Sanas.AI Inc. v. Krisp Technologies, Inc.

Background

Sanas.AI Inc. and Krisp Technologies, Inc. compete in voice-communication software that converts accents and reduces background noise. During discussions about a possible collaboration, Sanas shared technical and business information with Krisp. The parties entered a nondisclosure agreement in November 2021, under which Krisp agreed to use Sanas’s confidential information only to evaluate and pursue the proposed licensing opportunity.

After the discussions ended, Krisp announced accent-conversion technology and obtained two patents. Sanas alleged that Krisp’s patents reflected information Sanas had shared and that Sanas’s co-founder should have been identified as a joint inventor. Sanas also alleged that Krisp made false or misleading statements in blog posts and advertisements comparing the companies’ accent-conversion and noise-cancellation products.

Sanas sued Krisp, asserting patent-infringement, trade-secret misappropriation under the federal Defend Trade Secrets Act and California law, false-advertising, and unfair-competition claims. Krisp filed counterclaims concerning Sanas’s noise-cancellation technology, including claims under California laws governing below-cost sales, free giveaways intended to injure competition, and unfair competition. Both parties moved to dismiss claims under Federal Rule of Civil Procedure 12(b)(6), which tests whether the pleadings state legally sufficient claims. At this stage, the court accepted well-pleaded factual allegations as true.

Krisp’s Motion to Dismiss Sanas’s Claims

The court denied Krisp’s motion to dismiss Sanas’s trade-secret claims under the federal and California statutes. Sanas adequately alleged that the information had economic value because it was not generally known, and that Sanas took reasonable steps to protect it, including using the nondisclosure agreement and secure communications. The court stated that whether Sanas’s secrecy measures were reasonable could present a factual question and did not require dismissal at the pleading stage.

The court also found that Sanas described the alleged trade secrets with enough detail to give Krisp notice. The alleged information included customer requirements, market research, deployment results, hardware-specific performance metrics, and latency information for different call-center platforms. The court said greater specificity could be pursued through discovery rather than dismissal.

The court denied Krisp’s motion to dismiss Sanas’s co-inventorship and co-ownership claims. Sanas alleged that its co-founder, Maxim Serebryakov, shared specific features involving teacher-student machine-learning models and parallel-data generation, and that these features were important to claims in Krisp’s two patents. The alleged meetings, emails, and Slack communications also supported an inference that the parties collaborated. The court rejected Krisp’s argument that the alleged contributions were obviously invalid at this stage.

The court denied Krisp’s motion to dismiss Sanas’s false-advertising claims under the Lanham Act and California’s False Advertising Law. Sanas identified more than thirty statements it claimed were false or misleading and alleged that Krisp’s comparison methods were biased rather than objective. Sanas also alleged harm to its reputation, goodwill, sales, revenue, customers, and market share. The court found those allegations sufficient at the pleading stage.

Sanas’s Motion to Dismiss Krisp’s Counterclaims

The court granted Sanas’s motion to dismiss in part as to count three, Krisp’s claim under California Business and Professions Code section 17044. That statute requires a sale below cost, and the court held that giving a service away for free does not involve a sale. Because Krisp alleged that Sanas gave its noise-cancellation technology away for free, count three did not state a claim under section 17044.

The court denied Sanas’s motion as to count two, Krisp’s claim under section 17043. That provision can apply when a product is given away for free for the purpose of injuring competitors or destroying competition. Krisp alleged that Sanas offered its technology for free while preventing customers from using a Krisp app, and that Krisp lost profits as a result. The court held that these allegations were sufficient to plead the required purpose, harm, and causation at this stage.

The court also denied Sanas’s motion as to count four, Krisp’s California Unfair Competition Law counterclaim. Because the adequately pleaded section 17043 claim could serve as the unlawful conduct supporting the unfair-competition claim, the court did not need to decide at this stage whether Sanas’s conduct was independently unfair.

Disposition

The court denied Krisp’s motion to dismiss. It granted in part and denied in part Sanas’s motion to dismiss: it granted the motion as to count three and denied it as to the remaining challenged counterclaims. The order addressed the sufficiency of the pleadings and did not determine whether the allegations would ultimately be proven.