Bytemark, Inc. v. Xerox Corp.

342 F. Supp. 3d 496
CourtDistrict Court, S.D. Illinois
DecidedSeptember 21, 2018
Docket17 Civ. 1803 (PGG)
StatusPublished
Cited by32 cases

This text of 342 F. Supp. 3d 496 (Bytemark, Inc. v. Xerox Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bytemark, Inc. v. Xerox Corp., 342 F. Supp. 3d 496 (S.D. Ill. 2018).

Opinion

PAUL G. GARDEPHE, U.S.D.J.:

Plaintiff Bytemark, Inc. brings this action against Defendants Xerox Corp., ACS Transport Solutions, Inc. ("ACS Transport"), Xerox Transport Solutions, Inc. ("Xerox Transport") (collectively the "Xerox Entities"), Conduent Inc., and New Jersey Transit Corp. ("NJ Transit") (collectively "Defendants"), asserting claims for patent infringement, breach of contract, trade secret misappropriation, tortious interference with business relations, unfair competition, and unjust enrichment. (See First Am. Cmplt. ("FAC") (Dkt. No. 40) ¶¶ 1, 3) Bytemark alleges that it entered into a series of confidentiality agreements with ACS Transport and Xerox Transport for the purpose of developing joint bids to provide mobile ticketing solutions to prospective clients in the mass transit industry. (Id. ¶ 29) After Bytemark disclosed its trade secrets, however, the Xerox Entities cut Bytemark out of the bidding process and used Bytemark's trade secrets and intellectual property to secure a contract with NJ Transit. (Id. ¶ 33) Conduent allegedly has assisted the Xerox Entities in utilizing Bytemark's proprietary technology, and worked together with the Xerox Entities and NJ Transit to sell Bytemark's proprietary technology to prospective customers. (See id. ¶¶ 35-36) Bytemark now seeks damages related to Defendants' alleged misuse of its proprietary information.

Defendants have moved to dismiss Counts One, Two, Eight, and Nine as to all Defendants, and Count Ten as to Defendants Conduent and NJ Transit. (Mot. (Dkt. No. 51) at 1-2)1 For the reasons stated below, Defendants' motion to dismiss Counts Eight, Nine, and Ten will be granted in part, and denied in part. Defendants' motion regarding Counts One and Two - Plaintiff's patent infringement claims - will be addressed in a separate order.

BACKGROUND 2

I. FACTS

A. The Parties

Bytemark provides secure mobile ticketing platforms for transit, tourism, and *502events through smartphone apps, point-of-sale plugins, and open application programming interfaces ("APIs"). (FAC (Dkt. No. 40) ¶ 3) Bytemark is also the owner of certain trade secrets and patents related to the development and implementation of its mobile ticketing applications - such as its V3 Ticketing Technology - and has secured contracts across the mass transit industry, including a contract with New York Waterway - the largest private ferry operator in the United States. (Id. ¶¶ 21-23, 25)

Xerox Corp. sells business services and document technology products. (Id. ¶¶ 4-5)

ACS Transport and Xerox Transport are divisions of Xerox Corp., are incorporated in Georgia, and have their principal places of business in Texas. (Id. ¶¶ 7-8, 10-11) Xerox Corp. acquired ACS Transport's parent company - Affiliated Computer Services, LLC - in February 2010. (Id. ¶ 8) Prior to the acquisition, Xerox Corp. operated primarily as a technology company. (Id. ) After the acquisition, Xerox Corp. added a services operation and was reorganized into two major divisions: Xerox Technology and Xerox Services. (Id. ) Affiliated Computer Services served as Xerox Corp.'s core business process service, and became known as "ACS, A Xerox Company" and "Xerox/ACS." (Id. ¶ 8) At all relevant times, ACS Transport was subject to Xerox's "complete direction and control" and was - "in form and substance[ ]" - the same as Xerox. (Id. )

In January 2014, Xerox Transport changed its name to "ACS Transport Solutions, Inc." (Id. ¶ 11) At all relevant times, Xerox Transport/ACS Transport Solutions was subject to the complete direction and control of Xerox. (Id. )

In 2016, Xerox Corp. split into two publicly traded companies: Conduent and Xerox Corp. (Id. ¶¶ 9, 14) Conduent formally came into existence in January 2017. (Id. ¶ 14) Xerox Corp. retained the document technology operations, while Conduent assumed the business process services arm of the company. (Id. ¶¶ 9, 14)

NJ Transit is a public transportation system that operates buses, light rail, and commuter trains in New York, New Jersey, and Pennsylvania. (Id. ¶ 16)

B. Defendants' Alleged Misuse of Plaintiff's Proprietary Information

Bytemark owns two patents related to its visual validation mobile ticketing applications - Patent No. 8,494,967 (the "'967 patent"), and Patent No. 9,239,993 (the "'993 patent"). (Id. ¶¶ 21-22, Ex. A ( '967 Patent) (Dkt. No. 40-2), Ex. B ( '993 Patent) (Dkt. No. 40-3) ) The '967 Patent was issued on July 23, 2013, while the '993 Patent was issued on January 19, 2016. (See id., Ex. A ( '967 Patent) (Dkt. No. 40-2) at 1, Ex. B ( '993 Patent) (Dkt. No. 40-3) at 1)

Both patents are entitled, "Method and System for Distributing Electronic Tickets with Visual Display." (See id. ) According to the patent abstracts, each invention "discloses a novel system and method for distributing electronic ticketing such that the ticket is verified at the entrance to venues by means of an animation or other human perceptible verifying visual object that is selected by the venue for the specific event." (Id. ) The patent abstracts further explain that this ticketing technology improves the ticket and payment experience for consumers and merchants, by removing the need for a bar-code scanner on an LCD display, "speed[ing] up" the ticket verification process, "maintain[ing] a persistent communication channel with the *503user device in order to control the ticket verification process," and allowing for ticket verification "in the absence of a network connection." (Id. )

Bytemark also owns trade secrets related to the design of applications, technical support systems, and back-end management technical support and service of its mobile ticketing applications. (FAC (Dkt. No. 40) ¶¶ 25, 86, 101, 115) These trade secrets include "proprietary mobile development technology and know-how, design and implementation of mobile ticketing technology applications including those relating to its patented visual validation systems, back-end application and system management, maintenance and service, user data and account management and associated features, and aspects of Bytemark's pricing, sales initiatives and profit generation paradigm." (Id. ) Bytemark takes reasonable measures to protect its trade secrets and confidential information by, inter alia, requiring third parties and employees to sign confidentiality agreements before disclosing any confidential information to them. (Id. ¶ 27)

In the spring of 2012, Bytemark entered into a series of Nondisclosure. Agreements ("NDAs") and Teaming Agreements (collectively, "the Confidentiality Agreements") with ACS Transport and Xerox Transport for the purpose of developing joint proposals and bids to provide mobile ticketing solutions to clients in the mass transit industry. (Id. ¶ 29) The NDAs and Teaming Agreements between Bytemark and ACS Transport identify ACS Transport as "A Xerox Company," and the NDAs between Bytemark and Xerox Transport feature the "Xerox" logo. (Id. )

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Bluebook (online)
342 F. Supp. 3d 496, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bytemark-inc-v-xerox-corp-ilsd-2018.