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Torbit, Inc v. Datanyze

February 13, 2013

TORBIT, INC., PLAINTIFF,
v.
DATANYZE, INC. AND ILYA SEMIN, DEFENDANTS.



ORDER GRANTING DEFENDANTS' MOTION TO COMPEL ARBITRATION AND STAY ACTION PENDING ARBITRATION; DENYING AS MOOT PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION [Re: Docket Nos. 6, 14]

Presently before the Court are Defendants Datanyze, Inc. and Ilya Semin's (collectively, "Defendants") Motion to Compel Arbitration and Stay Action Pending Arbitration (Dkt. No. 6) and 20 Plaintiff Torbit, Inc.'s ("Plaintiff") Motion for Preliminary Injunction (Dkt. No. 14). The court has 21 subject matter jurisdiction pursuant to 28 U.S.C. § 1331. Having reviewed the parties' briefing, the 22 court GRANTS Defendants' Motion to Compel Arbitration and Stay Action Pending Arbitration 23 and DENIES Plaintiff's Motion for Preliminary Injunction as moot. 24

I.BACKGROUND

The following factual background is taken from the allegations contained in Plaintiff's 26 complaint and the exhibit attached thereto. This case arises out of Defendants' alleged improper use of Plaintiff's trade secrets and proprietary information both before and after individual 2

Defendant Ilya Semin's termination from Plaintiff's employment. Mr. Semin is a software 3 developer who was employed by Plaintiff from approximately October 2011 through April 2012. 4

Compl. ¶ 7, Dkt. No. 1. The terms of Mr. Semin's employment were governed by his offer letter 5 and the "Employee Proprietary Information and Inventions Agreement" (collectively, 6

"Agreement"). Compl. ¶ 8, Ex. A. By signing these documents Mr. Semin agreed, inter alia, that: 7 during and after his employment, he would not disclose, use or publish Plaintiff's "proprietary information" including its "trade secrets" (Compl. ¶ 9); 9 he would assign to Plaintiff any rights he may have had or acquired in "proprietary information" and any inventions (Compl. ¶¶ 10-11); he would not engage in competitive business activity during the course of his employment (Compl. ¶ 12); he would not copy, delete, or alter any of Plaintiff's information contained on his company computer (Compl. ¶ 12); he would return all Plaintiffs' documents and information upon the termination of his employment (Compl. ¶ 13); and during his employment and for one year thereafter he would disclose to Plaintiff all inventions he authored, conceived, or reduced to practice and would refrain from soliciting the business of any of Plaintiff's customers (Compl. ¶¶ 12, 14).

The Agreement also included an arbitration clause: 21 In the event of any dispute or claim relating to or arising out of our employment relationship, you and the Company agree that (i) any and all disputes between you and the Company shall be fully and finally resolved by binding arbitration, (ii) you are waiving any and all rights to a jury trial but all court remedies will be available in arbitration, (iii) all disputes shall be resolved by a neutral arbitrator who shall issue a written opinion, (iv) the arbitration shall provide for adequate discovery, and (v) the Company shall pay all but the first $125 of the arbitration fees. 3 Compl. Ex. A at 2.

Mr. Semin signed the Agreement on October 4, 2011, and began his work with Plaintiff on October 5 31, 2011. Compl. ¶¶ 7-8, Ex. A. 6

4

During the course of his employment, Mr. Semin worked on the development of an internal 7 tool known as Playbook. That technology "was designed to detect, monitor and record changes 8 made to websites in Torbit's industry." Compl. ¶¶ 15, 18. Playbook became Plaintiff's "most 9 valuable trade secret and one if its top competitive advantages." Compl. ¶ 17. 10

Plaintiff alleges that Mr. Semin used Plaintiff's computer network to download its code repository, including its trade secrets and proprietary information, onto his personal computer and 12 that Defendants stole the Playbook concept, technology, design and functionality. Compl. ¶¶ 22-23. 13

Furthermore, Plaintiff alleges that Mr. Semin founded his company, Datanyze, during the course of 14 his employment and that Datanyze is using Playbook and other of Plaintiff's proprietary 15 information and inventions. Compl. ¶¶ 24-25. 16

Plaintiff filed this case on November 16, 2012, alleging five causes of action: (1) Violations 17 of Federal Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030 (against Mr. Semin only); 18

(2) Violation of Colorado's Uniform Trade Secrets Act ("CUTSA"), Col. Rev. Stat. §7-74-101 et 19 seq. (against both Defendants); (3) Breach of Contract (against Mr. Semin only); (4) Breach of 20

Duty of Loyalty (against Mr. Semin only); and (5) Trespass to Chattels (against Mr. Semin only). 21

On December 17, 2012, Defendants filed the instant Motion to Compel Arbitration and Stay the 22

Action, to which the court now ...


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