821 F. Supp. 2d 955
M.D. Tenn.2011Background
- ProductiveMD, LLC sues 4UMD, LLC and individuals Becker, Kottas, Holmes, and MacIntyre for misappropriation, unfair competition, and related claims arising from alleged theft of confidential information and use in competing business.
- Becker allegedly misappropriated trade secrets as ProductiveMD's former business development manager and joined 4UMD to compete with his former employer.
- Allegations include Becker soliciting an employee to join 4UMD, and 4UMD copying ProductiveMD’s forms, brochures, and client lists, with some customers allegedly enticed away.
- ProductiveMD alleges 4UMD used ProductiveMD’s templates and forms and claimed to have taken over ProductiveMD’s business, as part of a broader conspiracy.
- Eight counts are asserted, including breach of duty of loyalty (Count I), trade secret misappropriation (Count II), copyright (Count III), Lanham Act (Count IV), unfair competition (Count V), intentional interference (Count VI), civil conspiracy (Count VII), and TCPA (Count VIII).
- The court grants in part and denies in part the Defendants’ Rule 12(c) motion, dismissing certain preempted and derivative claims but allowing others to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| TUTSA preemption scope and pleading sufficiency | TUTSA preempts non-UTSA claims only where based on misappropriation of trade secrets. | Many counts are preempted by TUTSA and rely on trade secrets. | Count VII (civil conspiracy) and parts of Counts I and V preempted; Count II survives as standalone misappropriation pleadings. |
| Breach of duty of loyalty by Becker | Becker breached loyalty by misappropriating trade secrets and competing while employed. | As an employee, Becker’s preparations to compete are not actionable. | Count I survives to extent not premised on misappropriation; portions tied to trade secrets preempted are dismissed. |
| Lanham Act claim viability | Defendants passed off 4UMD’s services as ProductiveMD’s and copied materials. | Lack of owned trademark ownership defeats § 1125(a) claim. | Lanham Act claim survives; § 1125(a) can apply without ownership of a registered mark. |
| TCPA claim viability | 4UMD’s actions caused unfair or deceptive practices injuring ProductiveMD. | TCPA pleading deficiencies require more specificity. | Count VIII survives; pleadings are sufficient to state unlawful/unfair practices under TCPA. |
| Civil conspiracy dismissal | Conspiracy to misappropriate trade secrets and unfair competition allowable. | Conspiracy depends on underlying misappropriation. | Count VII dismissed as preempted by TUTSA. |
Key Cases Cited
- PartyLite Gifts, Inc. v. Swiss Colony Occasions, 246 F. App’x 969 (6th Cir. 2007) (factors for defining trade secrets and preemption guidance)
- Hauck Mfg. Co. v. Astec Indus., Inc., 375 F. Supp. 2d 649 (E.D. Tenn. 2004) (same proof standard for UTSA preemption)
- Cardinal Health 414, Inc. v. Adams, 582 F. Supp. 2d 967 (M.D. Tenn. 2008) (applications of the same-proof approach to preemption)
- Gnesys, Inc. v. Greene, 437 F.3d 482 (6th Cir. 2005) (Section 43(a) scope beyond registered marks)
- Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (S. Ct. 2003) (Section 43(a) covers false designation beyond registered marks)
- Zyla v. Wadsworth, Div. of Thomson Corp., 360 F.3d 243 (1st Cir. 2004) (Section 43(a) applicability without trademark ownership)
- Empresa Cubana del Tabaco v. Culbro Corp., 399 F.3d 462 (2d Cir. 2005) (broad interpretation of Section 43(a))
- Trau-Med v. Allstate Ins. Co., 71 S.W.3d 691 (Tenn. 2002) (elements of intentional interference with business relationships)