Zvelo, Inc. v. Akamai Techs., Inc.
| Decision Date | 30 September 2019 |
| Docket Number | Civil Action No. 19-cv-00097-PAB-SKC |
| Parties | ZVELO, INC., Plaintiff, v. AKAMAI TECHNOLOGIES, INC., Defendant. |
| Court | U.S. District Court — District of Colorado |
ORDER
This matter is before the Court on Defendant Akamai Technologies, Inc.'s Motion to Dismiss [Docket No. 28]. The Court has jurisdiction under 28 U.S.C. §§ 1331 and 1367.
Plaintiff zvelo, Inc. is a technology company that offers a database of categorized website addresses, or Uniform Resource Locators ("URLs"), for purposes of domain name filtering, content filtering, parental controls, content categorization, and other purposes. Docket No. 1 at 3, ¶ 12. This type of technology allows companies to filter or block access to certain websites on the companies' computers. Id. at 2, ¶ 7. Because websites differ so widely, filtering websites based on form or content can be difficult. Id., ¶ 8. Thus, plaintiff's database assigns categories to each unique URL, such as "news" or "malicious software," so that users can filter or block websites based on category. Id. at 2-3, ¶¶ 8-9. Plaintiff also compiles data about URLs that are actively visited to keep its database up-to-date on active and inactive websites. Id. at 3-4, ¶ 14. Plaintiff calls its knowledge of active websites the "zvelo Active Web," which, along with the categorizations of the URLs, make up plaintiff's database - the "zveloDB." Id. at 4, ¶ 15. Plaintiff contends its database is unique and valuable intellectual property that would be challenging for another company to recreate. Id. at 3-4, ¶ 14.
Defendant Akamai Technologies, Inc. is a company that offers products and services that provide URL filtering functionality. Id. at 8, ¶ 41. Plaintiff alleges that defendant's products and services that provide this URL filtering functionality utilize plaintiff's database and the proprietary information contained therein. Id. at 8-9, ¶¶ 42-43. This allegation is based upon "information made available to the public by [defendant] as well as security measures that [plaintiff] has incorporated" into its database. Id. at 8, ¶ 42.
Plaintiff filed this lawsuit on January 10, 2019, raising claims of (1) trade secret misappropriation under the Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1836 et seq., (2) trade secret misappropriation under the Colorado Uniform Trade Secrets Act ("CUTSA"), Colo. Rev. Stat. § 7-74-101, et seq., and (3) unjust enrichment. Docket No. 1 at 9-13. Plaintiff also seeks injunctive relief. Id. at 14. On February 8, 2019, defendant filed a motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Docket No. 28. Plaintiff filed a response, Docket No. 38, to which defendant replied. Docket No. 46.
To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a complaint must allege enough factual matter that, taken as true, makes the plaintiff's "claim to relief . . . plausible on its face." Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "The 'plausibility' standard requires that relief must plausibly follow from the facts alleged, not that the facts themselves be plausible." RE/MAX, LLC v. Quicken Loans Inc., 295 F. Supp. 3d 1163, 1168 (D. Colo. 2018) (citing Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008)). Generally, "[s]pecific facts are not necessary; the statement need only 'give the defendant fair notice of what the claim is and the grounds upon which it rests.'" Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Twombly, 550 U.S. at 555) (omission marks omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not shown - that the pleader is entitled to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal quotation marks and alteration marks omitted); see also Khalik, 671 F.3d at 1190 . If a complaint's allegations are "so general that they encompass a wide swath of conduct, much of it innocent," then plaintiff has not stated a plausible claim. Khalik, 671 F.3d at 1191 (quotations omitted). Thus, even though modern rules of pleading are somewhat forgiving, "a complaint still must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory." Bryson, 534 F.3d at 1286 (alteration marks omitted).
Defendant first argues that plaintiff's trade secret misappropriation claims under DTSA and CUTSA should be dismissed for failure to state a claim. Docket No. 28 at 3. To prevail on a claim for misappropriation of trade secrets under Colorado law, a plaintiff must show: "(i) that he or she possessed a valid trade secret, (ii) that the trade secret was disclosed or used without consent, and (iii) that the defendant knew, or should have known, that the trade secret was acquired by improper means." Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 847 (10th Cir. 1993). CUTSA defines "trade secret" as "the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value." Colo. Rev. Stat. § 7-74-102(4). To constitute a trade secret, "the owner thereof must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes." Id.
Under Colorado law, "[w]hat constitutes a 'trade secret' is a question of fact for the trial court." Doubleclick Inc. v. Paikin, 402 F. Supp. 2d 1251, 1257 (D. Colo. 2005). Courts look to several factors to make this determination, including:
(1) the extent to which the information is known outside the business, (2) the extent to which it is known to those inside the business, i.e., by the employees[,] (3) the precautions taken by the holder of the trade secret to guard the secrecy of the information, (4) the savings effected and the value to the holder in having the information as against competitors, (5) the amount of effort or money expended in obtaining and developing the information, and (6) the amount of time and expense it would take for others to acquire and duplicate the information.
Id. (internal quotation marks omitted). The Tenth Circuit has held that, under Colorado law, "a trade secret can exist in a combination of characteristics, each of which, considered separately, is in the public domain, but, taken together, may yield a competitive advantage that results in a protectable trade secret." Harvey Barnett, Inc. v. Shidler, 338 F.3d 1125, 1130 (10th Cir. 2003).
Similar to the requirements under Colorado law, a plaintiff asserting a claim for misappropriation of trade secrets under DTSA must establish: "(1) the existence of a trade secret that relates to a product or service used in, or intended for use in, interstate or foreign commerce; (2) the acquisition of the trade secret, or the use or disclosure of the trade secret without consent; and (3) the person acquiring, using, or disclosing the trade secret knew or had reason to know that the trade secret was acquired by improper means." Arctic Energy Servs., LLC v. Neal, No. 18-cv-00108-PAB-KLM, 2018 WL 1010939, at *2 (D. Colo. Feb. 22, 2018). Like CUTSA, DTSA defines "trade secret" broadly to include "all forms and types of financial, business, scientific, technical, economic, or engineering information" so long as "the owner thereof has taken reasonable measures to keep such information secret" and "the information derives independent economic value, actual or potential, from not being generally known to," or ascertainable by, another person. 18 U.S.C. § 1839(3). Due to the similarities in the pleading requirements under DTSA and CUTSA, the Court will address the claims' elements together.
First, defendant argues that plaintiff has failed to allege sufficient facts to demonstrate that the information at issue here constitutes a valid trade secret. Docket No. 28 at 4. More specifically, defendant argues that none of the areas in which plaintiff claims it owns trade secrets constitutes trade secrets because all of its examples go to publicly available information. Id. at 4-6. For example, it argues that the URLs contained in plaintiff's database are "available to anyone with internet access," and that plaintiff's categorizations used in its database are likewise publicly available and readily ascertainable information. Id. at 5. Defendant counters that, while individual components of its trade secret information may be readily ascertainable, its compilation of URLs and categorization constitutes a valid trade secret. Docket No. 38 at 5.
As set out above, "a trade secret can exist in a combination of characteristics and components each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret." Hertz v. Luzenac Grp., 576 F.3d 1103, 1109 (10th Cir. 2009) (quoting Shidler, 338 F.3d at 1129 (applying Colorado law)). Further, "compilations" may be considered trade secrets under DTSA. 18 U.S.C. § 1839(3).
Plaintiff's complaint alleges the misappropriation of a database containing "billions of categorized URLs from a taxonomy of nearly 500 categories" that "covers 99.9% of active websites." Docket No. 1 at 4, ¶ 18. Plaintiff also alleges that it "has invested...
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