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`MEMORANDUM AND ORDER
`20 Civ. 907 (NRB)
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`------------------------------X
`FRAMEWORK MI, INC.,
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`Plaintiff,
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`- against –
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`CVS HEALTH CORPORATION; CVS
`PHARMACY, INC.; CAREMARK RX,
`LLC; and PROCARE PHARMACY, LLC
`D/B/A ENCOMPASS RX,
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`
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`Defendants.
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`------------------------------X
`NAOMI REICE BUCHWALD
`UNITED STATES DISTRICT JUDGE
`
`Plaintiff Framework MI, Inc. (“Framework”) brought suit
`against defendants CVS Health Corporation (“CVS Health”), CVS
`Pharmacy, Inc. (“CVS Pharmacy”), Caremark RX, LLC (“Caremark”),
`and ProCare Pharmacy, LLC d/b/a Encompass RX (“ProCare”)
`(collectively, “CVS”) asserting claims of breach of contract,
`breach of the implied covenant of good faith and fair dealing,
`misappropriation of trade secrets, copyright infringement, and
`unjust enrichment arising from the alleged improper accessing and
`copying of Framework’s proprietary software products. Before the
`Court is CVS’s motion to dismiss Framework’s non-copyright state
`law claims. For the following reasons, CVS’s motion to dismiss is
`granted.
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`BACKGROUND
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`1. Factual Allegations
`Framework is a healthcare consulting and technology company
`based in Ohio. First Amended Complaint, ECF No. 31 (“FAC”) ¶ 2.
`The company is the owner of United States Copyright Registration
`No. TXU 002175958 for Cleo Suite© (the “Copyrighted Work”). Id.
`¶ 28. The Copyrighted Work includes source code for digital
`interfaces that allow pharmacies to manage “patient information,
`new patient onboarding, prior authorization, and patient
`assistance programs.” Id. ¶ 33. Framework licenses its products
`to pharmacies and can customize software systems for its clients
`to meet their individualized needs. Id.
` In August of 2015, Framework and Encompass RX, LLC
`(“Encompass”), a specialty pharmacy based in Georgia (Id. ¶ 21),
`entered into a contract (the “Framework-Encompass Contract”)
`whereby Framework agreed to provide its services to Encompass,
`including the licensing of its Copyrighted Work. Id. ¶ 45. The
`Framework-Encompass Contract provides that Encompass “will
`maintain in strict confidence any and all proprietary information
`. . . trade secrets . . . products or services . . . software,
`source code or documentation for software” designated as
`“Confidential Information” by Framework. Id. ¶ 46. “Confidential
`Information” includes the Copyrighted Work. Id. ¶ 47.
`In May of 2018, while Encompass was still under contract with
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`Framework, CVS Health, a Delaware company which operates CVS
`pharmacy locations around the country, purchased Encompass through
`its subsidiary, ProCare. Id. ¶ 50. Around the time of the
`acquisition, Framework entered into discussions with CVS,1 which
`was interested in procuring Framework’s services, including use of
`the Copyrighted Work. Id. ¶¶ 51-52. In connection with these
`discussions, Framework and CVS entered into a Mutual Non-
`Disclosure Agreement (the “Framework-CVS NDA”),2 which required,
`inter alia, that “each party maintain as confidential any
`information that was shared or disclosed to the other” in the
`course of the parties’ discussions. Id. ¶ 55.
`During these negotiations, Framework continued to provide its
`services to Encompass. Id. ¶ 58. According to the FAC, despite
`representations and assurances from CVS that the parties were close
`to reaching a deal on a software services contract, over time, it
`became apparent to Framework that CVS was dragging out negotiations
`“in order to buy time so that it could gain access to Framework’s
`confidential and proprietary information.” Id. ¶¶ 57, 59.
`Framework thereafter ended negotiations and subsequently
`discovered that in the midst of their discussions, CVS “improperly
`
`
`1
`The FAC speaks of these negotiations as taking place between Framework
`and the CVS entities generally, but also specifically refers to discussions
`including employees of CVS Health and with CVS Pharmacy.
`2
`A copy of the Framework-CVS NDA is provided by CVS, see Declaration of
`Michael Dixon, ECF No. 45 (“Dixon Decl.”), Ex. B, and shows the contract as
`being between Framework and CVS Pharmacy and its affiliates, including Caremark.
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`accessed Framework’s confidential, proprietary products [and] also
`improperly copied [the Copyrighted Work], including some of the
`most unique components of the product including (1) Framework’s
`proprietary code for export from the pharmacy management software
`to Framework’s server; and (2) the code for export/connectivity
`with onsite FedEx.” Id. ¶ 61. CVS allegedly has begun using the
`software in connection with pharmacies in its network. Id. ¶ 64.
`2. Procedural History
`Framework filed its original complaint against CVS and
`Encompass on February 3, 2020. ECF No. 1.3 In response to a
`letter filed on April 20, 2020 (ECF No. 24) wherein defendants
`proposed to make a motion for a more definitive statement or, in
`the alternative, to dismiss the complaint in its entirety, the
`Court held a teleconference on April 23, 2020, after which
`Framework agreed to amend its complaint. The FAC was filed on May
`27, 2020, and CVS filed an additional letter proposing to make a
`motion to dismiss, this time as to the non-copyright state law
`claims. ECF No. 34. The Court held a second teleconference on
`July 6, 2020, after which we granted CVS leave to file its motion.
`CVS filed its motion on September 4, 2020, and at the request of
`counsel, the Court heard oral argument on the motion on May 13,
`2021.
`
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`Framework later voluntarily dismissed Encompass from the action. See
`3
`ECF No. 40.
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`DISCUSSION
`
`1. Legal Standard
`To survive a motion to dismiss under Rule 12(b)(6), a
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`complaint must plead “enough facts to state a claim to relief that
`is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
`544, 570 (2007). “A claim has facial plausibility when the
`plaintiff pleads factual content that allows the court to draw the
`reasonable inference that the defendant is liable for the
`misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
`In determining whether a claim has facial plausibility, “we accept
`as true all factual statements alleged in the complaint and draw
`all reasonable inferences in favor of the non-moving party.”
`McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir.
`2007). However, that tenet “is inapplicable to legal conclusions.”
`Iqbal, 556 U.S. at 678.
`2. Copyright Preemption
`CVS’s principal argument for the dismissal of Framework’s
`state law claims is that these claims are preempted by the
`Copyright Act. Congress expressly designed a statutory framework
`of federal copyright preemption in section 301 of the Copyright
`Act. See 17 U.S.C. § 301. “The Copyright Act exclusively governs
`a claim when: (1) the particular work to which the claim is being
`applied falls within the type of works protected by the Copyright
`Act under 17 U.S.C. §§ 102 and 103, and (2) the claim seeks to
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`vindicate legal or equitable rights that are equivalent to one of
`the bundle of exclusive rights already protected by copyright law
`under 17 U.S.C. § 106.” Briarpatch Ltd., L.P v. Phoenix Pictures,
`Inc., 373 F.3d 296, 305 (2d Cir. 2004). “The first prong of this
`test is called the ‘subject matter requirement,’ and the second
`prong is called the ‘general scope requirement.’” Id. (quoting
`Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 848 (2d
`Cir. 1997)).
`a. Subject Matter Requirement
`“The subject matter requirement is satisfied if the claim
`applies to a work of authorship fixed in a tangible medium of
`expression and falling within the ambit of one of the categories
`of copyrightable works. . . . A work need not consist entirely of
`copyrightable material in order to meet the subject matter
`requirement, but instead need only fit into one of the
`copyrightable categories in a broad sense.” Id.
`Framework’s state law claims meet the subject matter
`requirement. The FAC asserts that “[t]he Copyrighted Work is an
`original source code containing copyrightable subject matter for
`which copyright protection exists under the Copyright Act.” FAC
`¶ 96.4 Moreover, each of the non-copyright claims has as its basis
`
`
`4
`See also Universal Instruments Corp. v. Micro Sys. Eng’g, Inc., 924 F.3d
`32, 44 (2d Cir. 2019) (“Source code, the human-readable literal elements of
`software, is copyrightable.”).
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`the improper accessing and copying of the Copyrighted Work. See
`FAC ¶ 65 (asserting as the basis for breach of contract that “CVS’s
`conduct in improperly accessing and improperly copying Framework’s
`Copyrighted Work violated the (1) Framework-Encompass Contract;
`[and] (2) the Framework-CVS NDA”); id. ¶ 86 (asserting as the basis
`for breach of the implied covenant of good faith and fair dealing
`that defendants “persuaded Framework into granting [CVS] access to
`Framework’s products so that [it] could utilize the access . . .
`for [its] own benefit”); id. ¶¶ 91-92 (asserting as the basis for
`misappropriation of trade secrets that defendant’s “servers are
`hosting numerous copies of Framework’s pharmacy and management
`software and code,” and that defendants “improperly accessed,
`discovered, and copied Framework’s trade secrets, including but
`not limited to Framework’s unique, proprietary code for (1) export
`from the pharmacy management software to Framework’s server; and
`(2) the code for export/connectivity with onsite FedEx”); id. ¶ 109
`(asserting as the basis for unjust enrichment that defendants
`“improperly derived a benefit from [Framework] by utilizing
`[Framework’s] unique and proprietary software products for its own
`benefit”).
`Framework argues that the subject matter of its claims
`“consists of materials comprised of both copyrighted materials and
`non-copyrightable materials,” and therefore preemption may not
`apply. ECF No. 47 at 6. This argument is directly contrary to
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`the Second Circuit’s holding in Briarpatch that the works “need
`not consist entirely of copyrightable material in order to meet
`the subject matter requirement, but instead need only fit into one
`of the copyrightable categories in a broad sense.” 373 F.3d at
`305. In any event, Framework fails to articulate how any of its
`state law claims stand on their own, separate and apart from
`reliance on its copyright.
`b. General Scope Requirement
`“The general scope requirement [for Copyright Act preemption]
`is satisfied only when the state-created right may be abridged by
`an act that would, by itself, infringe one of the exclusive rights
`provided by federal copyright law. In other words, the state law
`claim must involve acts of reproduction, adaptation, performance,
`distribution or display.” Briarpatch, 373 F.3d at 305 (citing
`Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d
`Cir. 1992)). “[T]he state law claim must not include any extra
`elements that make it qualitatively different from a copyright
`infringement claim. Id. (citing Nat'l Basketball Ass'n, 105 F.3d
`at 851). To determine whether a claim is qualitatively different,
`we look at “what [the] plaintiff seeks to protect, the theories in
`which the matter is thought to be protected and the rights sought
`to be enforced.” Computer Assocs., 982 F.2d at 716 (internal
`quotations omitted). However, courts “take a restrictive view of
`what extra elements transform an otherwise equivalent claim into
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`Case 1:20-cv-00907-NRB Document 54 Filed 06/11/21 Page 9 of 17
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`one that is qualitatively different from a copyright infringement
`claim.” Briarpatch, 373 F.3d at 306. While awareness or intent,
`for example, are not elements that make state law claims
`qualitatively different, “claims based upon breaches of
`confidential relationships” satisfy the extra element test and are
`not preempted. Computer Assocs., 982 F.2d at 717.
`With these legal principles in mind, we address each state
`law claim in turn.
`i. Breach of Contract Claim
`Framework claims that CVS breached the Framework-Encompass
`Contract and the Framework-CVS NDA, and that these breaches “raise
`cognizable legal claims distinct from Framework’s copyright
`infringement claim.” ECF No. 47 at 9. This is so, according to
`Framework, because the claim involves the unauthorized disclosure
`of the Copyrighted Work as opposed to CVS’s unauthorized use. The
`Second Circuit has indeed held that “where the use of copyrighted
`expression is simultaneously the violation of a duty of
`confidentiality established by state law, that extra element
`renders the state right qualitatively distinct from the federal
`right, thereby foreclosing preemption under section 301.”
`Computer Assocs., 982 F.2d at 719. However, it is fundamental
`that “to state a valid claim for a breach of contract, a plaintiff
`must state when and how the defendant breached the specific
`contractual promise.” Novio v. New York Acad. of Art, 317 F. Supp.
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`3d 803, 813 (S.D.N.Y. 2018).
`Here, Framework has failed to allege at any level of
`specificity any breach of CVS’s duty of non-disclosure. The FAC
`merely alleges that the Framework-Encompass Contract imposed a
`duty on Encompass not to disclose the Copyrighted Work and
`associated proprietary information to third parties. It then
`alleges that, after Encompass was acquired by CVS, CVS entered
`into the Framework-CVS NDA which “required each party to maintain
`as confidential any information that was shared or disclosed to
`the other.” FAC ¶ 55. The FAC is mostly silent on the sequence
`of events leading to this lawsuit. It only maintains that after
`Framework ended negotiations with CVS, it “learned that [CVS] had
`improperly gained access to numerous confidential aspects and
`components of Framework’s unique proprietary products,” and then
`“improperly copied” the Copyrighted Work. Id. ¶¶ 60-61.
`An examination of this sweeping allegation reveals its lack
`of substance. Starting with Encompass, the FAC fails to plead
`that the company disclosed confidential information to any third
`party in violation of the Framework-Encompass Contract. If
`Framework’s theory is that Encompass breached the Framework-
`Encompass Contract by sharing the Copyrighted Work with CVS – and,
`notably, this is never expressly stated – it would fail since CVS
`would have access to the Copyrighted Work after it acquired
`Encompass. See id. ¶ 46 (quoting the Framework-Encompass
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`Contract’s non-disclosure provision which applied to “Recipient”
`(presumably, Encompass), and its “affiliates”). 5 Moreover,
`Encompass itself was dismissed from the action by Framework,
`vitiating whatever claims Framework may have at one time thought
`it had against it. See ECF No. 40. The Framework-CVS NDA appears
`even less availing to support Framework’s theory, as there are no
`allegations that the Copyrighted Work was disclosed to anyone
`outside of CVS’s affiliates.
`Framework’s brief in opposition to CVS’s motion only confirms
`the infirmities of the FAC. Framework merely repeats the existence
`of the non-disclosure obligations set forth in the two contracts
`while failing to explain how Defendants breached those
`obligations. Indeed, at oral argument on CVS’s motion, the Court
`asked counsel for Framework to name the third party to whom CVS
`had allegedly disclosed the Copyrighted Work, and counsel could
`not do so, curiously arguing instead that “[i]f you plead in the
`complaint that there is a non-disclosure agreement in place and
`that [the] non-disclosure agreement was violated or breached, you
`have pled that they shared it with a third party.” Oral Argument
`Tr. 14-15. This response of course does not satisfy Iqbal’s
`requirement that plaintiff plead facts beyond “[t]hreadbare
`
`
`5
`In this regard, at oral argument, counsel confirmed that the CVS-
`Framework agreement remained in effect after CVS’s acquisition of Encompass
`and that CVS paid an additional sum to have the agreement remain in effect
`while negotiations between CVS and Framework were ongoing. Oral Argument Tr.
`(May 13, 2021) 11:21-25, 12:1-7, 21:21-25, 22:1-4.
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`Case 1:20-cv-00907-NRB Document 54 Filed 06/11/21 Page 12 of 17
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`recitals of the elements of a cause of action.” Iqbal, 556 U.S.
`at 678.6
`Because Framework has failed to plead a claim for breach of
`contract under a theory that CVS disclosed the Copyrighted Work to
`third parties, all we are left with is Framework’s statement that
`“CVS’s conduct in improperly accessing and improperly copying
`Framework’s Copyrighted Work violated the (1) Framework-Encompass
`Contract; [and] (2) the Framework-CVS NDA.” FAC ¶ 65. Even if
`CVS’s alleged conduct of copying the Copyrighted Work did violate
`these contracts, this is precisely the type of conduct that is
`qualitatively indistinct from copyright infringement and is
`preempted by section 301. See Alpha Media Works, Inc. v.
`Perception Rsch. Servs., Inc., No. 09 Civ. 9563, 2012 WL 406914,
`at *2 (S.D.N.Y. Feb. 9, 2012) (holding that breach of contract
`claim was preempted where plaintiff “allege[d] that Defendant
`breached the Non–Disclosure Agreement and [Licensing] Agreement
`when it ‘adapt[ed], alter[ed], modif[ied], translate[d], or
`create[d] derivative works of [plaintiff’s] software.’”).
`Framework has therefore failed to state a viable claim for
`breach of contract, which would in any event have been preempted
`by the Copyright Act.
`
`
`6
`At oral argument, Framework’s counsel cited “concerns” that CVS had
`disclosed information to Framework’s competitor, Asembia, but when asked by
`the Court if Framework had any actual basis for these concerns, counsel
`conceded that Framework could not make “specific allegations as to Asembia.”
`Oral Argument Tr. 12:12-14:14.
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`ii. Breach of the Implied Covenant of Good Faith
`and Fair Dealing
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`For similar reasons, Framework’s claim for breach of the
`implied covenant of good faith and fair dealing must also be
`dismissed. The covenant, which is implicit in every contract,
`includes a promise that “neither party to a contract shall do
`anything that has the effect of destroying or injuring the right
`of the other party to receive the fruits of the contract, or to
`violate the party's presumed intentions or reasonable
`expectations.” Spinelli v. Nat'l Football League, 903 F.3d 185,
`205 (2d Cir. 2018) (internal quotations omitted).
`
`Framework’s theory appears to be that in prolonging
`negotiations with Framework and representing that the two sides
`were close to agreeing to a deal, CVS “lull[ed] Framework into a
`false sense of security entirely for the bad faith purpose of
`gaining unfettered access . . . to Framework’s products so they
`could unfairly derive a benefit from Framework and its products.”
`FAC ¶ 85.7 However, the unfair benefit alleged here is that CVS
`
`
`7
`Framework attempts to reframe its theory in its brief in opposition to
`allege that CVS engaged in negotiations “to obtain information that it would
`not otherwise be permitted access and subsequently disclosed and shared that
`information throughout its organization in a manner that constituted bad faith.”
`ECF No. 47 at 11. As discussed above, however, Framework has failed to support
`its theory that CVS improperly disclosed the Copyrighted Work. Regardless,
`were it able to support its breach of contract claim under its disclosure
`theory, its breach of the implied covenant of good faith and fair dealing would
`be dismissed for redundancy. See Cruz v. FXDirectDealer, LLC, 720 F.3d 115,
`125 (2d Cir. 2013) (“[W]hen a complaint alleges both a breach of contract and
`a breach of the implied covenant of good faith and fair dealing based on the
`same facts, the latter claim should be dismissed as redundant.”).
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`was able to reproduce the Copyrighted Work for its own purposes –
`the same harm covered by a claim of copyright infringement. The
`fact that CVS may have acted in bad faith during negotiations does
`not change the fact that Framework’s claim is qualitatively
`indistinct from copyright infringement. See Shepard v. Eur.
`Pressphoto Agency, 291 F. Supp. 3d 465, 471 (S.D.N.Y. 2017)
`(“Awareness or intent . . . are not extra elements that make a
`state law claim qualitatively different.”).
`
`Framework’s claim for breach of the implied covenant of good
`faith and fair dealing must therefore be dismissed.
`iii. Misappropriation of Trade Secrets
`
`Framework’s misappropriation of trade secrets claim suffers
`the same fate. The FAC claims that CVS “improperly accessed,
`discovered, and copied Framework’s trade secrets, including but
`not limited to Framework’s unique, proprietary code for (1) export
`from the pharmacy management software to Framework’s server; and
`(2) the code for export/connectivity with onsite FedEx.” FAC ¶ 92.
`The claim then is indistinguishable from Framework’s allegations
`that CVS infringed the Copyrighted Work. Framework again attempts
`to argue that its misappropriation claim may survive because it is
`based on CVS’s breach of confidentiality, but as discussed above,
`Framework fails to adequately allege such a breach. See
`Tysellcrouse, Inc. v. Sway Mgmt., LLC, No. 15 Civ. 3832, 2016 WL
`5923423, at *5 (N.D. Cal. Oct. 11, 2016) (holding misappropriation
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`of trade secret claim preempted because “there are no allegations
`that [defendant] disclosed any such ‘secret’ to any third party[;
`r]ather, the gravamen of the claim is that [defendant] copied and
`used the software for its own purposes — which is the very essence
`of the copyright claim”); Computer Generated Sols. Inc. v. Koral,
`No. 97 Civ. 6298, 1998 WL 1085945, at *6 (S.D.N.Y. Dec. 9, 1998)
`(“Plaintiff's misappropriation of trade secrets claim fares no
`better because it is based solely on the misappropriation of what
`plaintiff claims is protected expression.”).
`
`Additionally, CVS contends – and the Court concurs – that the
`FAC fails to allege with any specificity what trade secrets CVS
`purportedly misappropriated, only raising vague generalities of
`“procedures, processes, systems, methods of operation, concepts,
`principles, and discoveries” contained in the Copyrighted Work.
`See Elsevier Inc. v. Doctor Evidence, LLC, No. 17 Civ. 5540, 2018
`WL 557906, at *6 (S.D.N.Y. Jan. 23, 2018) (emphases, citations and
`internal quotations omitted) (“Alleging the existence of general
`categories of confidential information, without providing any
`details to generally define the trade secrets at issue, does not
`give rise to a plausible allegation of a trade secret’s
`existence.”). In fact, when Framework does attempt to define
`misappropriated trade secrets, it merely points to literal aspects
`of the Copyrighted Work. See FAC ¶ 90.
`
`At oral argument, the Court gave Framework an opportunity to
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`describe the supposedly non-copyrightable secrets that CVS had
`allegedly misappropriated, but Framework again merely pointed to
`literal aspects of its code – in particular, how the code
`“interacts” with FedEx to provide Framework with heightened
`oversight over FedEx shipments. Oral Argument Tr. 6-9. Further,
`even if the Copyrighted Work contained non-copyrightable elements
`such as ideas and processes, this alone would not save Framework’s
`claim from dismissal. The Second Circuit in Computer Assocs. – a
`case on which Framework heavily relies – found that “[t]he district
`court correctly stated that a state law claim based solely upon
`[defendant]’s ‘use’, by copying, of [the copyrighted work]’s non-
`literal elements could not satisfy the governing ‘extra element’
`test, and would be preempted by section 301.” 982 F.2d at 719.
`
`Framework’s misappropriation of trade secrets claim is
`therefore preempted.8
`iv. Unjust Enrichment
`Lastly, Framework’s unjust enrichment claim is preempted.
`The FAC claims that CVS “improperly derived a benefit from
`[Framework] by utilizing [Framework]’s unique and proprietary
`software products for its own benefit without [Framework]’s
`consent and/or without compensating Framework for such use.” FAC
`
`
`8
`We need not address CVS’s alternative argument that the misappropriation
`claim fails because such a claim is not cognizable under the state law governing
`the parties’ dispute.
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`¶ 109. Once again, the claim is indistinguishable from Framework’s
`claim of copyright infringement, and courts routinely hold that
`the additional element of unjust enrichment, while “not required
`for copyright infringement,” does not go “far enough to make the
`unjust enrichment claim qualitatively different from a copyright
`infringement claim.” Briarpatch, 373 F.3d at 306. Framework’s
`argument that the claim is not preempted because it involves CVS’s
`enrichment related to information and materials that are expressly
`exempted from copyright protection is unavailing for the reasons
`stated above.9
`
`CONCLUSION
`For the foregoing reasons, CVS’s motion to dismiss the state
`
`law claims is GRANTED. The Clerk of Court is respectfully directed
`to terminate the motion pending at ECF No. 43.
`SO ORDERED.
`Dated: New York, New York
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`June 11, 2021
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`9
`Finally, the Court rejects Framework’s contention that we should deny
`CVS’s motion to dismiss as “premature” and allow discovery on the state law
`claims to proceed. “Motions to dismiss are routinely filed before the plaintiff
`has access to discovery. However, it is still incumbent on Plaintiff to allege
`sufficient factual matter, accepted as true, to state a claim to relief that is
`plausible on its face.” Wellton Int'l Express v. Bank of China (Hong Kong),
`No. 19 Civ. 6834, 2020 WL 1659889, at *4 n. 4 (S.D.N.Y. Apr. 3, 2020) (internal
`quotations omitted). Framework fails to identify how additional discovery could
`cure the deficiencies in the FAC, which, after all, primarily arise from its
`inability to explain how CVS breached its obligations under agreements with
`Framework, separate and apart from CVS’s infringement of Framework’s copyright.
`
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`____________________________
` NAOMI REICE BUCHWALD
`UNITED STATES DISTRICT JUDGE
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