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CrowdStrike, Inc. v. NSS Labs, Inc.

United States District Court, D. Delaware

February 13, 2017

CROWDSTRIKE, INC., Plaintiff,
v.
NSS LABS, INC., Defendant.

          MEMORANDUM

         I. INTRODUCTION

         On February 10, 2017, CrowdStrike, Inc. filed suit against NSS Labs. Inc. (D.I. 3). Presently before the court is CrowdStrike's motion for a temporary restraining order and preliminary injunction (D.I. 2), filed contemporaneously with its Complaint. (D.I. 3). CrowdStrike's motion requests that the court order NSS: (1) "to refrain from using any CrowdStrike software in any public test"; (2) "to refrain from publishing any document or writing discussing or related to CrowdStrike, " its software, its technology, or its information; (3) "to comply with all contractual terms including destruction or return of the Falcon software and any other CrowdStrike technology"; and (4) "to identify to CrowdStrike all circumstances in which third parties have been provided by NSS Labs with CrowdStrike technology or information already and ensure return or destruction of all such technology and information." (D.I. 2 at 12-13). For the reasons that follow, this court will deny CrowdStrike's motion.

         II. BACKGROUND

         CrowdStrike is a cybersecurity company that provides "cloud-based endpoint threat detection to clients." (D.I. 3 at 2). CrowdStrike developed the Falcon software to provide advanced endpoint protection "by combining next-generation antivirus, endpoint detection and response, and proactive features." Id. NSS is a company .that, among other things, tests cybersecurity software and tools available in the marketplace to determine how well they stand up to attacks. (D.I. 7 at 3); (D.I. 3 at 3). In addition to conducting public tests, NSS also conducts private tests of cybersecurity platforms under contracts with vendors. (D.I. 3 at 3).

         On April 11, 2016, CrowdStrike and NSS executed the Private Engagement Agreement #3246 ("Private Agreement"), whereby NSS was to conduct a private test of CrowdStrike's Falcon cybersecurity platform and provide CrowdStrike with a report detailing the results of the test. (D.I. 3, Ex. 2). According to the Complaint, NSS failed to perform the tests in a way that CrowdStrike deemed accurate and acceptable. (D.I. 3 at 11-12). NSS conducted additional testing to attempt to remedy the failures CrowdStrike identified. Id. at 8. Around January 18, 2016, during discussions regarding a third round of private testing, NSS notified CrowdStrike that it was planning to perform a public test of the Falcon software. Id. It is the results of NSS's public test that CrowdStrike seeks to enjoin NSS from disclosing during a major technology gathering which begins on February 14, 2017, known as the RSA Conference. (D.I. 2 at 12-13).

         III. STANDARD OF REVIEW

         Federal Rule of Civil Procedure 65 permits a party to seek a preliminary injunction or a temporary restraining order prior to trial proceedings. Fed.R.Civ.P. 65(a), (b). A preliminary injunction is "an extraordinary remedy, which should be granted only in limited circumstances." Frank's GMC Truck Or., Inc. v. Gen. Motors Corp., 847 F.2d 100, 102 (3d Cir. 1988) (citation omitted). In certain situations where a party faces the possibility of irreparable harm before the court can hold a hearing on the motion for a preliminary injunction, a temporary restraining order may be appropriate to preserve the status quo and prevent such irreparable harm. See Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local No. 70 of Alameda Cty., 415 U.S. 423, 439 (1974). Specifically, a temporary restraining order or a preliminary injunction should only be granted if: (1) the plaintiff is likely to succeed on the merits; (2) denial will result in irreparable harm to the plaintiff; (3) granting the preliminary relief will not result in even greater harm to the nonmoving party; and (4) granting the injunction is in the public interest. See Tanimura & Antle, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132 (3d Cir. 2000) (citing Council for Alternative Political Parties v. Hooks, 121 F.3d 876, 879 (3d Cir. 1997)). A court should balance these factors in determining whether to grant either form of relief, and should deny such relief where the plaintiff has failed to establish each element. See NutraSweet Co. v. Vit-Mar Enterprises, Inc., 176 F.3d 151, 153 (3d Cir. 1999); In re Arthur Treacher's Franchisee Litig., 689 F.2d 1137, 1143 (3d Cir. 1982).

         IV. DISCUSSION

         In deciding whether to issue a temporary restraining order, the Third Circuit has required courts to consider the four elements defined in the Standard of Review. Each of these elements will be considered in turn below. Before the court addresses each element, it wishes to discuss the issue of subject matter jurisdiction in this case.

         Subject-matter jurisdiction is non-waivable, and, as such, "courts have an independent obligation to satisfy themselves of jurisdiction if it is in doubt." Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 76 (3d Cir. 2003). Accordingly, it is proper for the court to raise sua sponte subject-matter jurisdiction concerns. Id. Here, the parties are in federal court because the complaint includes a count arising under of the laws of the United States. See Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808 (1986). The parties, both being citizens of Delaware, do not satisfy the requirements for diversity jurisdiction. 28 U.S.C. § 1332 (2012).

         NSS contends that federal jurisdiction is not proper here because the Complaint "fails to plausibly state a claim under the Defend Trade Secrets Act." (D.I. 7 at 6). While the court does not have before it a Rule 12(b)(1) motion, it still finds the customary 12(b)(1) analysis instructive. See Fed. R. Civ. P. 12(b)(1). "A Rule 12(b)(1) motion may be treated as either a facial or a factual challenge to the court's subject matter jurisdiction." Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). When the court analyzes a facial attack on subject-matter jurisdiction, it must only consider the allegations in the complaint in the light most favorable to the plaintiff. See Id. The court finds the current arguments that NSS makes with regard to subject-matter jurisdiction analogous to a facial attack usually made in a 12(b)(1) motion. As such, though the court finds CrowdStrikes' claim that NSS misappropriated trade secrets tenuous at best, the court will exercise jurisdiction over CrowdStrike's motion for a temporary restraining order because it considers the facts alleged in the complaint in the light most favorable to CrowdStrike.

         A. Likelihood of Success on the Merits 1. Breach of Contract

         To prove likelihood of success on the merits for a breach of contact claim, CrowdStrike's first count in its Complaint, the party must provide evidence of: "(1) a contractual obligation; (2) a breach of that obligation by the defendant; and (3) resulting damage to the plaintiffs." Greenstar, LLC v. Heller, 814 F.Supp.2d 444, 450 (D. Del. 2011).

         CrowdStrike and NSS entered into the Private Agreement, which neither party disputes was a valid contract. (D.I 2 at 6); (D.I. 7 at 7). At this stage in the proceedings, the court is not persuaded that CrowdStrike is likely to succeed on the merits of its breach of contract claim. CrowdStrike alleges that NSS plans to publish information that it developed through use of the Falcon software during the private tests. (D.I. 2 at 6-7). NSS maintains that any information it plans to disclose in its report on the effectiveness of the Falcon tool it acquired through its public, not private test. (D.I. 7 at 7-8). CrowdStrike argues, in turn, that the contract prevented NSS from conducting a public test altogether. (D.I. 2 at ...


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