Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Minn.: Insufficient factual and legal allegations require dismissal of deceptive practices claim, (Dec 10, 2013)

By Jody Coultas, J.D.

Claims of misappropriation of software, passing off, and disparagement of a software developer failed to adequately allege a violation of the Minnesota Unfair and Deceptive Trade Practices Act (UDTPA), the federal district court in Minneapolis has held (Superior Edge, Inc. v. Monsanto Company, December 6, 2013, Tunheim, J.). While pleading defects required the dismissal of the action, the court granted leave to amend the claims.

Pursuant to an agreement, Superior Edge, Inc. (SEI) agreed to develop software for Monsanto Company to assist in Monsanto’s seed sales initiatives. After conflict ensued regarding the parties’ obligations under the agreement, Monsanto and another company, Site-Specific Technology Development Group, Inc. (SST), allegedly appropriated SEI’s initial software developments and undertook further development of the software to incorporate the capabilities initially intended to be created by SEI pursuant to the agreement.

SEI alleged that SST violated the UDTPA by passing off SEI’s software as its own; causing a likelihood of confusion or of misunderstanding as to the source of the software; disparaging SEI through false or misleading representations of fact; and creating a likelihood of confusion by holding out the intellectual property of SEI as its own.

The court dismissed the UDTPA claim for failure to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). SEI failed to state what actions SST took to engage in the allegedly deceptive practices, when or where the actions were taken, or how the actions constituted UDTPA violations. SEI also failed to allege with sufficient specificity when the allegedly misleading statements were made, where they were made, or what was said. Merely stating that the misleading statements were contained in “written materials” and “published statements,” as SEI did here, does not identify with sufficient particularity where the alleged misrepresentations were made. SEI also failed to identify what statements SST made that gave the impression it, not SEI, had created the software.

SEI was granted leave to amend the claim by the court. The court previously dismissed the without prejudice for failure to plead a permissible basis for relief. Although SEI’s failure to appropriately amend its UDTPA claim was based on an unreasonable interpretation of the previous order, the court found that none of the circumstances required for denial of an amendment were present. There was no undue delay or bad faith on SEI’s part, and it was not clear that an amendment would be futile. Because the litigation was still at an early stage, an amendment would not be unduly burdensome to SST.

The case is No. 12-2672 (JRT/FLN).

Attorneys: Walter Joseph Gates, III (Walter J. Gates) for Superior Edge, Inc. Jennifer S. Kingston (Dowd Bennett LLP) for Monsanto Company.

Companies: Superior Edge, Inc.; Monsanto Company; Site-Specific Technology Development Group, Inc.

Cases: StateUnfairTradePractices MinnesotaNews