Free Opening Brief in Support - District Court of Delaware - Delaware

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THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ACCENTURE GLOBAL SERVICE GmbH ) and ACCENTURE LLP, ) ) Plaintiffs, ) ) v. ) ) GUIDEWIRE SOFTWARE INC., ) ) Defendant. )

C.A. No. 07-826 (SLR)

DEFENDANT GUIDEWIRE SOFTWARE, INC.'S OPENING BRIEF IN SUPPORT OF ITS MOTION TO DISMISS

MORRIS, NICHOLS, ARSHT & TUNNELL LLP Jack B. Blumenfeld (#1014) Julia Heaney (#3052) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899 (302) 658-9200 [email protected] [email protected] Attorneys for Defendant Guidewire Software Inc. OF COUNSEL: Daralyn J. Durie Clement S. Roberts Matthias Kamber JuNelle Harris KEKER & VAN NEST LLP 710 Sansome Street San Francisco, CA 94111 (415) 391-5400 February 6, 2008

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TABLE OF CONTENTS Page TABLE OF AUTHORITIES .......................................................................................................... ii NATURE AND STAGE OF THE PROCEEDINGS ......................................................................1 SUMMARY OF ARGUMENT .......................................................................................................2 STATEMENT OF FACTS ..............................................................................................................3 ARGUMENT...................................................................................................................................3 I. THE SECOND CLAIM FOR TRADE SECRET MISAPPROPRIATION SHOULD BE DISMISSED .............................................4 A. II. III. Accenture has failed to plead any facts in support of its allegations ....................................................................................................4

THE THIRD AND FOURTH CAUSES OF ACTION FOR "UNFAIR COMPETITION" SHOULD BE DISMISSED....................................10 THE FIFTH CLAIM FOR TORTIOUS INTERFERENCE WITH BUSINESS RELATIONS SHOULD BE DISMISSED ........................................13

CONCLUSION..............................................................................................................................15

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TABLE OF AUTHORITIES Page(s) Cases Bell Atl. Corp v. Twombly, 127 S.Ct. 1955 (2007)................................................................................................ passim Brown v. Adidas, 938 F. Supp. 628 (S.D. Cal. 1996)...................................................................................... 9 Desimone v. Barrows, 924 A.2d 908 (Del. Ch. 2007)............................................................................................. 5 Ethypharm S.A. France v. Bentley Pharms., Inc., 388 F. Supp. 2d 426 (D. Del. 2005).................................................................... 2, 5, 10, 11 Fitzgerald v. Cantor, C.A. No. 16297-NC, 1999 Del. Ch. LEXIS 17 (Del. Ch. Jan. 14, 1999) ................................................................................................................................... 8 Flotec, Inc. v. S. Research, 16 F. Supp. 2d 992 (S.D. Ind. 1998) ................................................................................... 9 Hanna v. Plumer, 380 U.S. 460 (1965)............................................................................................................ 4 Ingersoll-Rand Fin. Corp. v. Anderson, 921 F.2d 497 (3d Cir. 1990)................................................................................................ 4 Leucadia, Inc. v. Applied Extrusion Techs., Inc., 755 F. Supp. 635 (D. Del. 1991)........................................................................... 10, 11, 14 Lipson v. Anesthesia Servs., P.A., 790 A.2d 1261 (Del. Super. Ct. 2001) .............................................................................. 13 Merck & Co. v. SmithKline Beecham Pharms. Co., C.A. No. 15443-NC, 1999 Del. Ch. LEXIS 242 (Del. Ch. Aug. 5, 1999) ................................................................................................................................... 4 On-Line Techs., Inc. v. Bodenseewerk Perkin-Elmer GmbH, 386 F.3d 1133 (Fed. Cir. 2004)......................................................................................... 12 Papasan v. Allain, 478 U.S. 265 (1986)............................................................................................................ 4

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Power Mktg. Direct, Inc. v. Ball, Case No. C2-03-1001, 2004 U.S. Dist. LEXIS 30016 (S.D. Oh. June 28, 2004)..................................................................................................................... 8 Regal Home Distribs., Inc. v. Gordon, 66 A.2d 754 (Del. Super. Ct. 1949) .................................................................................. 14 Rohm & Haas Co. v. Adco Chem. Co., 689 F.2d 424 (3d Cir. 1992)................................................................................................ 4 Savor, Inc. v. FMR Corp., C.A. No. 00C-10-249-JRS, 2004 Del. Super. LEXIS 276 (Del. Super. Ct. July 15, 2004) ........................................................................................... passim Technicon Data Sys. Corp. v. Curtis 1000, Inc., C.A. No. 7644, 1984 Del. Ch. LEXIS 588 (Del. Ch. Aug. 21, 1984) ................................................................................................................................... 4 UD Tech. Corp. v. Phenomenex, Inc., C.A. No. 05-842-GMS, 2007 U.S. Dist. LEXIS 642 (D. Del. Jan. 4, 2007) ............................................................................................................................. 12 Vincit Enters., Inc. v. Zimmerman, Case No. 1:06-cv-57, 2006 U.S. Dist. LEXIS 32323 (E.D. Tenn. May 12, 2006)..................................................................................................................... 7 Wilmington Trust Co. v. Consistent Asset Mgt. Co., C.A. No. 8867, 1987 Del. Ch. LEXIS 409 (Del. Ch. Mar. 25, 1987)................................. 5 Statutes 6 Del. Code § 2001 ............................................................................................................... 5, 8, 10 6 Del. Code § 2008 ............................................................................................................. 5, 11, 14 Fed. R. Civ. P. 12(b)(6)................................................................................................................... 3 Fed. R. Civ. P. 8.............................................................................................................................. 5 Other Authorities J. Pooley, Trade Secrets § 2.03[6] (2008) .................................................................................... 11 Wright & A. Miller, Federal Practice and Procedure § 1202 ....................................................... 5 Wright & Miller § 1216 .................................................................................................................. 7

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NATURE AND STAGE OF THE PROCEEDINGS Accenture, the global consulting giant, has sued Guidewire, its smaller, nimbler competitor, for patent infringement, misappropriation of trade secrets, statutory unfair competition, common law unfair competition, and tortious interference with contract. Guidewire moves to dismiss all of Accenture's state law claims as insufficiently pleaded and, for the nontrade secret claims, preempted by the Delaware Uniform Trade Secrets Act. Since approximately 2002, Accenture and Guidewire have competed in the field of "claims management technology and services [for] the insurance industry." (Compl. ¶¶ 6, 22). Leaving aside the allegations of patent infringement, the Complaint's only relevant factual allegations are set forth in paragraphs 20-25, as follows: · In the late 1990s, CNA Insurance's Personal business group bought a "Claim Components Solution system" from Accenture. Accenture proposed to sell a similar system to CNA's Commercial group. (Compl. ¶ 20). In late 2000, Accenture generated an "assessment," protected by a non-disclosure agreement, of how it could implement its Claim Components Solution system at CNA Commercial and integrate it with CNA's existing systems. (Id. ¶ 21). In 2002, Accenture installed a test system at CNA and learned that Guidewire had entered the market. (Id. ¶ 22). "In early 2003, CNA informed Accenture that an unnamed competitor would do joint development with CNA for more than ten million dollars less than Accenture proposed to charge. Accenture later learned that the CNA bid had been won by Guidewire." (Id. ¶ 23). Guidewire emerged "more and more frequently" as a competitor to Accenture and "seemed to have a surprisingly quick development trajectory, particularly in light of its small size and relatively light experience in the insurance market." (Id. ¶ 24). Accenture concluded "on information and belief, [that Guidewire] had somehow gained access to Accenture Trade Secrets in creating its software and services." (Id. ¶ 25).

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SUMMARY OF ARGUMENT Accenture's second, third, fourth, and fifth causes of action should be dismissed because they fail to state a claim upon which relief can be granted and/or are preempted by the Delaware Uniform Trade Secrets Act. Accenture's second cause of action for misappropriation of trade secrets must be dismissed because Accenture alleges no facts giving rise to a claim of trade secret misappropriation. The United States Supreme Court has made clear that "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp v. Twombly, 127 S.Ct. 1955, 1964-65 (2007) (internal quotation marks and alterations omitted). Accenture's trade-secret allegations are inadequately pleaded under this standard. Accenture's third, fourth, and fifth causes of action for "statutory unfair competition," "common law unfair competition," and "tortious interference with business relations," should be dismissed because they are based exclusively on Accenture's allegations of trade secret misappropriation. Delaware law requires that all claims relating to the alleged misappropriation of trade secrets be brought pursuant to the Delaware Uniform Trade Secrets Act. All other tort claims are preempted. See Ethypharm S.A. France v. Bentley Pharms., Inc., 388 F. Supp. 2d 426, 433 (D. Del. 2005) ("all claims stemming from the same acts as the alleged misappropriation are intended to be displaced"). The third, fourth, and fifth causes of action also fail because they set forth nothing more than boilerplate recitation of the elements of the claim and thus fail to satisfy Federal Rule of Civil Procedure 8(a).

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STATEMENT OF FACTS Accenture is a multinational corporation (Compl. ¶¶ 4-5) that has been in business for decades (id. ¶ 6). Guidewire is a Silicon Valley start-up that the Complaint characterizes as "small" (id. ¶¶ 22, 24) and a "recent arrival in the market" (id. ¶ 22). In 2003, after Accenture performed an "assessment" of CNA's business and produced a system for testing, CNA chose Guidewire to do a joint-development project for "more than ten million dollars less than Accenture proposed to charge." (Id. ¶ 23). Given this substantial price difference, it should have been no surprise that "as time passed, Guidewire emerged more and more frequently as a challenger to Accenture." (Id. ¶ 24). Accenture's Complaint opines that "Guidewire seemed to have a surprisingly quick development trajectory, particularly in light of its small size and relatively light experience in the insurance market." (Id. ¶ 24). Accenture concludes its

"factual" recitation by alleging "on information and belief" that Guidewire "had somehow gained access to Accenture Trade Secrets." (Id. ¶ 25). This is the sum total of Accenture's trade secret misappropriation allegations. Accenture has accused Guidewire and its employees of theft simply because: (1) Guidewire successfully outbid Accenture on at least one occasion (id. ¶ 23); (2) Guidewire competed against Accenture on several subsequent occasions (id. ¶ 24); and (3) Accenture was surprised by how quickly Guidewire had grown (id.). ARGUMENT Accenture's second through fifth causes of action should be dismissed because they fail to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6).

Accenture's claims are so lacking in substance that Guidewire cannot begin to defend itself. Accenture's third, fourth, and fifth causes of action also fail because they are wholly derivative

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of Accenture's trade secret claim and thus preempted by the Delaware Uniform Trade Secrets Act.1 I. THE SECOND CLAIM FOR TRADE SECRET MISAPPROPRIATION SHOULD BE DISMISSED A. Accenture has failed to plead any facts in support of its allegations

Accenture's claim for trade secret misappropriation should be dismissed because Accenture has alleged no facts that, if proven, would constitute trade secret misappropriation. Even the Federal Rules' liberal "notice-pleading" scheme does not obviate the need to plead some facts. As the Supreme Court recently made clear, "Rule 8(a)(2) still requires a `showing,' rather than a blanket assertion, of entitlement to relief." Bell Atl. Corp., 127 S.Ct. at 1965 n.3. On a motion to dismiss, courts "are not bound to accept as true a legal conclusion couched as a factual allegation." See Papasan v. Allain, 478 U.S. 265, 286 (1986). Rule 8(a)

"`contemplate[s] the statement of circumstances, occurrences, and events in support of the claim presented' and does not authorize a pleader's `bare averment that he wants relief and is entitled

1

Although the Complaint is vague as to which state's trade secret law applies, resolution of this question makes no difference to the present motion for two reasons. First, because Accenture has brought its state law claims in federal court it must satisfy the pleading standard in Federal Rule of Civil Procedure 8. Ingersoll-Rand Fin. Corp. v. Anderson, 921 F.2d 497, 501 (3d Cir. 1990) (citing Hanna v. Plumer, 380 U.S. 460 (1965)). Second, because each of the states alleged in the Complaint to have a relation to the matter--California, Delaware, and Illinois--have adopted the Uniform Trade Secrets Act, regardless of choice of law, the underlying state law is substantively identical. See Merck & Co. v. SmithKline Beecham Pharms. Co., C.A. No. 15443-NC, 1999 Del. Ch. LEXIS 242, at *50 (Del. Ch. Aug. 5, 1999); Technicon Data Sys. Corp. v. Curtis 1000, Inc., C.A. No. 7644, 1984 Del. Ch. LEXIS 588, at *13 (Del. Ch. Aug. 21, 1984). Where such a "`false conflict'" of laws exists, the court need not resolve the choice of law, but may instead simply "apply the [UTSA] and cases interpreting the Act." Savor, Inc. v. FMR Corp., C.A. No. 00C-10-249-JRS, 2004 Del. Super. LEXIS 276, at *20 (Del. Super. Ct. July 15, 2004) (quoting Rohm & Haas Co. v. Adco Chem. Co., 689 F.2d 424, 429 (3d Cir. 1992)).

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to it.'" Bell Atl. Corp., 127 S. Ct. at 1965 n.3 (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1202 at 94, 95 (3d ed. 2004)). Delaware state courts follow the same pleading standard as their federal counterparts. See e.g., Desimone v. Barrows, 924 A.2d 908, 929 (Del. Ch. 2007) ("[O]ur nation's high court has now embraced the pleading principle that Delaware courts have long applied, which is that a complaint must plead enough facts to plausibly suggest that the plaintiff will ultimately be entitled to the relief she seeks."); compare also Fed. R. Civ. P. 8, 12(b)(6) with Del. Super. Ct. R. 8, 12(b)(6) and Del. Ch. R. 8, 12(b)(6). Under Delaware law, "the relevant inquiry when determining whether a plaintiff has set forth a prima facie misappropriation of trade secrets claim" is (1) Does a trade secret exist, i.e., have the statutory elements-- commercial utility arising from secrecy and reasonable steps to maintain secrecy been shown; (2) Has the secret been communicated by plaintiff to the defendant; (3) Was such communication pursuant to an express or implied understanding that the secrecy of the matter would be respected; and (4) Has the secret information been improperly (e.g. in breach of the understanding) used or disclosed by the defendant to the injury of the plaintiff? Savor, Inc. v. FMR Corp., C.A. No. 00C-10-249-JRS, 2001 Del. Super. LEXIS 170, at *9-10 (Del. Super. Ct. Apr. 24, 2001) (quoting Wilmington Trust Co. v. Consistent Asset Mgt. Co., C.A. No. 8867, 1987 Del. Ch. LEXIS 409, at *8-9 (Del. Ch. Mar. 25, 1987)).2 Where

2

Because Delaware has adopted the Uniform Trade Secrets Act (6 Del. Code § 2001 et seq.) its laws governing trade secret misappropriation are functionally the same as all other states that have adopted the UTSA. For this reason, cases from other jurisdictions interpreting the UTSA (such as many of the federal cases cited below) are considered persuasive authority. See 6 Del. Code § 2008 ("This chapter shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it."); Ethypharm S.A. France v. Bentley Pharms., Inc., 388 F. Supp. 2d 426, 433 n.6 (D. Del. 2005).

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the plaintiff has alleged no facts to support these elements, the Complaint should be dismissed. As the court explained in Savor, The Second Amended Complaint also fails to plead facts sufficient to satisfy the third element of its claim for Misappropriation of Trade Secrets, . . . . It is alleged only that "upon information and belief, FMR Corp. defendants [sic] knew or had reason to know that the information received concerning the Savor program was a trade secret acquired under a duty of confidence owed to the plaintiff." (D.I. 7 P19) This conclusory allegation fails to give notice to FMR of the bases for the so-called "duty of confidence" it allegedly owed to Savor. Moreover, the Second Amended Complaint does not even allege that UPromise was aware of the trade secret status of the information, much less how it would have acquired such knowledge. . . . Finally, the Second Amended Complaint fails to allege facts sufficient to support its conclusion that Fidelity used or disclosed the information it received from Savor. Id. at *12-13. In other words, a Complaint fails to adequately plead misappropriation of trade secrets under Delaware law when it fails to set forth factual allegations giving rise to an inference: (1) that the defendant obtained information constituting a trade secret, (2) the defendant knew or had reason to know that the information was a trade secret acquired under a duty of confidence, (3) the party that disclosed the information was aware of the trade secret status of that information, and (4) the defendant used or disclosed the alleged trade secret information. Accenture simply has not pleaded facts supporting these elements. First, Accenture fails to allege any facts supporting its conclusion that Guidewire has obtained Accenture's trade secrets. In particular, Accenture nowhere alleges that Guidewire obtained Accenture information from CNA or from any other identifiable source. Nor, notably, has Accenture brought a trade secret claim against CNA. At most, the Complaint alleges that both Accenture and Guidewire had a relationship with CNA. But the fact that both parties had a relationship with CNA does not give rise to an inference that CNA misappropriated Accenture's trade secret information and gave it to Guidewire. See e.g., Vincit Enters., Inc. v. Zimmerman,

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Case No. 1:06-cv-57, 2006 U.S. Dist. LEXIS 32323, at *18-19 (E.D. Tenn. May 12, 2006) (applying Tennessee Uniform Trade Secrets Act: "An allegation that Zimmerman was talking to his former customer in the presence of colleagues from his new employer does not support an inference that he used or disclosed any trade secrets of Vincit, and there are no direct factual allegations in the complaint that Zimmerman in fact used or disclosed any such trade secrets. Without any direct or inferential allegations of a disclosure by Zimmerman of Vincit's alleged trade secrets, the complaint fails to allege sufficiently Zimmerman's misappropriation."). Instead of making factual allegations of misappropriation, Accenture merely concludes "on information and belief" that Guidewire "somehow gained access to Accenture Trade Secrets." (Compl. ¶¶ 25, 31). But this is nothing more than an alleged suspicion of wrongdoing--and is not enough to sustain a Complaint. See Bell Atl. Corp., 127 S. Ct. at 1965 (a Complaint "must contain something more . . . than . . . a statement of facts that merely creates a suspicion [of] a legally cognizable right of action") (quoting 5 Wright & Miller § 1216, at 235-236 (ellipses and alteration in original)). Indeed, Accenture's allegations of

misappropriation in this regard are even less specific than those found to be inadequate in Savor--where the plaintiff did at least identify the party that allegedly gave information to the defendant. See Savor, 2001 Del. Super. LEXIS 170, at *4-5. Second, the Complaint nowhere alleges that Guidewire obtained information under circumstances where Guidewire knew or should have known "the trade secret status of the information." Id. at *12. As noted above, the Complaint does not say from whom Guidewire supposedly acquired Accenture trade secret information, much less set forth the circumstances under which the alleged acquisition took place. Thus, the Complaint utterly fails to allege facts that give rise to an inference that Guidewire "knew or had reason to know that the information

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received . . . was a trade secret acquired under a duty of confidence owed to the plaintiff." Id. (internal quotation marks omitted); see also 6 Del. Code § 2001(2)(b). Instead, the Complaint offers the naked legal conclusion that "[o]n information and belief, Guidewire has acted with knowledge that the information it used was Accenture's Trade Secrets and that it was not authorized to possess or use these Trade Secrets." (Compl. ¶ 33). This kind of conclusory pleading simply is not sufficient. See Fitzgerald v. Cantor, C.A. No. 16297-NC, 1999 Del. Ch. LEXIS 17, at *5 (Del. Ch. Jan. 14, 1999) (plaintiff's "allegations in its First Amended Complaint that [defendants] misappropriated confidential information in violation of the Partnership Agreement are merely conclusory. The First Amended Complaint contains no facts which, if proved true, would support or lead to inferences that support a finding [of trade secret misappropriation]"). Third, Accenture alleges no facts to support the Complaint's conclusion "on information and belief" that Guidewire used or disclosed Accenture information. (Compl. ¶ 31). The closest the Complaint comes is alleging that "on information and belief, Guidewire has also used Accenture Trade Secrets in connection with applying for and obtaining United States Patents." (Compl. ¶ 32). Again, however, this is just a naked legal conclusion dressed up as a factual allegation. It is stated "on information and belief" precisely because Accenture has no factual basis to support it. See Power Mktg. Direct, Inc. v. Ball, Case No. C2-03-1001, 2004 U.S. Dist. LEXIS 30016, at *16-17 (S.D. Oh. June 28, 2004) (applying Ohio's Uniform Trade Secrets Act: "Plaintiff alleges only that the information was disclosed to Defendants subject to the Agreement, the Agreement subsequently was terminated, and thereafter Defendants maintained a competing business, which allegedly utilized the trade secrets. Plaintiff alleges no facts to substantiate its conclusion that Defendants continued to utilize the information disclosed

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to them by Plaintiff in Defendants' new business. This conclusory allegation is insufficient to support Plaintiff's claim for misappropriation of trade secrets."). Nor can Accenture rely on Guidewire's rapid product development to support its claim. Accenture's allegation that Guidewire "seemed to have a surprisingly quick development trajectory" is nothing more than a subjective opinion. (Compl. ¶ 24). And Accenture does not allege any facts to support this conclusion--or even say how much time Guidewire took to develop its software. And, even if Accenture could prove that it was surprised, that fact would have no legal significance because no reasonable inference of trade secret misappropriation can arise from Accenture's "surprise" at the speed of Guidewire's development. See e.g., Flotec, Inc. v. S. Research, 16 F. Supp. 2d 992, 1009 (S.D. Ind. 1998) ("Zaiser is an experienced engineer and entrepreneur who was operating under intense financial pressure to bring one of two reverse-engineered products to market as quickly as he could. He accomplished the task quickly. That speed does not show that SRI misappropriated trade secrets from Flotec."). Nor can Accenture support its trade secret claim by asserting, as it does, that the claim is predicated on a "review of the intellectual property protection for the Claim Component Solution assets." (Compl. ¶ 25). In Brown v. Adidas, 938 F. Supp. 628 (S.D. Cal. 1996), for example, the court dismissed a case predicated on a similar assertion: Brown's complaint fails to set forth sufficiently a claim of trade secret infringement. Although Brown alleges that the drawings he provided to adidas constituted a trade secret, Brown does not allege sufficiently that adidas misappropriated his designs. Brown merely asserts that his drawings demonstrate "design similarities" to the predator soccer shoe . . . Allegations of similarity, without more, do not support a claim of misappropriation of trade secrets. Id. at 634. In this case, of course, Accenture has not even alleged that there are similarities between its product and Guidewire's--but instead has merely asserted that, based on Accenture's "review" of unspecified material, "Accenture realized that Guidewire . . . on

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information and belief, had somehow gained access to Accenture Trade Secrets in creating its software and services." (Compl. ¶ 25). In other words, Accenture does not even claim

similarities between the products, but rather asserts that its lawsuit is justified by unspecified conclusions it drew after a "review" of unspecified materials. A Complaint must be based on more than speculation and suspicion of wrongdoing. The strictures of Federal Rule of Civil Procedure 8 are not stringent, but the Supreme Court has made clear that they are not inconsequential. Because Accenture has not met its burden, the Court should dismiss the second cause of action. II. THE THIRD AND FOURTH CAUSES OF ACTION FOR "UNFAIR COMPETITION" SHOULD BE DISMISSED Accenture's third and fourth causes of action -- for statutory and common law unfair competition -- should be dismissed as preempted by the Delaware Uniform Trade Secrets Act. That act preempts all statutory and common law tort claims that, like Accenture's unfair competition claims, arise from an alleged misappropriation of trade secrets. Tort causes of action founded on allegations of trade secret misappropriation are barred as a matter of law because the DUTSA is the exclusive means of addressing such claims. See Ethypharm, 388 F. Supp. at 433 (DUTSA's section 2007 "was intended to preserve a single tort cause of action under state law for misappropriation as defined in 6 Del. C. § 2001(2) and thus to eliminate other tort causes of action founded on allegations of trade secret misappropriation") (quoting Leucadia, Inc. v. Applied Extrusion Techs., Inc., 755 F. Supp. 635, 637 (D. Del. 1991) (internal quotation marks omitted, emphasis in original)); see also Savor, 2001 Del. Super. LEXIS 170, at *4 (the "displacement" provision of section 2007 covers claims based on "the same facts which purportedly support the misappropriation of trade secrets

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claim").3 The Delaware Legislature's purpose in adopting the DUTSA was to "make uniform the law with respect to trade secrets" by preempting competing theories of liability. See

Leucadia, 755 F. Supp. at 637 (citing 6 Del. Code § 2008) (internal quotation marks omitted). This preemption is no quirk of Delaware law: Preemption was a key goal of the Uniform Act itself--an act that forty-three states, including Delaware, have adopted. counsel has acknowledged as much: Accenture's own

"The drafters of the Uniform Act recognized that a

potpourri of legal theories had been applied to trade secret misappropriation actions; indeed, displacement (preemption) of inconsistent and superfluous theories was one of the objectives of the Act." J. Pooley, Trade Secrets § 2.03[6] (2008). The only relevant legal issue is whether the third and fourth causes of action are "founded on allegations of trade secret misappropriation." Leucadia, 755 F. Supp. at 637. A claim will be preempted if it is "grounded in the same facts which purportedly support the Misappropriation of Trade Secrets claim." Savor, 2001 Del. Super. LEXIS 170, at *14. Here, the question is not a close one: There are no other facts on which claims three and four could possibly be based. The only mention of "unfair competition" anywhere in the Complaint is in Accenture's boilerplate recitation of the elements of the cause of action. (Compl. ¶¶ 35-36). Paragraph 35 merely "repeats and realleges each and every allegation above." (Id. ¶ 35). Paragraph 36 simply states that "Guidewire's actions described above constitute unfair competition and deceptive trade practices in violation of the Delaware Uniform Deceptive Trade
3

The Court need not determine whether Accenture actually possesses a trade secret in order to dismiss the causes of action. "Because all claims stemming from the same acts as the alleged misappropriation are intended to be displaced, a claim can be displaced even if the information at issue is not a trade secret. Thus, a determination of whether the information at issue constitutes a trade secret under the DUTSA need not be addressed prior to making a determination of displacement. . . ." Ethypharm, 388 F. Supp. at 433 (emphasis added).

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Practices Act." (Id. ¶ 36). Accenture's fourth cause of action repeats these words verbatim, but substitutes the words "Delaware common law" in place of the name of the statute. (Id. ¶¶ 3738). In other words, Accenture's unfair competition claims are founded on the exact same factual basis as its trade secret claims. The claims are therefore barred. See UD Tech. Corp. v. Phenomenex, Inc., C.A. No. 05-842-GMS, 2007 U.S. Dist. LEXIS 642, at *25 (D. Del. Jan. 4, 2007) ("UDTC's allegations of trade secret misappropriation preempt its claims of deceptive trade practices and unjust enrichment. This is so because the latter claims are based expressly upon the alleged misappropriation of trade secrets."); see also On-Line Techs., Inc. v. Bodenseewerk Perkin-Elmer GmbH, 386 F.3d 1133, 1145-46 (Fed. Cir. 2004) (dismissing fraud claim as preempted by Connecticut's version of the UTSA because it was based on the same conduct as a trade secret misappropriation claim). Even if the Court were to find that Accenture's unfair competition claims are not preempted, those claims should nonetheless be dismissed as inadequately pleaded under Federal Rule of Civil Procedure 8. As noted previously (in the discussion of Accenture's trade secret claims) Accenture has not alleged that Guidewire took any actions that could constitue wrongful conduct. Instead, Accenture has limited itself to alleging that Guidewire competed for business and then summerially concluded "that Guidewire's actions described above constitute unfair competition..." (Compl. ¶¶ 35-38). This kind of conclusory pleading is inadequate under FRCP 8. Bell Atl. Corp., 127 S.Ct. at 1965 n.3 ("Rule 8(a)(2) still requires a `showing,' rather than a blanket assertion, of entitlement to relief.").

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III.

THE FIFTH CLAIM FOR TORTIOUS INTERFERENCE WITH BUSINESS RELATIONS SHOULD BE DISMISSED Accenture's fifth cause of action has the same defects as the second, third, and

fourth causes of action. First, the Complaint contains no factual allegations that, if true, would constitute a claim of intentional interference with business relations. Second, the claim is, in any event, wholly derivative of the trade secret allegations and therefore preempted by the DUTSA. It is unclear from Accenture's Complaint which of the two separate interference torts recognized under Delaware law it is pleading: "intentional interference with contractual relations" or "intentional interference with prospective contractual relations." But in either case, it has failed to allege facts sufficient to state a claim. The elements of a claim of intentional interference with contractual relations are: "(1) a contract (2) about which defendant knew and (3) an intentional act that is a significant factor in causing the breach of such contract (4) without justification (5) which causes injury." Lipson v. Anesthesia Servs., P.A., 790 A.2d 1261, 1284 (Del. Super. Ct. 2001) (internal quotation marks omitted). Accenture's claim fails on the very first element. The Complaint fails to identify any Accenture contract with which Guidewire allegedly interfered. Because a contract is a required element of intentional interference with contractual relations, Accenture's claim fails. Nor does Accenture fare any better if its intended claim is intentional interference with prospective contractual relations. To pursue that claim, a plaintiff must establish: "(a) the reasonable probability of a business opportunity, (b) the intentional interference by defendant with the opportunity, (c) proximate causation, and (d) damages, all of which must be considered in light of defendant's privilege to compete or protect his business interests in a fair and lawful manner . . . ." Id. at 1285 (internal quotation marks omitted, ellipsis in original). Again, Accenture's claim fails before it gets out of the gate. The only prospect the Complaint mentions

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is CNA. And there is no allegation--other than the conclusory recitation of the elements of the claim--that Accenture had a reasonable probability of winning the CNA bid absent wrongdoing by Guidewire, that Guidewire intentionally interfered with any prospective contract, or indeed that Guidewire did anything other than make a competing bid. That conduct alone cannot support a claim because [o]ne is privileged purposely to cause a third person not to enter into or continue a business relation with a competitor of the actor if (a) the relation concerns a matter involved in the competition between the actor and the competitor, and (b) the actor does not employ improper means, and (c) the actor does not intend thereby to create or continue an illegal restrain of competition, and (d) the actor's purpose is at least in part to advance his interest in his competition with the other. Id. at 1287 (quoting Regal Home Distribs., Inc. v. Gordon, 66 A.2d 754, 754 (Del. Super. Ct. 1949)) (internal quotation marks omitted). The only factual allegation is that Guidewire

underbid Accenture by more than ten million dollars. (Compl. ¶ 23). That fact cannot support a tortious interference claim. Finally, Accenture's fifth cause of action is based wholly on the same allegations that underlie its trade secret claim. The (inadequately) alleged trade secret misappropriation cannot be the basis for this claim because, as discussed above, tort claims based on the same facts as trade secret misappropriation are preempted by the Delaware Uniform Trade Secrets Act. See Leucadia, 755 F. Supp. at 637 (citing 6 Del. Code § 2008).

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CONCLUSION The Court should dismiss Accenture's second, third, fourth, and fifth claims. The facts alleged, even if proved, show only that a smaller, more nimble competitor bested an older, slower one. There is nothing unusual or tortious about such a story. But Accenture, with its deep pockets and size advantage, seeks to turn this simple story into a tool with which to bludgeon its smaller rival. To do that, however, it must have one thing it lacks: facts supporting its claims. The pleading requirements of Federal Rule of Civil Procedure 8 are not onerous, but Accenture has not met them here. MORRIS, NICHOLS, ARSHT & TUNNELL LLP

/s/ Julia Heaney
Jack B. Blumenfeld (#1014) Julia Heaney (#3052) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899 (302) 658-9200 [email protected] [email protected] Attorneys for Defendant Guidewire Software Inc. OF COUNSEL: Daralyn J. Durie Clement S. Roberts Matthias Kamber JuNelle Harris KEKER & VAN NEST LLP 710 Sansome Street San Francisco, CA 94111 (415) 391-5400 February 6, 2008
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CERTIFICATE OF SERVICE I hereby certify that on February 6, 2008 I electronically filed the foregoing with the Clerk of the Court using CM/ECF, which will send notification of such filing to:. Richard L. Horwitz David E. Moore POTTER ANDERSON & CORROON LLP I further certify that I caused to be served copies of the foregoing document on February 6, 2008 upon the following in the manner indicated: Richard L. Horwitz, Esquire David E. Moore, Esquire POTTER ANDERSON & CORROON LLP 1313 North Market Street Wilmington, DE 19801 James Pooley, Esquire L. Scott Oliver, Esquire MORRISON & FOERSTER LLP 755 Page Mill Road Palo Alto, CA 94304 VIA ELECTRONIC MAIL and HAND DELIVERY

VIA ELECTRONIC MAIL

/s/ Julia Heaney
Julia Heaney (#3052)