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Flexible Technologies, Inc. v. SharkNinja Operating LLC

United States District Court, D. Delaware

March 29, 2019

FLEXIBLE TECHNOLOGIES, INC., Plaintiff,
v.
SHARKNINJA OPERATING LLC, SHARKNINJA MANAGEMENT COMPANY, and SHARKNINJA SALES COMPANY, Defendants.

          Kenneth L. Dorsney, MORRIS JAMES LLP, Wilmington, Delaware; Jeffrey M. Fisher, Deepak Gupta, Winston Liaw, FARELLA BRAUN MARTEL LLP, San Francisco, California Counsel for Plaintiff

          Jack B. Blumenfeld, Jeremy A. Tigan, MORRIS, NICHOLS, ARSHT, & TUNNEL LLP, Wilmington, Delaware; Robert W. Kantner, JONES DAY®, Dallas, Texas Counsel for Defendants

          MEMORANDUM OPINION

          CONNOLLY, UNITED STATES DISTRICT JUDGE

         Flexible Technologies, Inc. has filed a six-count complaint against Defendants SharkNinja Operating, LLC, SharkNinja Management Company, and SharkNinja Sales Company (collectively "SharkNinja") for patent infringement (Count 1); misappropriation of trade secrets under South Carolina law (Count 2); misappropriation of trade secrets under the Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1836 (Count 3); breach of agreement (Count 4); breach of the covenant of good faith and fair dealing (Count 5); and unjust enrichment (Count 6). SharkNinja has moved pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss all but Count 1 of the complaint for failure to state a claim upon which relief can be granted. D.I. 41. For the following reasons, I will grant in part and deny in part the motion.

         I. BACKGROUND[1]

         Flexible Technologies designs and manufactures "high-end flexible, stretchable, retractable, and current-carrying hoses for a variety of applications in a wide range of industries." D.I. 1 at ¶ 11. SharkNinja designs and manufactures vacuum cleaners. See Id. at 1; id. at ¶ 17.

         In early 2012, SharkNinja sought Flexible Technologies' assistance in designing a current-carrying self-retracting stretch hose for a new vacuum cleaner product line SharkNinja was developing. This product line ultimately became the Shark Rotator Powered LiftAway™ vacuum (the "LiftAway"). Id. at ¶ 17. Flexible Technologies agreed to assist SharkNinja and began a collaborative development project with SharkNinja to custom engineer Flexible Technologies' innovative and proprietary hose technology for the LiftAway. Over the course of the following two years, as part of this project, Flexible Technologies disclosed to SharkNinja Flexible Technologies' "methods, techniques, know-how and other confidential information and trade secrets ... in a series of meetings and other communications." See Id. at 1-2.

         From the outset of their relationship, Flexible Technologies and SharkNinja had "an implicit understanding, duty and agreement... that all information, know-how, and technical guidance provided by [Flexible Technologies]... was to be maintained in confidence, and not be used without permission for any purpose other than [SharkNinja] doing business with [Flexible Technologies]." Id. at ¶ 22. This implied understanding was eventually formalized and reduced to a writing in the form of a "Visitor Confidentiality Agreement" signed by one of SharkNinja's employees during her visit to Flexible Technologies' factory in Abbeville, South Carolina. See Id. at ¶ 24-26; see also D.I. 1-2, Ex. B. The agreement provides in relevant part:

The undersigned is being admitted, and may from time to time in the future be admitted, to the premises of Flexible Technologies, Inc. ("Flexible"), in consideration of which the undersigned hereby confirms his/her continuing understanding and agreement as follows:
1. For purposes of this Agreement, "Confidential Information" shall mean information (i) not generally known by non-FLEXIBLE personnel and (ii) gained by the undersigned through or as a result of the undersigned's relationship with FLEXIBLE or access to any of FLEXIBLE's premises on this or any other occasion. Confidential [I]nformation also includes any similar information which FLEXIBLE obtains from a third party and which [FLEXIBLE] treats as proprietary or confidential, whether or not owned by FLEXIBLE.

D.I. 1-2, Ex. B at 2 (emphasis added).

         In early 2014, SharkNinja stopped all communications with Flexible Technologies and soon thereafter began to sell LiftAway vacuums that incorporate imported hosing technology that is "indistinguishable" from the patented and proprietary hosing technology Flexible Technologies disclosed to SharkNinja. See D.I. 1 at ¶ 27, ¶ 29. SharkNinja never sought Flexible Technologies' permission to use Flexible Technologies' patented and proprietary technology in the LiftAway and has never compensated Flexible Technologies for SharkNinja's incorporation of that technology in the LiftAway. See Id. at 2; id. at ¶¶ 61-62, 70.

         II. LEGAL STANDARDS

         To state a claim upon which relief can be granted, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Detailed factual allegations are not required, but the complaint must set forth sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly,550 U.S. 544, 570 (2007). A claim is facially plausible when the factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal,556 U.S. 662, 678 (2009). When considering a Rule 12(b)(6) motion to dismiss, ...


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