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Ivanti Inc. v. Staylinked Corp.

United States District Court, D. Utah

September 24, 2019

IVANTI, INC., Plaintiff,
v.
STAYLINKED CORPORATION, Defendant.

          MEMORANDUM DECISION AND ORDER

          Dee Benson United States District Judge

         Before the court is Defendant’s Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. No. 6. The motion has been fully briefed by both parties, and the court has considered the facts and arguments set forth in those filings. Pursuant to civil rule 7-1(f) of the United States District Court for the District of Utah Rules of Practice, the court elects to determine the motion on the basis of the written memoranda and finds that oral argument would not be helpful or necessary. DUCivR 7-1(f).

         FACTUAL BACKGROUND

         The following facts are taken from Ivanti’s complaint. They are accepted as true and viewed in the light most favorable to the plaintiff as the non-moving party. GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997).

         Since the early 2000s, Ivanti and StayLinked have been in direct competition in the market for terminal emulation products. Complaint ¶¶ 13-18, Dkt. No. 2. Over the years, StayLinked changed their products to resemble Ivanti’s. Id. ¶ 14. StayLinked hired at least six Ivanti employees and leveraged their familiarity with Ivanti to gain access to Ivanti’s technologies and strategies. Id ¶ 16.

         In 2012, at the request of its largest client, Ivanti began developing a new terminal emulation product initially called Smart TE. Id. ¶¶ 20-22. Jay Cichosz was then the Vice President of Products and Marketing for Ivanti and was “very familiar” with the development of the Smart TE product. Id. ¶ 23. In this role, Cichosz had access to confidential information related to the product. Id. ¶¶ 24-25. In April 2014, when Ivanti’s Smart TE prototypes had been developed and were being tested, Cichosz left Ivanti to join StayLinked as its Vice President of Marketing and Business Development. Id. ¶ 30. Ivanti’s Smart TE product was renamed Ivanti Velocity and launched in February 2015. Id. ¶¶ 31-32.

         Less than a year after Ivanti’s product was launched, StayLinked launched its own terminal emulation product in February 2016 under the name SmartTE. Id. ¶¶ 35-36. To develop this product, StayLinked relied on confidential Ivanti information obtained and shared by Cichosz. Id. ¶¶ 41-43. StayLinked used this new product to compete directly with Ivanti for key supply chain customers. Id. ¶¶ 45-46. SmartTE became a centerpiece of StayLinked’s supply chain business and helped them increase their market share significantly. Id.

         The following year, around September 2017, StayLinked began to recruit Ivanti’s Asia-Pacific Territory Manager, Stephen Shea. Id. ¶ 48. Soon thereafter, Shea resigned from Ivanti, claiming that he intended to take time off to care for his ailing parents in California. Id. ¶ 50. Shea then joined StayLinked without returning sensitive and confidential information he had acquired while working at Ivanti. Id. ¶¶ 51. Within a month of his resignation, he started recruiting Ivanti’s Asia-Pacific customers to join StayLinked. Id. ¶ 52. In doing so, Shea misappropriated and transferred confidential Ivanti documents and information. Id. ¶ 56-57. Ivanti obtained a stipulated injunction in a case against Shea (See No. 2:18-cv-00092), which prohibited Shea from competing with Ivanti in the Asia-Pacific region for six months. Id. ¶ 54. This period was extended after Shea failed to comply with that requirement. Id.

         StayLinked’s misappropriation of Ivanti’s confidential information resulted in financial gains by StayLinked and commensurate financial losses by Ivanti. Id. ¶¶ 45-46, 60. The misappropriated information included confidential strategies, documents, and prototypes, and Ivanti took substantial steps to preserve the confidentiality of the information. Id. ¶ 63, 65.

         On February 1, 2019, Ivanti filed suit in the United States District Court for the District of Utah alleging that StayLinked has violated Utah’s Uniform Trade Secrets Act (UTSA) as well as the federal Defend Trade Secrets Act (DTSA). Dkt. No. 2. In the complaint, Ivanti also alleged that StayLinked engaged in tortious interference with Ivanti’s business relations. Id. StayLinked moved to dismiss the complaint, arguing that (1) Ivanti’s UTSA and DTSA claims relating to Cichosz are barred by the statute of limitations under those acts; (2) a portion of Ivanti’s claims under the DTSA arose before the effective date of the statute; (3) Ivanti’s tortious interference claims are barred by the UTSA and Utah case law; and (4) Ivanti’s complaint does not set forth facts establishing the elements of its claims. Dkt. No. 6.

         MOTION TO DISMISS STANDARD

         In considering a motion to dismiss pursuant to Rule 12(b)(6), all well-pleaded factual allegations, as distinguished from conclusory allegations, are accepted as true and viewed in the light most favorable to the non-moving party. GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997). Plaintiff must provide “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This requires “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (2009). This court’s role “is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff’s complaint alone is legally sufficient.” Miller v. Glanz, 948 F.2d 1526, 1565 (10th Cir. 1991). In doing so, “courts must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         DISCUSSION

         StayLinked moves to dismiss the complaint on several distinct grounds. Each of ...


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