898 F. Supp. 2d 365
D. Mass.2012Background
- Blake, a Massachusetts coin dealer, asserts a new eye-appeal grading system (AURA) and alleges Defendants rebranded it with plus (+) designations; AURA has a pending patent application; Blake disclosed information to Schechter at Numismatic under a confidentiality expectation; Defendants allegedly launched similar plus labeling (SecurePlus and +) and shared ideas; Blake sues for Lanham Act violations, conversion, unjust enrichment, civil conspiracy, misappropriation of trade secrets, and unfair business practices, plus contract and implied covenant claims.
- The case involves universe subsidiary Professional Grading and Numismatic as grading services in the coin trade, with jurisdiction under the Lanham Act and supplemental state claims; the amount in controversy exceed $75,000; complete diversity exists among the parties for the remaining claims.
- The court treated the motion to dismiss as Rule 12(b)(6) despite outside materials, and allowed amendment only if not futile; Blake’s proposed amended complaint was found futile because it added no new viable theories beyond those in the original pleading.
- Blake seeks to protect confidential information and trade secrets related to AURA and its marketing plan; the court analyzes what constitutes confidential information and whether the plus symbol and marketing ideas were public-domain or confidential.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Lanham Act claim viability (Section 43(a)). | Blake asserts defendants’ plus labeling is a misrepresentation or reverse passing off. | Defendants contend plus labeling is public-domain, not confidential, and not counterfeiting origin or false advertising. | Count I dismissed; no plausible false designation of origin or false advertising associated with AURA. |
| Trade secret/misappropriation sufficiency (Count VII). | AURA system trade secret and marketing plan were confidential; defendants misused the marketing plan. | AURA itself was public; confidentiality did not attach; misappropriationClaims fail. | Misappropriation claim survives only for Blake’s marketing plan against Numismatic; AURA-specific misappropriation dismissed. |
| Breach of contract and implied covenant (Counts III & IV). | Numismatic violated oral confidentiality agreement and breached implied covenant. | No enforceable contract or breach established; confidentiality terms vague. | Breach of contract claim survives; implied covenant claim survives against Numismatic. |
| Unjust enrichment (Count V). | Defendants benefited from Blake’s confidential information and marketing plan. | No direct conferral of benefit to Grading entities; mixed results. | Unjust enrichment survives against Numismatic for marketing plan; fails against Professional Grading and Universe regarding AURA. |
| Civil conspiracy (Count VI). | Conspiracy between Numismatic and Professional Grading to misappropriate Blake’s trade secrets. | Underlying tort (conversion) not viable; conspiracy fails without a tort. | Count VI dismissed. |
Key Cases Cited
- Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (Supreme Court 2003) (reverse passing off; protectability of authorship under §43(a))
- Aronson v. Quick Point Pencil Co., 440 U.S. 257 (Supreme Court 1979) (information in public domain cannot be confidential)
- Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (Supreme Court 1989) (ideas in general circulation belong to public domain unless patented)
- Foster-Miller, Inc. v. Babcock & Wilcox Canada, 210 F.3d 1 (1st Cir. 2000) (confidential information must be exclusive/private; secrecy measures matter)
- J.T. Healy & Son, Inc. v. James A. Murphy & Son, Inc., 357 Mass. 728 (Mass. 1970) (trade secret protection requires defined protectable information)
- Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47 (1st Cir. 2009) (unjust enrichment and trade secret standards in MA context)