The opinion of the court was delivered by: Pratter, J.
Michael J. Mainard, Gerard N. Mainardi, and Lighthouse Strategic Projects Group, Inc. claim that Prudential Insurance Company of America violated the copyright and breached the software license agreement for products Plaintiffs had developed for marketing insurance and financial services. In addition, Plaintiffs assert state claims for misappropriation of trade secrets, unfair competition, and intentional interference with prospective contractual relations.
Prudential has moved to dismiss all claims, arguing that (1) Plaintiffs' claim for copyright infringement seeks protection of ideas, not the original elements of the works protected by the Federal Copyright Act; (2) Plaintiffs' state law claims are preempted by federal law; and (3) Plaintiffs have not properly pleaded their state law claims.
For the reasons set forth below, Prudential's Motion is granted as to Count III (Misappropriation of Trade Secrets) and Count V (Intentional Interference with Prospective Contractual Relations), denied without prejudice to reassert at a later stage in the litigation as to Count IV (Unfair Competition), and denied in all other respects.
Messrs. Mainardi claim to have extensive experience producing "product-based sales materials and marketing tools for the insurance and financial industries." Compl. ¶ 10. In 1995, they formed Lighthouse Strategic Projects Group, a partnership that undertook an 18-month analysis of marketing techniques used in those fields. The Mainardis hoped to develop innovative marketing strategies using the results of their analysis. Id. Lighthouse Strategic Projects Group was the predecessor of Lighthouse Strategic Projects Group, Inc. ("Lighthouse").
Using what they learned from their industry analysis, the Mainardis developed "a tool to educate and emotionally motivate customers via audiovisual vignettes designed to demonstrate how a lack of planning could put the potential customers' business and personal finances at risk." Compl. ¶ 15. They named the new product "businessKillers," and on July 20, 1998, the Mainardis copyrighted businessKillers in accordance with the federal copyright law. The copyright claimed "Text and Audiovisual Material." Id. ¶¶ 15-16. See id., Ex. 1. The Mainardis continued work on their products and developed "businessKillers Extended Market," a CD-ROM specifically targeted at women. They copyrighted businessKillers Extended Market on October 29, 2003 as an "audiovisual work." Id. ¶¶ 17-18. Finally, the Mainardis developed "Family Matters," an interactive CD-ROM with companion written materials "aimed at marketing insurance and financial services products to closely-held business owners." Id. ¶ 19. They copyrighted Family Matters on October 31, 2003.
The software for businessKillers and Family Matters ("the businessKillers package") contains license agreements that each user must accept upon installation by clicking a button that says, "I ACCEPT." A user cannot gain access to the software without clicking this button. Id. ¶ 21. See id., Ex. 4 (license agreements for businessKillers and Family Matters). The license agreements on Lighthouse's copyrighted CD-ROMs read as follows:
The...Software...and the related materials are licensed to you by Lighthouse Strategic Projects Group in accordance with the terms hereof. The Software and...trademarks, product names, documentation, and support materials are owned by Lighthouse Strategic Projects Group, Inc. Except to the extent explicitly stated in this Agreement, Lighthouse SPG reserves any and all right, title, and interest in and to the Software and...trademarks, product names, documentation, and support materials.
[A] The Software may be used only on one single computer, by one user at a time.
[B] You may use the Software for...workshop presentations. Permitting unauthorized users access to the Software is a violation of this Agreement.
[C] You may not transfer, assign, or sublicense the Software to another party.
[D] You may not copy or reproduce in any form the user documentation provided with the software. Only marketing and support materials provided and authorized through Lighthouse SPG may be used in conjunction with the software. You may not create and/or use your own marketing materials without prior written authorization from Lighthouse SPG.
Compl., Ex. 4. The license agreements were effective until terminated, but they provided that a user could "terminate this Agreement at any time by returning the Software along with a written notice of termination." Id.
The Mainardis, on behalf of Lighthouse, sought to market the businessKillers package "to independent insurance agents, financial and insurance marketing firms, financial planners and major insurance companies." Compl. ¶ 21. In June 2005, they began marketing the businessKillers package to Prudential. The following month, an officer of Prudential informed the Mainardis that she wanted more information about the programs and a demonstration. Id. ¶ 23.
The Mainardis repeatedly presented the businessKillers package to Prudential employees and to officers of Prudential's affiliates in 2005 and 2006. "Prudential also asked [the Mainardis] to provide it with hours of explanation and instruction in the use of the copyrighted interactive audiovisual products and texts, and the various theories behind its development. [The Mainardis] complied with  Prudential's requests." Id. ¶ 24. Prudential agreed to keep confidential all information received from the Mainardis during this period. Id.
By February 2006, Prudential had told the Mainardis that it wanted to enter into a license agreement for the distribution of the businessKillers package, including the copyrighted CDROMs and written materials. Before and during the related negotiations, Plaintiffs provided Prudential with numerous copies of the materials from the businessKillers package. Id. ¶ 25. Plaintiffs assert that "[e]ach time that an agent or employee of Prudential installed the copyrighted audiovisual materials he or she necessarily first accepted the terms required by the software License Agreements for the businessKillers package." Id. ¶ 26.
After lengthy negotiations, Lighthouse and Prudential reduced a distribution license agreement to writing. The agreement requires Prudential to pay Lighthouse $300,000 per year for three years for distribution rights of the businessKillers package plus $3,000 per year for each person to whom Prudential distributed the package. "Prudential informed Plaintiffs that it expected to distribute the copyrighted software and materials contained in the businessKillers package to over 1,000 agents/affiliates. Plaintiffs were assured that their requested revisions unrelated to the terms were underway and a final Agreement would be reached." Compl. ¶ 29. Prudential then required that the businessKiller package materials be submitted to its compliance department "for review and assignment of internal 'IFS' numbers signifying approval for public distribution." Id. ¶ 30. After receiving approval from the compliance department, Lighthouse revised the businessKiller package to meet Prudential's requirements. Id.
Throughout the spring of 2006, Prudential communicated to Lighthouse that there were delays and slight problems. Compl. ¶ 31. In June 2006, Prudential presented a revised contract to Lighthouse that did not include requested changes. "As a result the parties failed to reach a meeting of the minds and the contract negotiations met with an impasse. Consequently the anticipated business relationship between the parties never materialized." Id. ¶ 32. However, Prudential did not return to Lighthouse any of the businessKillers package software or written materials. Id.
"[O]ne year later, in June 2007, Prudential released a substantially similar copy of the Plaintiffs' businessKillers package entitled 'Prudential's Tipping Points' containing an interactive CD-ROM presenting Plaintiffs' unique, educationally focused, marketing strategy in the same format of audiovisual vignettes presenting a problem and a solution through a financial consultant/expert along with companion written materials including 'Balance Check' containing a substantially similar 'yes/no' test for the consumer to analyze in substantially the same way his/her business risk and determine for the agent and the customer his/her particular insurance and financial services needs." Compl. ¶ 33. Plaintiffs assert that Prudential's Tipping Points is substantially similar to Plaintiffs' businessKillers package in the following ways:
a. Prudential's Tipping Points is comprised of an interactive CD-ROM with accompanying printed materials;
b. Prudential's Tipping Points contains a self-assessment written test booklet to ascertain each business owner's risk in each topic addressed in the CD-ROM presentation in a "yes/no" format;
c. Prudential's Tipping Points content focuses on nearly identical topics/discussion points for each video-vignette;
d. Prudential's Tipping Points interactive CD-ROM offers a subject-matter expert/consultant after each vignette to present potential solutions to the business-owner;
e. Prudential's Tipping Points is positioned as an "executive briefing" rather than as a seminar;
f. Prudential's Tipping Points interactive CD-ROM contains emotionally charged video vignettes illustrating ...