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New Media Strategies, Inc. v. Pulpfree

January 31, 2008

NEW MEDIA STRATEGIES, INC., APPELLANT/CROSS-APPELLEE,
v.
PULPFREE, INC. D/B/A BUZZMETRICS, ET AL., APPELLEES/CROSS-APPELLANTS.



Appeals from the Superior Court of the District of Columbia (CAB-3450-05) (Hon. Michael L. Rankin, Trial Judge).

The opinion of the court was delivered by: Thompson, Associate Judge

Submitted December 4, 2007

Before WASHINGTON, Chief Judge, THOMPSON, Associate Judge, and FERREN, Senior Judge.

Appellant New Media Strategies ("NMS") seeks reversal of a grant of summary judgment that the trial court entered in favor of appellees, Pulpfree, Inc. and three of its officers (together, "Pulpfree"), on the ground that NMS's complaint alleging misappropriation of trade secrets was time-barred. Pulpfree has cross-appealed, contending that it was entitled to summary judgment on an alternative basis, as well as on statute-of-limitations grounds. We reverse that portion of the trial court's order granting summary judgment on statute-of- limitations grounds, affirm the court's decision declining to grant summary judgment on the alternative ground that Pulpfree urges, and remand for further proceedings.

I.

The pertinent undisputed facts are as follows. In the summer of 2000, Pulpfree sold software that enabled users to "download text content published on the internet by third parties" or, stated differently, to "harvest" information that was available on the internet. By contrast, NMS's business included providing "analytical reports generated from data collected on the Internet" and market analysis of "online customer feedback." During mid-summer, representatives of Pulpfree and NMS commenced discussions and negotiations about NMS's potential acquisition of Pulpfree's software. The parties' negotiations involved the exchange of business information. Among other things, NMS provided Pulpfree a summary of its business plan. By the end of August 2000, the negotiations had terminated without a deal. Thereafter, however, Jonathan Carson of Pulpfree reinitiated contact with NMS outside director Oron Strauss. During November and December 2000 and January 2001, Carson exchanged several emails with Strauss and also met with him once, discussing Pulpfree's business opportunities and Pulpfree as a potential investment opportunity.

There, the parties' accounts diverge. Strauss asserts, in his affidavit in support of NMS's opposition to Pulpfree's motion for summary judgment, that, throughout his communications with Carson, he (Strauss) believed that Pulpfree "[was] continuing to develop [its] harvesting software and [was] looking for business opportunities to promote or license [its] product." Strauss avows that he believed that Pulpfree was "following substantially the same business strategy that [it] had been following during the acquisition discussions," i.e., attempting to sell its harvesting software, not "expand[ing its business] to include analytic or marketing services" similar to those provided by NMS. Pulpfree, by contrast, asserts that by the end of December 2000, Carson had disclosed to Strauss that Pulpfree was pursuing a new business model. Pulpfree asserts that Carson made this disclosure through email correspondence and during a meeting with Strauss, and by emailing to Strauss a copy of the Executive Summary of "BuzzMetrics," the trade name under which Pulpfree was pursuing its new business.

There is no dispute that Pulpfree has expanded its business. NMS argues that Pulpfree did so in a way that "mirror[s] New Media Strategies' online intelligence business as revealed in confidence to Pulpfree." NMS asserts, without contradiction, that Pulpfree's current websitestates, inter alia, that "BuzzMetrics analysts" use the company's software to deliver "quantitative analysis of marketplace perception and attitudes" and "actionable market findings and strategic recommendations," and to "identif[y] key market issues, challenges and opportunities."

NMS claims that it was not until early 2003 that Pulpfree's change of its business plan "to conform to the New Media Strategies business plan" came to NMS's attention. According to NMS, this occurred in late January 2003, when NMS's President, Pete Snyder, read an article regarding Pulpfree and alerted Strauss, who subsequently read the article, reviewed Pulpfree's BuzzMetrics website, and noticed that "the [website's] description of Pulpfree's business included language that was identical or similar to the language that [NMS] had used for its branding and in the description of its business that it had provided to [Pulpfree] in 2000."*fn1 According to Strauss, when he thereafter telephoned Carson, Carson confirmed that "[b]ecause of the complexities and issues of selling and integrating [its] software, [Pulpfree] had decided that the software business alone did not make sense and . . . sometime later in calendar year 2001 . . . moved into providing analytic services including research, monitoring and marketing." Strauss relayed that message to Snyder, and on May 4, 2005, NMS filed a complaint against Pulpfree and its officers for misappropriation of trade secrets pursuant to the Uniform Trade Secrets Act ("UTSA"), seeking injunctive relief, including an order "[e]njoining Pulpfree and the individual defendants from all activities in competition with [NMS]," and compensatory damages. See D.C. Code § 36-401-11 (2001).

Pulpfree immediately moved for summary judgment, arguing that the UTSA's statute of limitations precluded NMS's claim. See D.C. Code § 36-406 (stating that "[a]n action for misappropriation must be brought within 3 years after the misappropriation is discovered or, by the exercise of reasonable diligence, should have been discovered"). Specifically, Pulpfree asserted that Carson's communications with Strauss in 2000 and 2001 placed NMS on notice of the alleged misappropriation. Pulpfree also argued that it was entitled to summary judgment on the ground that NMS consented to Pulpfree's use of NMS's alleged trade secrets and that NMS failed to protect the confidentiality of the alleged "secrets," making a UTSA claim unavailable.

Ruling on Pulpfree's motion for summary judgment in an order dated October 12, 2006, the trial court stated that it "[was] not persuaded by NMS' position" that "there was no suggestion [to anyone at NMS prior to 2003] that Pulpfree was expanding its business to include marketing and analysis services similar to those provided by NMS." The court concluded that NMS either knew or should have known in the fall of 2000 that Pulpfree was "operating as a direct competitor of NMS." Id. at 4. The court therefore held that NMS's complaint was "barred by the expiration of the statute of limitation due to its accrual in the fall of 2000." Id. at 5. The court declined to rule on Pulpfree's argument that NMS consented to use of its trade secrets, although stating that the argument had "substance." Id. Finally, as to Pulpfree's argument that NMS had waived any claim under the UTSA by failing to protect the confidentiality of its trade secrets, the court held that the parties' contentions "present[ed] a factual dispute that a jury would have to decide but for the court's ruling on the statute of limitations defense." Id. at 6.

NMS noted this timely appeal. Pulpfree filed a timely cross-appeal, pursuing its contention that the trial court should have awarded summary judgment on the alternative ground that NMS consented to Pulpfree's use of NMS's claimed trade secrets.

II.

In considering a motion for summary judgment, the trial court must view the facts in the light most favorable to the non-moving party. Smith v. Washington Metro. Area Transit Auth., 631 A.2d 387, 390 (D.C. 1993) (quotation marks and citation omitted). Summary judgment is appropriate only when the record, including "pleadings . . . together with affidavits," indicates that "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Super. Ct. Civ. R. 56 (c); White v. Sargent, 875 A.2d 658, 662-63 (D.C. 2005). "Any doubt as to whether or not an issue of fact has been raised is sufficient to preclude a grant of summary judgment." Copeland v. Cohen, 905 A.2d 144, 146 (D.C. 2006) (citation and quotation marks omitted). "We review the trial court's grant of summary judgment de novo, making our own independent inquiry to determine whether the trial court correctly ...


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