Document Security Systems, Inc. v. Coupons.com, Inc.

55 F. Supp. 3d 485, 2014 U.S. Dist. LEXIS 152802, 2014 WL 5465467
CourtDistrict Court, W.D. New York
DecidedOctober 28, 2014
DocketNo. 11-CV-6528 CJS
StatusPublished
Cited by2 cases

This text of 55 F. Supp. 3d 485 (Document Security Systems, Inc. v. Coupons.com, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Document Security Systems, Inc. v. Coupons.com, Inc., 55 F. Supp. 3d 485, 2014 U.S. Dist. LEXIS 152802, 2014 WL 5465467 (W.D.N.Y. 2014).

Opinion

DECISION AND ORDER

CHARLES J. SIRAGUSA, District Judge.

INTRODUCTION

This is an action asserting a claim for breach of contract, relating to a commercial non-disclosure agreement. Now before the Court is Defendant’s motion (Docket No. [# 89]) for summary judgment. Defendant’s application is granted and this action is dismissed.

BACKGROUND

Plaintiff is a corporation that provides “anti-counterfeiting, authentication and mass-serialization technologies” to other businesses. Amended Complaint [# 14-3] ¶ 6. Defendant produces digital and printed store coupons. Between 2003 and 2008, Plaintiff provided Defendant with “safety paper” for printing coupons. However, Plaintiff was also interested in selling Defendant certain anti-counterfeiting technology.

In connection with this ongoing business arrangement, the parties signed two nondisclosure agreements (“NDAs”), one in 2003, and one in 2005. Id, Exs. A & B. The pertinent 2005 NDA (“the “NDA” or “the agreement” ”), which Plaintiff drafted, indicated that Plaintiff was disclosing confidential information to Defendant-for the following purpose: “To evaluate a poten[487]*487tial business relationship regarding ... technology and trade secrets of [Plaintiff] related to document printing security features.” Id., Ex. B. The NDA stated that Defendant could only use disclosed “Confidential Information” for that purpose.

The NDA indicated, however, that such “Confidential Information” did not include the following types of information:

a) [information that] was known by the Recipient prior to disclosure, as evidenced by its business records; b) [information that is] lawfully received free of restriction from another source having the right to so furnish such confidential information; c) [information that is] independently developed by or for the Recipient without reference to or use of Confidential Information; d) [information that is] lawfully in the public domain other than through a breach of th[e] Agreement; e) [information that] Discloser agrees in writing is free of such restrictions; f) [information that] is disclosed by the Discloser to a third party without a duty of confidentiality on such third party; or g) [information that] is required or compelled by law to be disclosed, provided that the Recipient gives all reasonable prior notice to the Discloser to allow it to seek protective or other court orders.

Nall Declaration [# 90], Ex. 6.

The agreement is strictly a non-disclosure agreement, not a license, and it specifically indicates that “[n]o license is either granted or implied by the conveying of Confidential Information to the Recipient.” Moreover, as already discussed, the agreement did not envision that Defendant would use the disclosed information for any purpose other than considering whether to purchase Plaintiff’s products. Consequently, the parties never negotiated royalties concerning the commercial use of Plaintiffs technology, and the agreement does not expressly provide for the payment or calculation of royalties in the event of a breach of the agreement. Rather, in terms of potential remedies, the agreement indicates only that

any violation or threat of violation [of the agreement] will result in irreparable harm to Discloser for which damages would be an inadequate remedy and therefore in addition to its rights and remedies otherwise available at law, Dis-closer may seek equitable and administrative relief ... to prevent any unáu-thorized use or disclosure.

Id.

At some time prior to 2006, Plaintiff developed the specific anti-copying technology that is the basis of this lawsuit. The technology, known as “Block-Out,” is an image that is placed on a printed or digital document, and is designed to prevent photocopying of the document. Plaintiff developed the Block-Out anti-copying mechanism from a design that is widely used on currencies, including U.S. currency, and is commonly referred to as the “EURion pattern.” The EURion pattern consists of a pattern of five rings. The anti-copying effect of the pattern is due to the fact that certain commercial-grade photocopiers contain a mechanism, called an “Omron chip,” that recognizes the EURion five-ring pattern, and prevents copying of documents containing the pattern. However, many copiers, including the Court’s color copier/fax/scanner,1 and most if not all home printers and scanners, do not contain such a mechanism. Nor, in almost all cases, does the EURion pattern prevent the copying of black-and-white documents, and almost all, if not all, retailers accept black-and-white [488]*488printed coupons. Consequently, the EU-Rion pattern, and the Block-Out technology derived from that pattern, have limited utility for preventing the counterfeiting of coupons.2

The parties dispute exactly what constitutes the Block-Out technology and how it differs from the EURion pattern used on currencies. For example, Defendant essentially maintains that Block-Out consists of a five-ring image, which can readily be observed as being just a slightly-enlarged version of the EURion pattern. Plaintiff acknowledges that the anti-copying aspect of the Block-Out. image is essentially the same as the EURion pattern, though optimized, by having slightly enlarged rings, so as to ensure that the image triggers copiers’ anti-copying mechanism regardless of the type of printing method. In that regard, Plaintiff maintains that certain copying procedures may cause the rings to appear slightly smaller, which can affect whether a copier’s Omron chip is activated. However, Plaintiff maintains that its Block-Out technology consists of more than just the five-ring image, and that Defendant “is conflating the printed Block-Out pattern [with] the underlying electronic Bloch-Out file, 3 which, Plaintiff maintains, consists of “thirteen (13) separate items of Confidential Information.”4 Such items of information pertain to things such as the ideal location for placement of the anti-copying pattern on a coupon and the color of ink to be used.

The parties also dispute whether the Block-Out technology is covered by the NDA. On this point, Defendant maintains that the Block-Out technology is not covered by the NDA, since it is nothing more than the EURion pattern which is in the public domain, and therefore is not novel. Alternatively, Defendant contends that even if the Block-Out technology is not the same as the EURion pattern, it was nevertheless in the public domain since Plaintiff used the Block-Out image on publicly-available printed materials such as coupons. Defendant maintains, in that regard, that the image could be easily copied by anyone wishing to do so. Plaintiff, though, disputes that the image is easily copied, and reiterates that Block-Out consists of the image along with the underlying electronic information about how to make the image, which is novel and not publicly-available, and which is therefore covered by the NDA.

In any event, Plaintiff maintains that in or about late July, 2006, it provided Defendant with a disc containing Block-Out technology, as well as the instructions for how to use the technology. Plaintiff further maintains that it offered to license the information to Defendant.5 Such “offer” apparently consisted of Plaintiff providing Defendant with a sample of the technology to try out.

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Cite This Page — Counsel Stack

Bluebook (online)
55 F. Supp. 3d 485, 2014 U.S. Dist. LEXIS 152802, 2014 WL 5465467, Counsel Stack Legal Research, https://law.counselstack.com/opinion/document-security-systems-inc-v-couponscom-inc-nywd-2014.