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Mobile Mark, Inc v. Daniel Pakosz

September 6, 2011

MOBILE MARK, INC., PLAINTIFF,
v.
DANIEL PAKOSZ, INDIVIDUALLY AND AS AGENT OF DENKE LABORATORIES, INC. AND HASCALL-DENKE CORPORATION; DENKE LABORATORIES, INC., AND HASCALL-DENKE CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge

MEMORANDUM OPINION AND ORDER

Mobile Mark, a designer and seller of commercial antenna products, sued one of its former engineers, Daniel Pakosz ("Pakosz"), along with industry competitors, Hascall-Denke Corporation and Denke Laboratories, Inc. (together, "HascallDenke"), for violation of the Illinois Trade Secrets Act ("ITSA"), 765 ILCS 1065/2, the federal Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030, and the Illinois Computer Crime Prevention Law ("ICCPL"), 720 ILCS 5/16D-3. In addition, Mobile Mark asserts common-law claims for breach of contract, conspiracy, spoliation, and injunctive relief.

In brief, the amended complaint alleges that, before leaving Mobile Mark to work for Hascall-Denke, Pakosz accessed Mobile Mark's computer system and copied proprietary information to a laptop that Mobile Mark had loaned him. Pakosz allegedly transferred the proprietary data to a number of external storage devices, and then installed and repeatedly ran a "Window Washer" program on the laptop to delete files and other data in order to conceal his activities. According to Mobile Mark, Pakosz turned its trade secrets over to Hascall-Denke, which used the information to manufacture knock-off versions of Mobile Mark's antennas.

Defendants have moved pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss each of the seven counts alleged in Mobile Mark's amended complaint. For the reasons explained below, the motion is granted in part and denied in part.

I.

Count I of Mobile Mark's amended complaint alleges a claim under the ITSA. Defendants first maintain that the claim must be dismissed because Mobile Mark fails to identify the alleged purloined trade secrets with sufficient specificity. This contention is unpersuasive. As courts have frequently noted, "ITSA plaintiffs are not required to plead highly specific facts on improper trade secret use, because such facts often will not be available before discovery." Motorola, Inc. v. Lemko Corp., 609 F. Supp. 2d 760, 771 (N.D. Ill. 2009); see also Sentry Pool v. Wave Tec Pools, Inc., No. 07-4082, 2008 WL 3200837, at *3 (C.D. Ill. Aug. 6, 2008); AutoMed Technologies, Inc. v. Eller, 160 F. Supp. 2d 915, 920-21 (N.D. Ill. 2001). Although Mobile Mark does not identify particular trade secrets, the amended complaint singles out several specific antennas that Hascall-Denke allegedly developed based on its use of the proprietary information. At this stage of the litigation, the degree of detail provided in the amended complaint is more than adequate.

The case on which defendants rely, Maclean-Fogg Co. v. Edge Composites, L.L.C., No. 08 C 6367, 2009 WL 1010426 (N.D. Ill. Apr. 14, 2009), is inapposite. While the court there dismissed the plaintiff's ITSA and other claims for failing to identify the trade secret on which the suit was based, the allegations made in support of the claim were entirely conclusory. Mobile Mark's complaint provides substantial factual enhancement for its ITSA claim.

The parties also dispute whether Count I sufficiently alleges an ITSA claim under a so-called "inevitable disclosure" theory. It is unclear whether defendants take this alleged defect to be fatal to Mobile Mark's entire ITSA claim, or whether they believe that it simply forecloses Mobile Mark from relying on inevitable disclosure as a way of proving its ITSA claim. In either case, defendants' argument fails. As the Illinois Court of Appeals has explained, "[u]sing a theory of inevitable disclosure, a plaintiff may prove a claim of trade secret misappropriation by demonstrating that defendant's new employment will inevitably lead him to rely on the plaintiff's trade secrets." Stenstrom Petroleum Services Group, Inc. v. Mesch, 874 N.E.2d 959, 976 (Ill. App. Ct. 2007) (quotation marks omitted). "Inevitable disclosure is not assumed when an employee has general information in his head as a result of working for a company." Saban v. Caremark Rx, L.L.C., --- F. Supp. 2d ----, 2011 WL 1356943, at *33 (N.D. Ill. Apr. 11, 2011). "However, where evidence exists that the employee copied the employer's confidential information, it leads to the conclusion of inevitable disclosure." Id. "When evaluating whether the disclosure of trade secrets is inevitable, courts also consider: (1) the level of competition between the former employer and the new employer; (2) whether the employee's position with the new employer is comparable to the position he held with the former employer; and (3) the actions the new employer has taken to prevent the former employee from using or disclosing trade secrets of the former employer." Id.

Taking these factors into account, Mobile Mark's complaint states a claim for misappropriation of trade secrets via the inevitable disclosure theory. First and foremost, Mobile Mark plainly alleges that Pakosz copied its proprietary information. In addition, the amended complaint indicates that Mobile Mark and Hascall-Denke are competitors, and that Pakosz's position with Hascall-Denke is comparable to his former position at Mobile Mark. Moreover, according to the complaint, Hascall-Denke made no effort to prevent Pakosz from disclosing Mobile Mark's proprietary information. On the contrary, Mobile Mark claims that HascallDenke actively encouraged Pakosz's disclosure of the information.

In short, the amended complaint alleges an ITSA claim under an inevitable disclosure theory. Defendants' motion to dismiss as to Count I is denied.

Count II of the amended complaint alleges a claim under the CFAA. "To state a civil claim for violation of the CFAA, a plaintiff must allege: 1) damage or loss; 2) caused by; 3) a violation of one of the substantive provisions set forth in § 1030(a); and 4) conduct involving one of the factors in § 1030(c)(4)(A)(i)(I)-(V)." Cassetica Software, Inc. v. Computer Sciences Corp., No. 09 C 0003, 2009 WL 1703015, at * 3 (N.D. Ill. June 18, 2009). For purposes of the third of these requirements, the substantive provision on which Mobile Mark relies is § 1030(a)(2), which makes it a violation of the CFAA to "intentionally access[] a computer without authorization or exceed[] authorized access, and thereby obtain[] information from any protected computer." 18 U.S.C. § 1030(a)(2)(C). With respect to the fourth requirement, Mobile Mark relies on the factor set forth in § 1030(c)(4)(A)(i)(I), which applies to offenses involving "loss to 1 or more persons during any 1-year period . . . aggregating at least $5,000 in value." 18 U.S.C. § 1030(c)(4)(A)(i)(I).

Defendants argue that Count II must be dismissed for several reasons, none of which are persuasive. First, defendants object that "Mobile Mark has not alleged any particular file or document that Pakosz allegedly accessed without authorization." Mem. at 7. They also argue that Mobile Mark has failed to allege that Pakosz lacked permission to copy or transfer files to his Mobile-Mark laptop. Defendants are incorrect in assuming that Mobile Mark's CFAA claim must be set forth with such particularity. As with the allegations in support of its ITSA claim, the complaint provides defendants with ample notice of the basis for Mobile Mark's CFAA claim. Thus, for example, while the amended complaint does not list the particular files or documents accessed by Pakosz, it does specify the date and time when Pakosz's unauthorized activity took place.

Defendants also argue that Count II must be dismissed because Mobile Mark has failed to allege that the files on which the claim is based "involved interstate commerce." Mem. at 8. This argument fails for several reasons. As an initial matter, it is unclear why Mobile Mark's CFAA claim should be required to include allegations to this effect. This is so not only because such particularity is not required under federal notice pleading standards, but also because the portion of the CFAA on which Mobile Mark relies simply does not require any showing that the files at issue had anything to do with interstate commerce. While other parts of the statute embody such a requirement, see, e.g., 18 U.S.C. § 1030(a)(6)(applying to anyone who "knowingly and with intent to defraud traffics . . . in any password or similar information through which a computer may be accessed without authorization, if . . . such trafficking affects interstate or foreign commerce"); 18 U.S.C. § 1030(a)(7)(applying to anyone who "with intent to extort from any person any money or other thing of value, transmits in interstate or foreign commerce any communication containing" threats or demands of particular kinds), no such language appears in the provision on which Mobile Mark's claim is premised, 18 U.S.C. § 1030(a)(2).

Yet even if such allegations were required defendants' argument would be unavailing. The amended complaint specifically states that "Mobile Mark's computer systems are 'protected' computers within the meaning of the Computer Fraud and Abuse Act because they are used in and affect interstate commerce." Am. Compl. ¶ 64. In addition, the complaint alleges that Mobile Mark is located in Illinois; that Hascall-Denke is located in Florida; and that Pakosz's malfeasance involved accessing computers and obtaining information in Illinois and turning it over to HascallDenke in Florida. These allegations are enough to indicate the interstate character of the conduct at issue in Mobile Mark's CFAA claim. See, e.g., Modis, Inc. v. Bardelli, 531 F. Supp. 2d 314, 318-19 (D. Conn. 2008) (factual allegations concerning the ...


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