`E-FILED
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` Wednesday, 06 August, 2008 02:47:59 PM
` Clerk, U.S. District Court, ILCD
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF ILLINOIS
`ROCK ISLAND DIVISION
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`SENTRY POOL,
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`Plaintiff,
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`WAVE TEC POOLS, INC. )
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`Defendant.
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`No. 07-4082
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`O R D E R
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`Before the Court is Defendants’ Motion to Dismiss, filed on March 7, 2008.
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`[Doc. 11.] Plaintiff filed a Response on March 24, 2008. [Doc. 15.] For the following
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`reasons Defendants’ Motion to Dismiss is GRANTED IN PART and DENIED IN
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`PART.
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`I.
`BACKGROUND
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`On December 29, 2003 Sentry Pool, Inc. (“Plaintiff”) contracted to buy
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`Riverpool units2 from Wave Tec Pools, Inc..3 (Doc. 1.) The contract was to last for
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`2 A Riverpool unit is a package that includes parts for a pool, such as galvanized
`panels, decking and supports, a powder coat of steal, hydraulic pump and motor,
`stainless steel return benches, coping, hardware to assemble, and support straps for
`walls. (Doc. 1, Exh. B.)
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` The individual defendant Jason Herring is the President and CEO of Wave Tech
`Pools; and Richard Leaf is the COO of Wave Tech Pools. (Wave Tech and these
`individual defendants are hereinafter collectively referred to as “Defendants.”)
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` 3
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`one year or until a minimum of 100 Riverpool units were purchased, whichever
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`occurred first. (Doc. 1.) The contract states in part:
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`Buyer hereby agrees that for the term of this contract, Buyer will not
`purchase pools substantially the same as the “Riverpool” unit or not
`duplicate or manufacture or outsource the manufacture of units similar to
`the “Riverpool” unit under terms of this agreement.
`(Doc.1-3, ¶ 1.)
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`The contract further discussed issues of intellectual property by including the
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`following section:
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`Any and all trademarks which each of the Parties uses in connection with
`the “Riverpool” unit are and shall remain in exclusive property of Seller.
`(Doc. 1-3, ¶ 10.)
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`In 2007, nearly four years following the initial contract date, Plaintiff claims
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`Defendants violated Plaintiff’s intellectual property rights associated with the
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`Riverpool unit. Specifically, Defendants allegedly violated Plaintiff’s rights when
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`they sent Plaintiff’s print books and manufacturer cut sheets to one of Plaintiff’s
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`competitors. (Doc. 1.)
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`Plaintiff has now filed suit alleging breach of contract (Count I), violation of
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`trade secrets (Count II), copyright infringement (Count III), interference with
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`business relations (Count IV), interference with a prospective economic advantage
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`(Count V), and patent infringement (Count VI and VII).
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`II.
`LEGAL STANDARD
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`When considering a motion to dismiss pursuant to Federal Rule of Civil
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`Procedure 12(b)(6), the Court must view the complaint in the light most favorable to
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`the plaintiff and the complaint’s well-pleaded factual allegations must be accepted
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`as true. Williams v. Ramos, 71 F.3d 1246, 1250 (7th Cir. 1995). Therefore, a
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`complaint can only be dismissed if a plaintiff cannot prove any set of facts upon
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`which relief can be granted. Travel All Over the World, Inc. v. Kingdom of Saudi
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`Arabia, 73 F.3d 1423, 1429-30 (7th Cir. 1996). However, the Court is not bound by
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`a plaintiff’s legal conclusions. Reed v. City of Chicago, 77 F.3d 1049, 1051 (7th Cir.
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`1996). The province of Rule 12(b)(6) motions is to question the availability of a legal
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`formula justifying relief on the alleged facts, not to test or determine the facts
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`themselves. Maple Lanes, Inc. v. Messer, 196 F.3d 823, 824-25 (7th Cir. 1999).
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`III.
`ANALYSIS
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`A. Breach of Contract
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`Defendants argue that the contract between Plaintiff and Defendant, Wave
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`Tech Pools, Inc., began on December 29, 2003 and expired on December 29, 2004.
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`Defendants further argue that despite the parties ability to agree to extend the
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`contract, no terms indicating an agreement or extension of the contract are
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`mentioned in the Complaint. Specifically, Defendants argue that this claim should
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`be dismissed because the Complaint did not state enough details as to how or when
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`the parties agreed to extend the contract.
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`Plaintiff states in his brief that the parties orally agreed to extend the
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`contract. On the other hand the Complaint itself does not state how the contract is
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`extended, but does allege that the contract was in force at the time of the alleged
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`breach.
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`Nonetheless, the factual details regarding the oral extension of the contract
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`are not necessary at this stage of litigation. Under Federal Rules of Civil Procedure
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`8(a) a plaintiff must set forth a “a short plain statement of the claim”. Fed. R. Civ.
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`P. 8(a). Recent rulings in the Seventh Circuit require the complaint to contain more
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`than “sketchy” facts, as well as “enough facts to state a claim to relief that is
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`plausible on its face”. Airborne Beepers & Video, Inc. v. AT&T, Mobility, LLC, 499,
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`F.3d 663 (7th Cir. 2007); Killingsworth v. HSBC Bank Nevada, NA 507 F.3d 614
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`(7th Cir. 2007).
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`This Court finds that even under the most restrictive analysis, the details
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`within the Complaint are sufficient to state a plausible claim for relief. It is
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`reasonable to imply that the contract was extended based on Plaintiff’s allegation
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`that the parties were still bound by the agreement on September 19, 2007, almost
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`four years after its execution. Based on this allegation, Plaintiff has stated a
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`sufficient amount of facts to state a plausible claim for relief.4 The Court further
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`assumes Plaintiff has made the allegations in good faith and will be expected to
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`provide evidentiary support for such allegations when required in future
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`proceedings. Therefore, Plaintiff stated a sufficient amount of facts at this stage.
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`Based on this analysis, the Court denies Defendants’ Motion to Dismiss Count I for
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`breach of contract.
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`4 The Court notes that under Section 8 of the Contract, the section concerning the
`“Duration of Agreement,” where there is a dispute regarding extension of the
`Contract, it appears that the parties are bound to submit the issue to mandatory
`arbitration. No party has raised this provision before this Court and no party has
`argued that this matter should be stayed pending arbitration.
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`B. Violation of Trade Secrets
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`Defendants next argue that Plaintiff’s allegations did not state a viable claim
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`for violation of a trade secret.5 Defendants further argue that Plaintiff’s Complaint
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`did not describe the trade secret with the required specificity and particularity. The
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`Court will address each argument in turn.
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`To allege a violation of a trade secret, the ITSA requires the complaint to
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`allege (1) what the trade secret at issue is, (2) its misappropriation and (3) its use in
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`defendants’ business. 765 Ill. Comp. Stat. 1065/1 et seq. Further, no trade secret is
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`protected if a product is available to the market. United States Gypsum Co. v.
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`LaFarge N. America, Inc., 508 F. Supp. 2d 601, 624 (N.D. Ill. 2007).
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`Misappropriation indicates that information was stolen and given to another source
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`instead of independently developed. Rotec Indus. Inc. v. Mitsubishi Corp., 179 F.
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`Supp. 2d 885, 893 (C.D. Ill 2002). To prove the trade secret was used in a
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`defendants’ business, one must prove more than a potential misuse of the secret.
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`Teradyne, Inc. v. Clear Commc’n Corp., 707 F. Supp. 353, 357 (N.D. Ill. 1989).
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`Moreover, it is not enough to allege conclusory statements claiming a defendant will
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`use or disclose information in the future without any factual allegation of the
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`5 Under the Illinois Trade Secret Act (“ITSA”), a “trade secret” is: “[i]nformation,
`including but not limited to, technical or non-technical data, a formula, pattern,
`compilation, program, device, method, technique, drawing, process, financial data,
`or list of actual or potential customers or suppliers, that: (1) sufficiently secret to
`derive economic value, actual or potential, from not being generally known to other
`persons who can obtain economic value from its disclosure or use; and (2) is the
`subject of efforts that are reasonable under the circumstances to maintain its
`secrecy or confidentiality.” 760 ILCS § 1065/2(d).
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`defendant’s actual use. Complete Bus. Solutions, Inc. v. Mauro, 2001 U.S. Dist.
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`LEXIS 3132, * 3 (N.D. Ill. 2001).
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` Despite Defendants’ argument, Plaintiff has in fact addressed the three
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`elements throughout its Complaint. First, though applying for a patent would
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`make the products publicly available, the application has yet to be accepted.
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`Therefore, the information has not been disclosed to the public and is still kept
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`within the business. Further, the contract itself shows the intent of Plaintiff to
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`retain secrecy of its products as evidenced by section 10, paragraph B which states:
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`“Buyer agrees that Buyer is solely responsible for any infringement lawsuit
`concerning the infringement of patents or trademarks or the like created by
`the sale, promotion for sale or distribution created by the sale of the
`Riverpool unit thru any part of Buyers organization.”
`(Doc. 1-3, 4.) (emphasis added).
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`The inclusion of this paragraph in the contract signifies Plaintiff’s intent to
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`establish their rights and ownership over their products regardless of the products
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`status as a patent or trademark. Though it is not mentioned in the contract, it is
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`clear that the qualifying phrase “or the like” can reasonably be inferred at this stage
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`to include a trade secret. This paragraph indicates Plaintiff’s objective to keep the
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`products a secret as well as indicate the responsibility of such secrecy to
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`Defendants.
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`The second element, misappropriation, is addressed in paragraph 21 of the
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`Complaint which states that Defendants sent print books and manufacturer cut
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`sheets to Plaintiff’s competitors “without the authority and express permission of
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`Plaintiff.” (Doc. 1.) This statement gives Defendants “fair notice” of Plaintiff’s
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`claim and adequately fulfills the second element of the ITSA. Bell Atl. Corp. v.
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`Twombly, 127 S. Ct. 1955, 1964 (2007). Further, though Defendants include each
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`element required for misappropriation in their Response, Plaintiff need not include
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`details of the elements to be argued at trial. See, e.g., AutoMed Techs., Inc. v. Eller,
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`160 F. Supp. 2d 915, 921 (N.D. Ill. 2001) (stating “trade secrets need not be
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`disclosed in detail in a complaint”).
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`The final element of a violation of a trade secret claim is using the product or
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`information in business. Plaintiff alleges that in the course of Defendants’ business
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`Defendants sent print books and cut sheets to Plaintiff’s competitors. Discovery
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`could reveal that Defendants provided this intellectual property in an effort to
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`develop a business relationship with Plaintiff’s competitor in exchange for a
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`monetary reward. However, Plaintiff need not provide the factual details of such
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`allegations at this time. All that matters is that Plaintiff has adequately claimed
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`that Defendants sent this intellectual property to a competitor in the course of their
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`business. Accordingly, the Court finds Plaintiff’s Complaint sufficiently pled the
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`final element required by the ITSA.
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`Defendants next argue that this Count does not meet the required level of
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`specificity. “It is not enough to point to broad areas of technology. . . [t]he plaintiff
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`must show concrete secrets.” Composite Marine Propellers , Inc. v. Van Der Woude,
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`962 F.2d 1263, 1266 (7th Cir. 1992). This rule is in place to prevent a Plaintiff from
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`going on a “fishing expedition” through discovery to determine what, if any, trade
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`secrets have been misappropriated. See, e.g., AutoMed Tech., Inc., 160 F.Supp. 2d
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`at 925-26. Though the Court agrees that a complaint must be specific when
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`addressing trade secrets, Plaintiff’s Complaint is sufficient and there does not
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`appear to be any risk of a “fishing expedition”. The Complaint states Plaintiff’s
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`print books and cut sheets are trade secrets. Plaintiff named two specific products
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`instead of broadly generalizing numerous products, and does not appear to require
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`discovery to discern which trade secrets were misappropriated. Based on this
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`analysis, the Court finds Plaintiff pled their trade secret with adequate
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`particularity. Therefore Defendants’ Motion to Dismiss Count III is Denied.
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`C. Copyright Infringement
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`Defendants argue for dismissal of the copyright infringement claim because
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`the Complaint did not include a copyright registration number. Defendants
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`emphasize that copyright registration is a condition precedent to filing suit. Burns
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`v. Rockwood Distrib., 481 F. Supp 841, 845 (N.D. Ill. 1979). Plaintiff provides the
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`registration numbers in their brief and requests leave to amend their complaint to
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`include these numbers. (Doc. 15.)
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`Federal Rule of Civil Procedure 15(a) allows courts to grant a leave to amend
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`when “justice so requires.” Fed. R. Civ. P. 15(a). This rule allows parties to amend
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`their complaint when matters have been overlooked or unknown at the time of the
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`initial statement. Id. The court has discretion in this determination, but if the
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`district court lacks a “substantial reason” to deny leave, the discretion is not broad
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`enough to permit denial. Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 598 (5th
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`Cir. 1981).
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`This Court grants Plaintiff’s request for leave to amend the Complaint based
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`on the fact that the copyright registration numbers are in Plaintiff’s possession and
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`are also found in Exhibit A. Additionally, the Court has no “substantial reason” to
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`deny leave to amend. Therefore, this Court will allow Plaintiff leave to amend his
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`Complaint within seven (7) days of this Order.
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`D. Interference with Business Relations and Prospective Economic
`Advantage
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`Defendants argue Plaintiff’s claims for interference with business relations
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`and prospective economic advantage are preempted by the ITSA. Federal courts
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`consistently apply Section 8 of the ITSA to pre-empt non-contract claims to the
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`extent that they are based on a misappropriation of trade secrets. Composite, 962
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`F.2d at 1265. Additionally, if an interference claim is simply a restatement of a
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`plaintiff’s claim for misappropriation, the claim is preempted by the ITSA. See, eg.,
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`Fox Controls, Inc. v. Honeywell Inc., 2002 U.S. Dist. LEXIS 15663, *5 (N.D. Ill
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`2002).
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`Upon review of Counts IV and V of Plaintiff’s Complaint, this Court finds no
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`factual difference from the trade secret claim. The Complaint once again cites to
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`the allegation that Defendants sent print books and cut sheets to Plaintiff’s
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`competitor. This is the same factual premise made supra for the misappropriation
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`of a trade secret claim. As such, the allegations are simply restatements of the
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`trade secret claim and are expressly preempted by 765 ILC 1065/86. Therefore,
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`because Plaintiff presents no new factual allegations differing from the trade secret
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`violation claim, both claims are thus preempted by the ITSA, and as such, Counts
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`IV and V are dismissed.
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`E. Patent Infringement
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`Finally, Plaintiff seeks relief for patent infringement. However, “a suit
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`cannot be brought for infringement of a patent that has not issued.” Amgen, Inc. v.
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`Genetics Inst., Inc., 98 F.3d 1328, 1332 (Fed. Cir. 1999). Because Plaintiff has
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`merely applied for a patent and has not yet been issued a patent, he is not able to
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`seek relief for patent infringement at this time. Therefore, Defendants’ Motion to
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`Dismiss Counts VI and VII is granted.
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`IV.
`CONCLUSION
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`IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss [Doc. 11]
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`is DENIED as to Counts I, II, and III and GRANTED as to Counts IV, V, VI, and
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`VII. Plaintiff is GRANTED seven (7) days to file an Amended Complaint which
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`incorporates the copyright registration numbers in Count III. This matter is
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`referred to the Magistrate Judge for pretrial proceedings.
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`ENTERED this 6th day of August, 2008.
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` s/ Joe Billy McDade
` Joe Billy McDade
`United States District Judge
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`6 Sec. 8 (a) states: “ (a) Except as provided in subsection (b), this Act is intended to
`displace conflicting tort, restitutionary, unfair competition, and other laws of this
`State providing civil remedies for misappropriation of a trade secret.
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