement was essentially made on a handshake. See id. Abraham Plough and Somson personally insisted that no additional secrecy agreements were needed. See id. Based on this implicit confidential agreement, Swartz transferred all available information about SUN-BUG to the Schering Defendants in 1975. See id. at ¶ 8.

Thereafter, Swartz attempted to enter into an exclusive license with the Schering Defendants for the SUN-BUG technology and product development. See id. at ¶ 9. The parties, however, never reached a licensing agreement regarding SUN-BUG. See id. at ¶ 10. In 1997, the Schering Defendants began marketing a product called "BUG & SUN" which Swartz claims is merely his SUN-BUG product and concept being sold under a different name. See id. at ¶ 11. Although Swartz expressed his concern to the Schering Defendants that they were infringing SUN-BUG and offered a license, the parties did not reach any licensing agreement. See id. at ¶ 17. The Schering Defendants then "reportedly licensed or sold or transferred [the SUN-BUG] technology to a second agency, group, individual, or company." Id. Swartz "recently" filed a trademark for SUN-BUG with the United States Patent and Trademark Office. See id. at ¶ 22.


In Count I of the Amended Complaint, Swartz brings a claim against the Schering Defendants for Business and Intellectual Property Misappropriation ("Trade Secret Misappropriation"). "The essence of an action for the wrongful use of trade secrets is the breach of the duty not to disclose or to use without permission confidential information acquired from another." Jet Spray Cooler, Inc. v. Crampton, 377 Mass. 159, 165, 385 N.E.2d 1349 (1979). In order to establish a claim for trade secret misappropriation, Swartz must sufficiently allege that (i) SUN-BUG is a trade secret, (ii) he took reasonable steps to preserve SUN-BUG's confidentiality, and (iii) the Schering Defendants utilized improper means, or participated in their own or another's breach of a confidential relationship, to acquire and use the trade secret. See Picker Int'l. Corp. v. Imaging Equip. Servs., Inc., 931 F.Supp. 18, 35 (D.Mass.1995) (Wolf, J.).

Under Massachusetts law, a trade secret is defined as:

[A]ny formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers. A trade secret is a process or device for continuous use in the operation of the business. Generally it relates to the production of goods, as, for example, a machine or formula for the production of an article. The subject matter of a trade secret must be secret. Matters of public knowledge or of general knowledge in an industry cannot be appropriated by one as his secret.

J.T. Healy & Son v. James A. Murphy & Son, 357 Mass. 728, 736, 260 N.E.2d 723 (1970) (quoting Restatement of Torts § 757, comment b). The Schering Defendants first contend that, even as alleged, the subject matter of SUN-BUG was not "secret" because Swartz shared information "with at least five unidentified parties — none of whom were employees or agents of Schering-Plough." Def.Mem. at 5. This argument fails, however, because in his amended complaint, Swartz identifies the parties with whom he shared information as Dr. Berlin, Ms. Berlin, Solomon, Abraham Plough, and Somson — all of whom either "worked on the confidential business project" with Swartz or were subject to the purported confidential agreement. See Am.Compl. ¶ 6.

The Schering Defendants also point out that the Amended Complaint states that the SUN-BUG trademark "was used over a wide area" before any discussions between the parties began. Id. Since the purportedly misappropriated trade secret is essentially the SUN-BUG trademark or trade dress, as opposed to the SUN-BUG formula, previous dissemination of the product negates the existence of a trade secret. Even though Swartz adequately alleges that he took reasonable steps to preserve SUN-BUG's confidentiality in the negotiations with the Schering Defendants,6 these precautions could not restore SUN-BUG's "secret" status. Consequently, with respect to Count I of the Amended Complaint, this Court GRANTS the Schering Defendants' motion to dismiss.7


In Count II of his Amended Complaint, Swartz alleges trademark infringement under the Lanham Act, 15 U.S.C. §§ 1051-1128. The Lanham Act

seeks to prevent one seller from using the same "mark" as — or one similar to — that used by another in such a way that he confuses the public about who really produced the goods (or service). Confusion may prevent the buyer from obtaining the goods he really wants. It may also jeopardize the commercial reputation of the senior (first) user, which might be tarnished by association with the junior (subsequent) user.

DeCosta v. Viacom Int'l, Inc., 981 F.2d 602, 605 (1st Cir.1992). To establish his trademark claim, Swartz must allege that (i) he uses, and thereby "owns," a mark, (ii) that the Schering Defendants are using that same or a similar mark, and (iii) that the Schering Defendants' use is likely to confuse the public, thereby harming Swartz. See Star Fin. Servs., Inc. v. AASTAR Mortgage Corp., 89 F.3d 5, 9 (1st Cir.1996). The Schering Defendants contend that Swartz' complaint does not meet either the use or likelihood of confusion requirements and his claim for trademark infringement must be dismissed.

Swartz' Amended Complaint does not rectify the deficient...

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