Mujae Group, Inc. v. Spotify USA Inc.

Background

Mujae Group, Inc. alleged that Spotify USA Inc. and other defendants misappropriated confidential information connected to an application developer. The amended complaint asserted six claims: (1) violation of the federal Defend Trade Secrets Act; (2) misappropriation of trade secrets under New York law; (3) misappropriation of ideas under New York law; (4) unfair competition under New York law; (5) misappropriation of skills and expenditures under New York law; and (6) unjust enrichment under New York law.

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal for failure to state a legally sufficient claim. They argued that the federal and New York trade-secret claims were time-barred.

Court’s Analysis

The court concluded that the amended complaint plausibly alleged that Mujae Group had no reason to suspect misuse of its confidential information before Spotify Ad Studio was released in September 2017. It therefore held that the federal and New York trade-secret claims were not time-barred at the motion-to-dismiss stage.

The court also found that the amended complaint described the alleged trade secrets with enough specificity to inform the defendants what they allegedly misappropriated. It further found that the defendants’ assurance to keep information confidential could constitute an agreement, confidential relationship, or duty to maintain secrecy. The court determined that Mujae Group had sufficiently alleged reasonable efforts to protect the information through passwords and nondisclosure agreements.

The court treated the claims for misappropriation of ideas, unfair competition, and misappropriation of skills and expenditures as duplicative of the trade-secret claims. It granted the motion as to those claims. The opinion identifies them as the Third, Fourth, and Fifth Counts.

Disposition

Judge Hellerstein granted the defendants’ motion to dismiss with respect to the Third, Fourth, and Fifth Counts and denied the motion with respect to the First, Second, and Sixth Counts. The court directed Mujae Group to file a second amended complaint by January 14, 2021, removing the dismissed causes of action and allegations concerning personal jurisdiction. The defendants’ answer was due February 4, 2021, and the parties were ordered to appear for a status conference on February 26, 2021. The Clerk was directed to terminate the open motion.