Misappropriation claims levied by a Columbia Law School graduate-turned-website creator who said his design concepts were wrongfully shared with the creators of Pinterest.com must be dismissed because the alleged ideas weren’t described specifically enough, weren’t sufficiently novel, and weren’t confidential, an appeals court has ruled.
In a forceful and succinct decision, an Appellate Division, First Department panel provided a long list of reasons for tossing out claims of misappropriation of trade secrets and ideas brought by Theodore Schroeder, a lawyer who began developing a concept for a socially networked bulletin board site while at Columbia Law in 2005.
The panel ticked off one failing reason in the underlying record after the next while upholding the 2017 decision of Manhattan Supreme Court Justice O. Peter Sherwood to dismiss on summary judgment Schroeder’s claims, which he’d launched in 2013 against one of the initial investors in Pinterest; against a nonprofit angel-investing consortium from where the investor had come; and against Pinterest itself.
Pinterest, a popular social media web and mobile application that allows users to find information on the Web and post it onto personal boards—reported in 2015 by the Wall Street Journal to be worth some $11 billion—was dismissed from the case early on.
But the initial Pinterest investor, Brian S. Cohen, who years earlier had worked with Schroeder on a different website, remained a defendant in the case. And so did New York Angels Inc., the investing consortium, which was sued under a theory of vicarious liability.
Schroeder alleged that Cohen, who’d previously teamed with him to create the now-defunct website Skoopwire.com, which had focused on becoming a direct-to-customer newswire connecting businesses to bloggers and announcing product launches, had taken his ideas to the creators of Pinterest when he invested in that site and app.
Schroeder claimed that Pinterest was “nearly exactly what [he] conceived” for a previous website he was seeking to develop. And he sued Cohen on grounds that included misappropriation and breach of fiduciary duty tied to Cohen’s business relationship and position with companies Schroeder had started, included Skoop Media.
According to Sherwood’s decision, in which he quoted from Schroeder’s allegations, among the ideas and concepts, or “key similarities,” that Schroeder claimed Cohen had illegally given to Pinterest’s founders were: “the concept of a ‘website for users to post their interests for their friends and other users of the site to see,’; the goal of ‘connect[ing] things that mattered to a user with other users … while providing a place for a product or event promoter to gain visibility for its product,’ ; the goal of covering a new product launch on Skoopwire.com ‘by its users and shared with friends of that user, thereby igniting word of mouth about the product launch,’ and adopting an infinite scroll user interface technique.”
But the unanimous First Department panel wrote that Schroeder’s misappropriation of trade secrets and ideas claims were rightly thrown out by Sherman, first, because Schroeder and his co-plaintiffs—Rendezvoo LLC and Skoop Media Associates Inc.—“failed to describe the allegedly misappropriated ideas with sufficient specificity.”
“It is difficult to identify the precise nature of plaintiffs’ claims because their descriptions of what was misappropriated have shifted throughout the litigation,” the panel explained.
It added, “Plaintiffs’ ideas amount to nothing more than a collection of broad concepts, and there is very little information in the record about how those concepts were actually employed in practice, nor is it clear that they were ever even used in combination in a single website.”
Moving to another reason for why the misappropriation claims deserved to be dismissed on summary judgment, the panel wrote that “plaintiffs’ ideas were not sufficiently novel to merit protection.”
“Plaintiffs do not dispute that each of their individual ideas was not new, but contend that what was novel was their use of these ideas in combination,” the panel wrote.
“However,” it added, “it is not clear that the ideas were ever actually combined in a single website. Even if they were, ‘a combination of pre-existing elements is not considered novel,’” quoting Brandwynne v. Combe Int’l.
Then the panel, composed of Justices David Friedman, Angela Mazzarelli, Troy Webber, Cynthia Kern and Jeffrey Oing, wrote that both the misappropriation and breach of fiduciary duty claims were correctly dismissed because “the plaintiffs’ ideas were not confidential.”
“It is undisputed that versions 1 and 2 of plaintiffs’ Rendezvoo website were publicly available online,” the justices said, adding that “although plaintiffs claim that there were additional features in version 2 and in their Skoopwire website that were never publicly launched, there is insufficient evidence … regarding what the nonpublic versions of plaintiffs’ websites looked like and how they differed from the public versions.”
The panel also wrote, in the Feb. 5 opinion, that “even if this were not the case, it is clear that plaintiffs shared the allegedly nonpublic aspects of their websites with third parties—including web designers, potential investors, public relations firms, and focus groups—without requiring them to sign confidentiality agreements or to affirm that they were not working on competing websites.”
The panel added that “plaintiffs’ claims were also properly dismissed because there is no evidence in the record that Cohen actually conveyed their ideas to Pinterest.” And the justices pointed out that because all of the claims against Cohen were dismissed, there was no need to address the issue of New York Angel’s vicarious liability for his actions.
Brian Fischer, a Jenner & Block partner in Manhattan who has represented Cohen and New York Angels in the case since it was launched six years ago, said by phone Wednesday that now that the First Department has affirmed the suit’s summary judgment dismissal, “hopefully [Schroeder] realizes now that it’s time to move on with his life.”
“It’s a tremendous relief for Mr. Cohen [to have the First Department's decision],” Fischer also noted, “because he had gone through six years of having his integrity and credibility questioned.”
“We are grateful and gratified that both the trial and appellate court saw through plaintiffs’ false allegations,” he also said.
In addition, Fischer noted that he and his Jenner & Block team focused throughout the litigation on “doggedly questioning everything” that Schroeder had claimed.
Asked why the case had lasted as many years as it did, before reaching summary judgment dismissal, Fischer said, “In terms of the duration of this, we have always expected through this odyssey that once the court had an opportunity to consider the facts instead of Schroeder’s … allegations, summary judgement would follow emphatically.”
Charles Palella, a former partner at Montgomery McCracken who was counsel to the plaintiffs, could not be reached for comment. A message left for a partner at Montgomery McCracken was not immediately returned.