Rokt Corp. and Rokt PTE Ltd. v. AdsPostX, Inc., Jon Nolz, and Surojit Niyogi

Background

Rokt Corp. and Rokt Pte Ltd. asserted five groups of claims against AdsPostX, Inc., Jon Nolz, and Surojit Niyogi: misappropriation of trade secrets under the federal Defend Trade Secrets Act and New York law; New York unfair competition; breach of contract; and fraud. Defendants moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal for failure to state a legally sufficient claim.

Rokt alleged that it developed confidential business, technical, and marketing information through substantial investment and that it protected that information through confidentiality agreements, access restrictions, and password protection. Rokt alleged that Nolz received information while working as an advertising director for Groupon, a Rokt client, and while subject to confidentiality obligations. Rokt further alleged that Nolz was developing AdsPostX while requesting Rokt’s information and that AdsPostX used the information to develop competing services, solicit Rokt’s clients and prospective partners, and make critical comparisons to Rokt.

Rokt also alleged that Niyogi, identified as an AdsPostX co-founder and Chief Product Officer, created three Shopify accounts in August and September 2022 and agreed to Rokt’s Platform Services Agreements. Those agreements included confidentiality provisions and prohibited using Rokt’s platform to build a competing product or copy its ideas, features, functions, or graphics. Rokt alleged that the accounts were dummy accounts created to obtain access to Rokt’s platform and confidential information for AdsPostX.

Trade-Secret Claims

The court held that most of Rokt’s identified categories of alleged trade secrets were described specifically enough to support claims under both federal and New York law at the pleading stage. These categories included information about advertisers, user experiences, pricing, revenue sharing, client lists, engagement rates, platform functionality, bidding technology, reporting metrics, quality scores, product launches, anomaly detection, referral strategy, and related business practices.

The court found one category too general: “Rokt’s A/B testing and results of same regarding various strategies.” The court also rejected reliance on additional trade-secret categories that were not described in the complaint. The court otherwise found that Rokt plausibly alleged that the information had economic value because it was secret, that Rokt took reasonable measures to protect it, and that Defendants acquired or used it improperly.

The court declined to resolve factual disputes about whether some of the information was publicly available. Defendants’ website printouts were offered to establish the truth of that issue, and the court concluded that the dispute was more appropriate for summary judgment than a motion to dismiss.

The court therefore denied the motion as to the trade-secret claims based on the specifically described categories, but granted the motion as to claims based on the A/B-testing category and categories not described in the complaint.

Unfair Competition

The court denied the motion as to Count III. It found that Rokt sufficiently alleged that Defendants acted in bad faith by taking and using Rokt’s confidential and trade-secret information to gain a commercial advantage for AdsPostX. The court also concluded at this stage that the unfair-competition claim was not duplicative of the trade-secret claims.

Breach of Contract

The court denied the motion as to Count IV. Rokt plausibly alleged that Niyogi breached the Platform Services Agreements by accessing Rokt’s Shopify application and platform to help build a competing service and by disclosing or improperly using Rokt’s confidential information.

The court also allowed the contract claim against Niyogi in his personal capacity to proceed. It reasoned that Niyogi personally entered the agreements without identifying AdsPostX as his principal, and the complaint did not allege that Rokt knew he was acting for AdsPostX when he entered the agreements.

Fraud

The court denied the motion as to Count V. Rokt alleged that Nolz requested confidential information while representing that he needed it for his work with Groupon, while actually seeking it to develop AdsPostX. The court found that Rokt identified specific communications and dates, alleged a motive for the misrepresentation, and alleged that it would not have disclosed the information if it had known Nolz’s purposes. Those allegations plausibly stated fraud under New York law. The court also noted that Rokt’s material-omission theory was not defeated by Defendants’ arguments.

Disposition

Judge Laura Taylor Swain granted Defendants’ motion only insofar as it sought dismissal of Counts I and II based on unspecified trade-secret information and the A/B-testing category in paragraph 53(f) of the complaint. The motion was denied in all other respects. Rokt may file a motion for permission to amend the deficient portions within 30 days. If Rokt does not timely seek permission to amend, the designated portions of Counts I and II will be dismissed with prejudice. The court also directed that the opinion initially be filed under seal while the parties addressed possible redactions and referred the case for general pretrial management.