The opinion of the court was delivered by: Castillo, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiff The Higher Gear Group, Inc. ("Higher Gear") sues
Defendants Rockenbach Chevrolet Sales, Inc. ("Rockenbach"), Gail
Vitols and Auto eDirect.Com, Inc. ("Auto eDirect") for copyright
infringement under the Federal Copyright Act of 1976,
17 U.S.C. § 101 et seq., trade secret misappropriation under the
Illinois Trade Secrets Act, 765 ILCS 1065/2, breach of contract,
unfair competition, civil conspiracy and tortious interference
with contract relations.*fn1 Currently before the Court is
Defendants' motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6) for failure to state a
claim upon which relief can be granted. For the reasons that
follow, Defendants' motion to dismiss is granted in part and
denied in part. (R. 9-1.)
Higher Gear and Auto eDirect develop and sell automobile
dealership computer software. Higher Gear developed the computer
software at issue in this case and licensed it to Rockenbach. On
September 29, 1999, Higher Gear and Rockenbach entered into a
software license agreement whereby Rockenbach agreed to use
Higher Gear's software "only for internal business operations."
(R. 1-1, Compl. ¶ 7.) Rockenbach also agreed not to permit
software use for the benefit of third parties, not to re-license
or sell the software and not to copy or create derivative works
of the software. Id. Higher Gear claims that despite
contractual obligations Vitols allowed Auto eDirect to view,
access and copy Higher Gear's software. Furthermore, Higher Gear
alleges that Auto eDirect developed designs, features, logic and
computer code derived from Higher Gear's software.
On March 15, 2002, Higher Gear filed suit against Rockenbach,
Vitols and Auto eDirect. Higher Gear claims that all three
Defendants violated the Federal Copyright Act (count I) and the
Illinois Trade Secrets Act ("ITSA") (count II). In addition,
Higher Gear sues Rockenbach for breach of contract (count III),
Vitols and Auto eDirect for unfair competition and civil
conspiracy (counts IV and V) and Auto eDirect for tortious
interference with contract relations (count VI). Currently
before this court is Defendants' motion to dismiss counts II
through VI for failure to state a claim upon which relief can be
granted. Defendants argue that Higher Gear's state claims are
preempted by the Federal Copyright Act, 17 U.S.C. § 301(a),
and/or the Illinois Trade Secret Act, 765 ILCS 1065/8.
A motion to dismiss tests the sufficiency of the complaint,
not the merits of the suit. Gibson v. City of Chicago,
910 F.2d 1510, 1520 (7th Cir. 1990). When considering a motion to
dismiss, the Court views all facts alleged in the complaint, as
well as any inferences reasonably drawn from those facts, in the
light most favorable to Plaintiff. Autry v. Northwest Premium
Servs., 144 F.3d 1037, 1039 (7th Cir. 1998). The Court will
also consider facts asserted in Plaintiffs response to the
motion to dismiss as long as they are consistent with the
allegations found in the complaint. See Help at Home, Inc. v.
Med. Capital, L.L.C., 260 F.3d 748, 752-53 (7th Cir. 2001)
(citation and quotation omitted). We will grant a motion to
dismiss only if Plaintiff can prove no set of facts entitling
her to relief. Venture Assocs. Corp. v. Zenith Data Sys.
Corp., 987 F.2d 429, 432 (7th Cir. 1993).
I. Preemption under 17 U.S.C. § 301(a)
Defendants argue that all of Higher Gear's state claims
(counts II through IV) should be dismissed because the
conditions for preemption under 17 U.S.C. § 301(a) have been
satisfied. Plaintiff, on the other hand, contends that its state
claims should not be preempted because they require additional
elements that qualitatively differ from the elements necessary
to prove copyright infringement.
The Federal Copyright Act preempts state causes of actions
that are equivalent to copyright infringement claims.
17 U.S.C. § 301(a). The Seventh Circuit, interpreting § 301(a), developed
a two-prong test to preempt claims. Balt.
Orioles, Inc. v. Major League Baseball Players Ass'n.,
805 F.2d 663, 674 (7th Cir. 1986). First, a court must determine
that the work in which the right is asserted is fixed in
tangible form and comes within the subject matter of copyright.
Id. Second, the rights granted under state law must be
equivalent to the exclusive rights established by federal
copyright law in § 106. Id. A state right is `equivalent' to
the rights established by federal copyright law if it is
violated by the exercise of any of the rights set forth in §
106, which includes the right to reproduce (whether in original
or derivative form), distribute, perform and display the
copyrighted material. Id. at 676-77. Furthermore, a state
right is `equivalent' if it requires additional elements to make
out a cause of action, but the additional elements do not differ
in kind from those necessary for copyright infringement. Id.
It is well established that computer software is fixed in a
tangible medium of expression and within the subject matter of
copyright. See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1453
(7th Cir. 1996). The legislative history of the Federal
Copyright Act indicates that computer programs are considered
copyrightable as literary works. See Firoozye v. Earthlink
Network, 153 F. Supp.2d 1115, 1124-25 (N.D.Cal. 2001).
Therefore, the first condition for preemption has been
satisfied. As such, the Court will proceed with a discussion of
whether counts II through VI assert claims that are `equivalent'
to the exclusive rights established by federal copyright law.
Because counts II through VI contain elements that differ from
those necessary to prove a copyright infringement claim, the
Court will determine if the additional elements differ in kind
from those necessary for copyright infringement — i.e.
ownership of a valid copyright and copying of constituent
elements of the work that are original. See Susan Wakeen Doll
Co., Inc., v. Ashton Drake Galleries, 272 F.3d 441, 450 (7th
Cir. 2001). The Court will not preempt the state causes of
action if the additional elements change the nature of the
copyright infringement claim. See Computer Assocs. Int'l, Inc.
v. Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992). To determine
if an element changes the nature of a copyright action, it may
be necessary to consider the allegations supporting a claim as
well as the rights sought to be enforced. See Stephen & Hayes
Constr., Inc. v. Meadowbrook Homes, Inc., 988 F. Supp. 1194,
1198 (N.D.Ill. 1998); see also Mayer v. Josiah Wedgwood & Sons,
Ltd., 601 F. Supp. 1523, 1533-34 (S.D.N.Y. 1985).
II. Trade Secret Misappropriation (Count II)
To state a claim for misappropriation under the ITSA, a
plaintiff must show that: (1) she has a trade secret; (2)
defendant misappropriated the trade secret; and (3) defendant
used the trade secret for business purposes. See Composite
Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263,
1265-66 (7th Cir. 1992). Misappropriation of a trade secret
occurs when a person acquires a trade secret by improper means
or discloses a trade secret in breach of a duty of
confidentiality. See American Antenna Corp. v. Amperex
Electronic Corp., 190 Ill. App.3d 535, 137 Ill.Dec. 417,
546 N.E.2d 41, 44 (1989). Improper means includes ...