Liveperson, Inc. v. 24/7 Customer, Inc.

83 F.Supp.3d 501

LIVEPERSON, INC., Plaintiff

v.24/7 CUSTOMER, INC., Defendant.

No. 14 Civ. 1559RWS.

United States District Court, S.D. New York.

Filed Jan. 16, 2015.

Signed Jan. 15, 2015.

Honigman Miller Schwartz and Cohn LLP, by: J. Michael Huget, Esq., Ann Arbor, MI, Honigman Miller Schwartz and Cohn LLP, by: Roger P. Meyers, Esq., Detroit, MI, Duane Morris, LLP, by: Jeffrey K. Lamb, Esq.,Chicago, IL, Cohen & Gresser LLP, by: Mark S. Cohen, Esq., Sandra C. McCallion, Esq., New York, NY, for plaintiff.

O'Melveny & Myers, LLP, by: Carolyn S. Wall, Esq., New York, NY, O'Melveny

& Myers, LLP, by: George A. Riley, Esq., Mark E. Miller, Esq., David Eberhart, Esq., Elysa Q. Wan, Esq., San Francisco, CA, O'Melveny & Myers, LLP, by: Susan Roeder, Esq., Menlo Park CA, for defendant.

AMENDED OPINION

SWEET, District Judge.

Defendant 24/7 Customer, Inc. (“[24]7” or “24/7” or “Defendant”), moves to dismiss plaintiff Liveperson, Inc.'s (“LivePerson” or “Plaintiff”) First Amended Complaint (“FAC” or “Complaint”) filed May 15, 2014. As to any claims not dismissed, Defendant moves for an order requiring Plaintiff to provide a more definite statement. Based upon the conclusions set for below, the motion to dismiss the complaint is granted in part and denied in part, and the motion for a more definite statement is granted in part and denied in part.

Prior Proceedings

LivePerson initiated this action on March 6, 2014 by filing a summons and complaint. On May 15, 2014, Plaintiff filed the FAC alleging: (i) copyright infringement in violation of 17 U.S.C. § 101 et seq.; (ii) violation of the Digital Millennium Act, 17 U.S.C. § 1201(a) (“DMCA”); (iii) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (“CFAA”); (iv) misappropriation of trade secrets; (v) breach of contract; (vi) intentional interference with advantageous existing economic relationships; (vii) intentional interference with prospective advantageous economic relationships; (viii) unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a) ; (ix) common law unfair competition; and (x) unjust enrichment. On July 18, 2014, Defendant filed the instant motion, seeking to dismiss each of Plaintiff's ten causes of action, and further seeking an order for a more definitive statement for any of Plaintiff's claims that are not dismissed. The instant motion was heard and marked fully submitted on September 24, 2014.

Facts

For the purposes of this motion, the FAC's allegations are assumed true and summarized as follows.

LivePerson, a Delaware corporation with its principal place of business in New York City, provides customers with live-interaction and customer engagement technology for e-commerce websites, enabling businesses to interact in real-time with their website customers. FAC ¶¶ 1, 10. [24]7, a California corporation with its principal place in New York City, is a customer service technology that historically provided human call-center operators to answer phones in customers' call centers. FAC ¶¶ 3, 11. More recently, [24]7 also developed its own live-interaction technology. FAC SI 7.

In 2006 and 2007, [24]7 and LP entered into two contracts to cooperatively market to and serve certain customers: a Co–Marketing and Referral Agreement (“CMA”) and a Master Service Agreement (“MSA”). FAC Ex. A and Ex. B. The contracts were executed in support of the “joint solutions” the parties intended to offer their clients, namely, use of LivePerson's technology coupled with [24]7's call center personnel. FAC ¶ 3.

Under the CMA, which took effect on July 10, 2006, [24]7 obtained a license to “access, operate, and use” LivePerson's intellectual property as specified in the CMA until expiration or termination of the agreement. CMA ¶ 2.1. The parties acknowledged the CMA did not grant a party the rights to the other party's intellectual property beyond the limited license granted in the agreement. CMA ¶ 2.4. The CMA permitted each party to co-market the other party's products and services to certain third parties, but each party reserved the right to “sell, license, support and install its own products and services either directly to customers or indirectly” through various distribution channels. CMA ¶¶ 4.1, 4.3. The CMA included schedules listing LivePerson's customers and [24]7's customers. FAC Ex. A Schedules 1, 2.

On January 26, 2007, [24]7 and LivePerson entered into the MSA. Among other things, LivePerson agreed to provide [24]7 with “access to and license to use” LivePerson's service for the purpose of delivering services to these clients. MSA ¶¶ 5(b), 7(a). The MSA set forth the terms and conditions under which LivePerson was able to offer the combined solution to its clients. FAC ¶ 27.

[24]7 began to develop its own competing live-interaction technology, allegedly by misappropriating LivePerson's software and selling it as its own. FAC ¶ 35. [24]7 also allegedly engaged in additional improper conduct in order to gain a competitive edge over LivePerson. See generally FAC ¶ 35–51. The alleged conduct includes accessing LivePerson's back-end systems to download and manipulate LivePerson's data for the purpose of copying LivePerson's technology, and interfering with LivePerson's client relationships. FAC ¶ 37. [24]7 also allegedly designed its competing software to both interfere with LivePerson's software, such that a customer using both technologies on its website would experience poor performance from LivePerson's technology, and to collect performance data from LivePerson's data, which would then be sent to [24]7. FAC ¶¶ 39, 40, 44. [24]7 used its access to LivePerson's code to “mimic” LivePerson, thereby gaining access to LivePerson's servers and mining LivePerson's confidential and proprietary system data. FAC ¶ 41. [24]7's alleged conduct also included poaching LivePerson employees to work for [24]7, falsely claiming that [24]7's software is the “first predictive or smart chat platform,” and disseminating fabricated and disparaging LivePerson performance metrics to clients. FAC ¶¶ 38, 45–46.

The Applicable Standard

Under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A claim is facially plausible 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 663, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ). In other words, the factual allegations must “possess enough heft to show that the pleader is entitled to relief.” Twombly, 550 U.S. at 557, 127 S.Ct. 1955 (internal quotation marks omitted).

Though the court must accept the factual allegations of a complaint as true, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ).

In considering a motion to dismiss, “a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint.” DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir.2010).

The Copyright Infringement Claim Is Not Adequately Pled

The parties agree that a copyright infringement claim must allege: (1) which specific original works are the subject of the claim; (2) plaintiff's ownership of the copyrights in those works; (3) proper registration of the copyrights; and (4) “by what acts during what time the defendant infringed the copyright.” Kelly v. L.L. Cool J., 145 F.R.D. 32, 36 (S.D.N.Y.1992), aff'd, 23 F.3d 398 (2d Cir.1994), cert. denied, 513 U.S. 950, 115 S.Ct. 365, 130 L.Ed.2d 318 (1994), cited in Def.'s Mem. in Supp. 4 and Pl.'s Mem. in Opp'n 5.

With respect to the first three elements, Plaintiff has adequately identified the LivePerson Visitor Monitoring Module (the “Module”) as its original work, alleged that it is copyrighted, and that the copyright was registered with the United States Copyright Office. See FAC ¶ 53 and FAC Ex. C. Defendant contends, however, that Plaintiff has failed to adequately plead the fourth infringement element.

Plaintiff alleges that “24/7, without LivePerson's authorization or consent” copied “LivePerson's own copyrighted software code.” FAC ¶ 53. Plaintiff further alleges that “[24]7's conduct constitutes direct and intentional infringement of LivePerson's exclusive rights under the Copyright Act to control the reproduction, publication, use and display of LivePerson's live-interaction technology, including the LivePerson Visitor Monitoring Module.” FAC ¶ 54.

Defendant contends that Plaintiff fails to adequately allege the time of infringement, that the FAC does not identify [24]7's infringing product, and that the Plaintiff has not pled which aspects of its Module were copyrightable. Def.'s Mem. in Supp. 5–6. For the purposes of a motion to dismiss, courts evaluating the time of infringement element under Kelly consider whether the complaint, read in the light most favorable to the non-moving party, contains enough factual allegations to provide notice of the period of time during which infringement occurred. See Tangorre v. Mako's, Inc., 01–cv–4430, 2002 WL 313156, at *3 (S.D.N.Y. Jan. 30, 2002) (collecting cases to outline the distinction: “Compare Carell v. Shubert Org., Inc., 104 F.Supp.2d 236, 251 (S.D.N.Y.2000) (complaint sufficient under Rule 8 [...] where plaintiff alleged the publication of certain designs in national and international stage productions and videos in 1997 and 1998 and their use in certain commercial products) and Kelly, 145 F.R.D. at 36 n. 3 (infringement claim adequately supported when plaintiff narrowed the infringing act to the publishing and distribution of two...