Slip Opinion
N.D. Ill.Mar 29, 2024Background
- ES3 developed proprietary MARS Software, a computational tool for structural simulations, over a period of 22 years, including advanced modeling features (LDPM pre- and post-processors).
- Gianluca Cusatis, a former ES3 employee and academic, had direct access to MARS source code under a confidentiality agreement and later sought to license or transfer ownership but was denied.
- Shortly after departing ES3, Cusatis allegedly developed similar software (referred to as "MARS Derivative") and produced output reportedly only possible with MARS’s unique features.
- ES3 alleges Cusatis and his company, CCS, used ES3’s proprietary code and trade secrets, and published confidential information without consent, leading to claims of copyright infringement, misappropriation of trade secrets (under federal, Illinois, and California law), and breach of contract.
- Procedurally, defendants moved to dismiss all claims for failure to state a claim and for lack of subject matter jurisdiction, particularly arguing that the court lacked jurisdiction because the dispute was government-contract related.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject Matter Jurisdiction (Copyright) | Claims are against private parties, government contract not dispositive | Claim arises under government contract; only Court of Federal Claims has jurisdiction | District court retains jurisdiction; gov't authorization not shown |
| Sufficiency of Copyright Infringement Allegations | Defendants had access, copying alleged, outputs unique to MARS | No access to '22 version; claims overly vague; public domain argument | Plausibly alleged both access and substantial similarity |
| Trade Secrets Identification and Misappropriation | Broadly and sufficiently described, secrecy measures detailed | Vague, overbroad list; insufficient detail on disclosures | Sufficiently pleaded, trade secret status is factual question |
| Breach of Contract (Non-Compete, Confidentiality) | Agreement enforces protection of valid trade secrets, not void | Invalid under CA law (non-compete prohibited); applies to both defs | Survives as to Cusatis, but not CCS (who was not a signatory) |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard for facial plausibility)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard)
- Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (copyright originality requirement)
- Peters v. West, 692 F.3d 629 (Seventh Circuit standard for copyright infringement)
- Pickett v. Prince, 207 F.3d 402 (copyright ownership and derivative works)
- JCW Invs., Inc. v. Novelty, Inc., 482 F.3d 910 (evidence of access and copying in copyright claims)
- Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263 (ITSA requirements)