As reported in Law360, Brooklyn-based Dumbo Moving & Storage Inc. ("Dumbo") can proceed with claims that three competitors and their owners misappropriated software that provides customers with instant price quotes and real-time updates, a Manhattan federal judge ruled Monday.
Dumbo has plausibly shown that it owns the software and that the defendants misappropriated it, U.S. District Judge Edgardo Ramos said in a ruling allowing copyright infringement and trade secret claims to move forward.
Dumbo's complaint against Piece of Cake Moving & Storage LLC, Simply Moving LLC and Simply Moving Storage LLC "plausibly pleads that the defendants misappropriated the trade secrets here," Judge Ramos said. "It states that the defendant purchasers were aware that the software was 'solely and exclusively owned by Dumbo,'" the judge said.
The complaint also names the individual owners of the three defendants and Volodymyr Plokhykh, who previously worked at Dumbo and is accused of obtaining and selling the software.
In 2016, Dumbo began developing the moving management system, which would also be used to book customer moves, assign trucks and crews and track moves in real time, according to the suit. Dumbo implemented the software in June 2018 and saw a big jump in annual revenue, going from $17.5 million in 2017 to $36 million in 2020, the suit said.
Dumbo alleges that Plokhykh, the former employee, introduced the company to IT Dev Group Inc. to develop the software without telling Dumbo he worked or held a stake in the business. Around the time Dumbo implemented the software, Plokhykh copied it by accessing it through IT Dev Group with his username and password, according to the suit.
Plokhykh was fired from Dumbo and IT Dev Group in August 2020 after the companies learned that he had copied and sold the software to the other moving companies, the complaint alleges.
Dumbo paid IT Dev Group $100,000 to develop the software, and they agreed it would be owned by Dumbo, according to the complaint.
In seeking to dismiss the suit, the defendants argued that Dumbo failed to plausibly allege ownership because the complaint and the copyright paperwork have different information about who created and transferred ownership of the software.
However, Judge Ramos said he found that argument "unavailing" and that the discrepancy between the complaint and the copyright documents "makes no difference" because the paperwork states that "ownership in the work was subsequently transferred" to Dumbo.
"The incorporated documents plausibly show that Dumbo did indeed acquire ownership of the software," Judge Ramos said.
The judge also rejected defendants' arguments that Dumbo's complaint did not sufficiently identify its trade secrets with specificity or that the company took reasonable steps to protect them. Judge Ramos said Dumbo does not rely on "nebulous descriptions" of its trade secrets, "contrary to defendants' arguments."
Dumbo's lead counsel, Stephen Turman of Turman Legal Solutions PLLC, said in a statement to Law360 Tuesday that his client was pleased with Judge Ramos' ruling, and that the moving companies shouldn't be allowed to infringe Dumbo's trade secrets and intellectual property rights "with impunity."
"We look forward to having the merits of Dumbo's case determined by the court and are confident in a positive outcome," Turman said.
Dumbo's complaint included state claims of breach of fiduciary duty against Plokhykh, the moving companies and their owners, but Judge Ramos dismissed those in Monday's ruling, concluding they were time-barred.
Dumbo Moving & Storage is represented by Stephen Turman of Turman Legal Solutions PLLC and Paul Ackerman of AcknowledgeIP PC. Piece of Cake Moving & Storage, Simply Moving and Simply Moving Storage are represented by Fred H. Perkins of Morrison Cohen LLP. The case is Dumbo Moving & Storage Inc. v. Piece of Cake Moving & Storage LLC et al., case number 1:22-cv-05138, in U.S. District Court for the Southern District of New York.