Concepts NREC, LLC v. SoftInWay, Inc. et al (D. Mass. 19-cv-12033).

  • November 13, 2020

In 2019, turbomachinery designer Concepts NREC filed suit against SoftInWay and Actual Mechanics, Ltd., accusing them of copyright infringement, trade secret misappropriation under the Defend Trade Secrets Act and Massachusetts statutory and common law and violation of 93A in connection with software. The complaint alleged that SoftInWay is a Burlington, Massachusetts company, that Actual Mechanics is (while admittedly a different corporation) the “Ukraine office” and is the “development arm” for SoftInWay, and that the two operate as a common enterprise to develop and sell the software that is the subject of the lawsuit. It further alleges as factual support that the two businesses share common ownership and management share e-mail addresses and domain names, and hold themselves out to the public as a single entity

Defendants moved to dismiss for failure to state a claim. Judge Talwani had previously denied the 12(b)(6) motion, finding that the complaint adequately pled that defendants SoftInWay and Actual Mechanics formed a common enterprise. She noted that SoftInWay’s motion did not challenge whether the factual allegations, if true, gave rise to the legal conclusion of a common enterprise but instead sought to challenge the accuracy of the factual allegations, which is inappropriate at the 12(b)(6) stage. Defendant Actual Mechanics further moved to dismiss for ineffective service and lack of personal jurisdiction. Concepts served SoftInWay, which it asserts to be effective service of Actual while Actual asserts that, as a Ukrainian company, it must be served through the Hague convention. Judge Talwani noted that service of process on a foreign defendant need not be through the Hague convention so long as the service complies with the internal law of the forum, and thus if Actual were an alter ego of SoftInWay, service was sufficient. She noted the dueling affidavits and evidence indicated a factual dispute on the alter ego issue, and set an evidentiary hearing for November 17th. Each party submitted further evidence on the issue, and each sought to seal the evidence being filed. Judge Talwani ordered further briefing from SoftInWay on the respective motions to seal, noted the strong presumption of public access to judicial documents that only the most compelling reasons can justify withholding such access. In this case, while both parties moved to file documents under seal, all of the documents were designated confidential by SoftInway. Judge Talwani required SoftInWay to provide “a particular factual demonstration of potential harm” if the documents were placed on the public docket. She also required Concepts to indicate whether it objects to the sealing of the materials.

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