Applied Predictive Techs. v. MarketDial, Inc.

1

APPLIED PREDICTIVE TECHNOLOGIES, INC., Plaintiff, v. MARKETDIAL, INC., JOHN M. STODDARD, and MORGAN DAVIS, Defendants.

No. 2:19-cv-496-JNP-CMR

United States District Court, D. Utah

August 12, 2024

MEMORANDUM DECISION & ORDER ON DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT (AMENDED)

JILL N. PARRISH, UNITED STATES DISTRICT COURT JUDGE

District Judge Jill N. Parrish

Applied Predictive Technologies, Inc. (“Plaintiff” or “APT”) asserts a number of claims against MarketDial, Inc. (“MarketDial”), John M. Stoddard (“Mr. Stoddard”), and Morgan Davis (“Mr Davis”) (collectively, “Defendants”). Before the court are two motions for summary judgment relating to APT's claims for misappropriation of trade secrets. ECF Nos. 443 (“Defendants' Motion” or “Mot.”) (filed under seal), 445 (filed under seal). For the reasons set out below, Defendants' Motion is GRANTED, and Davis's Motion is DENIED as moot.

FACTUAL BACKGROUND

A. Factual Predicate

APT is a business analytics company. It serves customers “in a variety of industries, including retail, restaurants financial services, consumer packaged goods, airlines automotive, hotels, insurance, life sciences, healthcare, and telecommunications and media.” ECF No. 188 (“TAC”) ¶ 23. Importantly, APT owns software called Test & Learn (“T&L”), which it licenses to businesses for use in the design and analysis of business experiments. At its core, the software is an A/B test methodology designed to identify business initiatives likely to succeed:

For example, McDonald's might want to know if introducing a new sandwich will increase profits. T&L would use McDonald's data to identify test stores in which the new sandwich should be introduced, identify control stores in which the new sandwich should not be introduced, and compare the behavior across those two groups. McDonald's could then tell whether the new sandwich will boom or bust.

Mot. at 1. To do this, T&L uses data feeds provided by customers consisting of tailored categories of information requested by APT.

APT has repeatedly alleged and maintained that T&L is the result of tens of millions of dollars of capital investment and more than 20 years of development efforts. TAC ¶ 74. APT alleges that the value of its T&L platform, and business model generally, is attested to by its $600 million acquisition by Mastercard in 2015. Id. APT claims that its business model is so valuable and unique that “no competitor before or since has built a similarly competing solution without APT trade secrets,” and that “APT had no meaningful market competitors prior to MarketDial.” ECF No. 552 at 4 (“Opp'n Mem.”) (filed under seal) at 45, 59.

In 2015, APT shared documents and information regarding its business model, and T&L in particular, with McKinsey & Co. (“McKinsey”), a business consulting firm. Through its relationship with McKinsey, APT sought to be recommended to McKinsey's clients. Among the McKinsey personnel who reviewed the information APT shared with McKinsey was Mr. Stoddard, who was tasked with evaluating dozens of software offerings to determine their potential value to McKinsey clients. Mr. Stoddard was an associate on the McKinsey team working on evaluating these software offerings for a period of about five months (from February 20, 2015, until July 16, 2015).

Defendants characterize the information provided to Mr. Stoddard as high-level marketing documents that did not reveal any secrets about how T&L operated. In contrast, APT maintains that the information it provided to McKinsey contained valuable insight into T&L and the general business strategies of APT. Specifically, it argues that it provided “a roadmap for developing a successful predictive business analytics software business with a playbook for how to successfully build, market, sell and deploy predictive business analytics software to customers.” Opp'n Mem. at 2.

While employed at McKinsey, Mr. Stoddard requested APT documents and shared them with Mr. Davis. In April 2016, Mr. Stoddard and Mr. Davis founded MarketDial. Through 2016, Mr. Davis and Mr. Stoddard developed MarketDial business analytics software. They maintain that they did so by consulting with a university professor, writing relatively rudimentary software scripts using R (a language for statistical computing and graphics), and hiring a software development company to help develop the product, never relying on information that could be considered a trade secret. But APT argues that they developed the MarketDial software through extensive misappropriation of APT trade secrets. Mot. at 6; Opp'n Mem. at 10. APT further argues that during Mr. Stoddard's time at MarketDial, he accessed documents purportedly containing trade secret information that he previously had obtained through his employment at McKinsey.

APT also alleges that Sharon Choi, a MarketDial employee who had seen two demonstrations of the T&L software before her employment by MarketDial, inappropriately shared information from these demonstrations with MarketDial. First, while employed at Guitar Center, Ms. Choi received information from APT regarding its business operations and the T&L software from a pitch APT made to Guitar Center for the T&L product. After she left Guitar Center, Ms. Choi retained at least some of these materials and, in 2019, while working at MarketDial, shared them with Josh Baran, another MarketDial employee. Second, while employed by Torrid in 2017, Ms. Choi saw and took screenshots of a presentation on T&L that APT gave to Torrid. Ms. Choi, while still working at Torrid, sent those screenshots to Mr. Baran in October of 2017 in response to an email she had received from him.

B. Procedural History

On June 28, 2018, APT sued MarketDial for patent infringement and misappropriation of trade secrets. APT subsequently amended its complaint multiple times. In September 2019, Defendants moved to dismiss APT's Second Amended Complaint pursuant to FED. R. CIV. P. 12. ECF No. 104. In an order dated November 25, 2020, this court granted in part and denied in part Defendants' motion. Applied Predictive Techs., Inc. v. Marketdial, Inc., 2020 U.S. Dist. LEXIS 221981, at *77, 2020 WL 6940736 (D. Utah Nov. 25, 2020) (“APT I”). It dismissed APT's patent infringement and unfair competition claims, but declined to dismiss APT's claims for misappropriation of trade secrets as insufficiently pleaded. Id.

APT then filed its Third Amended Complaint (“TAC”) on July 27, 2021. The TAC alleged that MarketDial, Mr. Stoddard, and Mr. Davis misappropriated and used APT's trade secret information. Specifically, APT alleged:

a. APT has incorporated its trade secrets into all of its software offerings, including but not limited to its Test & Learn® software, which uses such trade secrets to improve the value and performance of the software;

b. APT's Test & Learn® software uses trade secrets to allow rapid measurement of incremental impact of business initiatives, including optimal selection of specific criteria to improve test results;

c. APT's Test & Learn® software uses patented methods and systems for determining optimal parameter settings for business initiative testing used for testing initiatives for business locations included in a business network, which are enhanced by trade secrets beyond the patented methods that isolate the cause-and-effect impact of each marketing initiative d. APT's trade secrets provide confidential methods that determine specific characteristics that are used to select a set of test locations or markets that will enhance the accuracy of testing, which characteristics were identified and selected by APT based upon many years of trial and error and software engineering utilizing the results of such trial and error;

e. APT has developed trade secrets that are used in its software to identify specific criteria to be assessed to reduce inaccuracies in the testing of business initiatives;

f. APT uses the trade secrets in its software to analyze test results and build out models that recommend the markets/sites where particular business programs will have the best impact;

g. APT's trade secrets include techniques to refine test measurement at a customer level;

h. APT utilizes dashboards that display test results to customers in a confidential format;

i. APT utilizes a set of particular confidential user interfaces (UIs) and architecture that provide simplified reporting of results for customers; these easy-to-use interfaces provide more effective reporting of test results to customers that can be used by customers to more effectively use the trade secrets incorporated into APT's software to assist customers in analyzing business initiative test results, and to make more effective and profitable business decisions;

j. APT utilizes trade secrets incorporated into its software to guide clients on the number of sites that should be used to help design tests that are significant and predictive of rollout performance;

k. APT software incorporates trade secrets that automatically generate a set of key outputs and keeps them up-to-date during the test; a customer using the APT software can then use these APT trade secrets, including a set of APT's confidential UIs, to easily add outputs to the analysis or turn the results into a presentation;

l. APT has developed trade secrets that include confidential business strategies and testing methods unique to certain clients or certain industries;

m. APT has developed trade secrets that include confidential strategies for, among other things (i) effectively deploying APT's Test & Learn® software through partnerships with consulting firms, (ii) enhancing client work with a robust and scalable Test & Learn® software platform, and (iii) using the Test & Learn® software

...