EDGENET, INC. v. GS1 AISBL (E.D.Wis. 9-27-2010)

ffery did not constitute mail fraud); see also Jepson, Inc. v. Makita Corp., 43 F.3d 1321, 1330 (7th Cir. 1994) (inherently subjective expressions ill-suited as basis for mail and wire fraud).

Here, the alleged False Nonprofit Acts are not technically false. GS1 U.S. and 1SYNC are in fact technically nonprofits, though their status may have been improperly acquired. See Second Am. Compl. ¶¶ 4, 22, 40, 43. Further, the alleged False Capability Acts are no more than puffery. Statements regarding the ability of a business to meet clients' needs are completely subjective. Thus, neither set of alleged predicate acts are plausible and so cannot be considered in the pattern analysis. Therefore, because the complaint fails to show any plausible threat of continuity, it has failed to show plausible open-ended continuity sufficient to establish a RICO pattern.

The court recognizes that the case United States v. Green indicates that mailings need not be fraudulent on their face so long as they are incident to a fraudulent scheme. 786 F.2d 247, 249 (7th Cir. 1986). However, as the Seventh Circuit noted in Jepson, where mailings and wire communications are themselves the alleged acts of fraud serving as RICO predicates, they must stand on their own. 34 F.3d at 1330-31. Additionally, as will be discussed below, the two sets of acts likely do not qualify as predicates because schemes to eliminate competition may not form the basis of fraud claims under Jepson.

2. Closed-Ended Continuity

There is no plausible closed-ended continuity here either. While the series of alleged predicates occurred over more than four years, the other Morgan factors and common sense counsel against finding closed-ended continuity. The examination of the number of victims, presence of separate schemes, occurrence of distinct injuries, and number and variety of predicate acts weigh more heavily than the time period, and thus against finding closed-ended continuity.

Even accepting the allegations as true, only plaintiff and the United States are indicated as victims. The complaint does not show plausible victimization of other market participants. Defendants' alleged misuse of plaintiff's copyright in fact would benefit the other participants, as discussed previously. Additionally, the alleged acts of mail and wire fraud cannot serve to create victims through a general scheme to eliminate competition. The Seventh Circuit has cited approvingly the proposition, and this court agrees, that competitive injury is not the type of harm which may form the basis for mail or wire fraud. Jepson, 34 F.3d at 1327. Thus, because anticompetitive injury is not a proper basis for mail or wire fraud, other market

See the discussion in Section I.C.

In Jepson, the Seventh Circuit affirmed dismissal of a civil RICO complaint because defects in the mail and wire fraud allegations left the claim without the necessary predicate acts. 34 F.3d at 1327. The court "[found], at the outset, considerable persuasive force to the district court's conclusion that the nature of the scheme alleged . . . [was] beyond the scope of the mail and wire fraud statutes" and cited approvingly a 1991 Ninth Circuit case. Id. The Ninth Circuit first explained that U.S. Supreme Court precedent establishes that the mail fraud statute protects only property rights, though such may be tangible or intangible. Lancaster Cmty. Hosp. v. Antelop Valley Hosp. Dist., 940 F.2d 397, 405-06 (9th Cir. 1991). The court then reasoned that the defendant's conduct was aimed at increasing market share at the expense of competitors, and that "[m]arket share is neither tangible or intangible property; its loss is far too amorphous a blow to support a claim of mail fraud." Id. at 406. Elaborating, it wrote that "it might be said that defendants hoped to `steal' Lacaster's customers. But it cannot be said that these customers were Lancaster's property." Id. Finally, the court explained that "[t]he fraud Lancaster alleges is in reality nothing more or less than unalloyed anticompetitive conduct. This conduct may be unacceptable, but it is not `fraud.'" Id. The Jepson court declined to explore the issue further because the alleged acts failed in other respects. Jepson, 34 F.3d at 1327. The court finds such reasoning persuasive.

participants are not properly considered victims for purposes of the Morgan factor. Further, the United States as a victim adds little if any weight to plaintiff's claim. While predicate acts harming only a third party may be considered in analyzing the existence of a pattern, that third party is a much less convincing victim for continuity purposes when the harm is wholly different. Moreover, as just discussed, the Tax Fraud Acts are not to be viewed as creating market-participant victims through a (tenuous) relation to competitive injury. Thus, not only do the Tax Fraud Acts fail to show market participant victims, the United States itself is the victim of an alleged scheme that is unrelated to anything harming plaintiff. Consequently, plaintiff's complaint shows, at best, one victim and one very tenuously related victim, and, as a result, this factor weighs against a finding of closed-ended continuity.

The court only assumes a general scheme to eliminate competition for purposes of this analysis, and does not accept such in a manner contradictory to finding a lack of antitrust injury in Section I.C.

The relationship prong of the "continuity plus relationship" test is satisfied where conduct has "the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." Nw. Bell, 429 U.S. at 240. To the extent that plaintiff attempts to hang its hat on the Tax Fraud Acts to provide an additional scheme, victim, and distinct injury, the court finds such predicate acts unrelated and thus not capable of supporting a pattern. In one light, the Tax Fraud Acts may be viewed as a scheme to defraud the government, victimizing the United States and creating a distinct injury through loss of tax revenue. However, viewed in this light, it is clear that the acts are not related to the other alleged predicate acts. The Tax Fraud Acts have a different purpose, result, victim, and method of commission. In an alternate light, the Tax Fraud Acts may be viewed as a scheme to reduce competition, victimizing plaintiff and creating a distinct injury through loss of profits, however the court has already rejected this possibility under Jepson. However, the court will refrain from making a finding because, even assuming their relatedness, the Tax Fraud Acts do not help plaintiff's claim.

The number of schemes weighs against the claim as well. The predicate acts alleged show, at most, a tax-fraud scheme, an infringement or other misappropriation scheme, and a scheme to eliminate competition. As discussed earlier, schemes to eliminate competition are not the proper subject of fraud, and the alleged copyright infringement would seem to in fact increase competition. Further, the tax-fraud scheme is tenuously related at best. Thus, there is only a showing of two schemes, one of which carries little weight. Therefore, this factor also counsels against finding closed-ended continuity.

The injury factor does not help plaintiff either. The copyright infringement is a distinct injury. However, the Tax Fraud Acts, as discussed above, create only a tenuously related injury, and the other acts of mail and wire fraud cannot soundly create injuries to competition. Thus, again, there are, at best, two distinct injuries here, one of which is very tenuously related, if at all. This factor, too, works against finding closed-ended continuity.

Finally, the number and variety of predicate acts do not save the claim. There is alleged but one act of copyright infringement. While plaintiff alleges a not insubstantial individual number of mail and wire fraud acts, they are ultimately only subsets of larger acts. The six allegedly fraudulent tax filings constituting mail fraud are in reality only a subset of one continuous alleged improper tax status. The same reasoning applies to the HEAI Acts. The HEAI mail and wire communications are all incident to the same single act of copyright infringement. And, as discussed previously, the alleged False Nonprofit Acts and False Capability Acts do not qualify as predicate acts. In total, the complaint reads as an allegation of copyright

infringement or misappropriation that has been padded with allegations of fraud that are either incident to the dispute, tenuously related, or severe overreaching. Thus, the Morgan factors lead the court to find that there is no closed-ended continuity. The length of time over which all the acts occurred is likely sufficient, but not determinative. See Morgan, 804 F.2d at 976 (no single factor necessarily determinative). The number and variety of predicate acts are deceptive and do not weigh in favor of finding continuity. There are only two victims, two schemes, and two injuries at best, and the alleged tax fraud is too tenuously related to give much weight to the second victim, scheme, and injury. Therefore, common sense and the Morgan factors urge the court to, and it does so, find a lack of closed-ended continuity. Because plaintiff has failed to allege facts sufficient to show continuity, it has failed to state a claim under RICO.

III. CIVIL RICO CONSPIRACY

Plaintiff also alleges a violation of RICO conspiracy under § 1962(d). (Second Am. Compl. ¶¶ 155-63). Defendants argue that plaintiff failed to establish the plausible existence of an agreement giving rise to conspiracy, and that the intracorporate conspiracy doctrine operates to bar the claim here. Section 1962(d) of RICO prohibits conspiring to violate any of the other three provisions within § 1962, including subsection (c), as alleged in Count III by plaintiff. 18 U.S.C. § 1962(d); Second Am. Compl. ¶¶ 137-54. In order to commit conspiracy under RICO, "[o]ne must knowingly agree to perform services of a kind which facilitate the activities of those who are operating the enterprise in an illegal manner." Brouwer v. Raffensperger, Hughes Co., 199 F.3d 961, 967 (7th Cir. 2000). It is unnecessary to show actual commission of predicate acts, nor is it necessary that conspirators agree to actually commit the predicate acts themselves, or even participate, so long as they agree the acts will be committed. Gagan v. Am. Cablevision, Inc., 77 F.3d 951, 961 (7th Cir. 1996). Thus, to carry the day, plaintiff must allege facts establishing a plausible claim that: (1) defendants agreed to "conduct or participate in the affairs of an enterprise through a pattern of racketeering activity"; and (2) defendants "further agreed that someone would commit at least two predicate acts to accomplish those goals." See Id. Because the court finds that plaintiff has failed to establish a plausible claim to conspiracy, the complaint fails to state a claim and it need not address the intracorporate conspiracy doctrine.

Defendants begin by arguing that plaintiff cannot establish a plausible conspiracy if its facts cannot establish a plausible violation. Plaintiff responds that, under Gagan, a RICO violation need not be established in order to establish RICO conspiracy. While this is an accurate statement, it does not apply to the issue at hand. While it is true that RICO conspiracy does not require the predicate acts to have actually taken place, the predicate acts that the parties have conspired to effectuate must be sufficient to create a RICO violation. Without such a showing, it is simply impossible to have a "conspir[acy] to violate" a RICO provision. See 18 U.S.C. § 1962(d).

While not binding, the Ninth Circuit has put this point succinctly: where a party "fail[s] to allege the requisite substantive elements of RICO, the conspiracy cause of action cannot stand." Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364, 367 n. 8 (9th Cir. 1992). That circuit later explained this point by writing that "if the section 1962(c) claim does not state an action upon which relief could ever be granted, regardless of the evidence, then the section 1962(d) claim cannot be entertained." Neibel v. Trans World Assurance Co., 108 F.3d 1123, 1127 (9th Cir. 1997). It distinguished such a case from one where "[a] lack of evidence may render the substantive claim deficient, but it does not render it legally impossible," thus allowing a conspiracy claim to stand despite a directed verdict on the § 1962(c) claim. Id. The Neibel case has been disagreed with here in the Seventh Circuit, but on separate grounds (that is, to the extent the Ninth Circuit's opinion disagreed with Brouwer). See United States v. Warneke, 310 F.3d 542, 547-48 (7th Cir. 2002). However, in its opinion, the Seventh Circuit pointed out that, regarding conspiracy generally, "[a] conspirator must intend to further an endeavor which, if completed, would satisfy all of the elements of a substantive criminal offense." Id. at 547 (quoting Salinas v. United States, 522 U.S. 52, 65 (1997)). Thus, where plaintiff has failed to sufficiently allege a plausible claim to relief under § 1962(c), such a deficiency infects plaintiff's § 1962(d) claim as well. Because the facts alleged cannot establish plausible continuity, see Section II.B, the complaint does not show a plausible "pattern of racketeering activity." Because, under the facts alleged, the pattern element is legally impossible, a RICO violation is legally impossible, and it is correspondingly impossible to conspire to violate § 1962(c) through acts that would not violate § 1962(c).

Further, there are no additional facts alleged indicating a conspiracy to commit any predicate acts that would in fact create a RICO violation. Therefore, the court finds plaintiff has failed to allege facts sufficient to show a plausible claim to relief under § 1962(d) of RICO.

Because the court finds plaintiff has failed to state a claim for relief under RICO conspiracy, it need not address the question of whether the intracorporate conspiracy doctrine applies.

IV. WISCONSIN ORGANIZED CRIME CONTROL ACT

Plaintiff advances the same allegations as appear in its claimed RICO violation to support a violation of the Wisconsin Organized Crime Control Act, Wis. Stat. § 946.80, et seq. ("WOCCA"). (Second Am. Compl. ¶¶ 164-75). As both parties note, RICO interpretation informs WOCCA interpretation, except where there are express alternative requirements. Brunswick Corp., Mercury Marine Div. v. E.A. Doyle Mfg. Co., 770 F. Supp. 1351, 1363 (E.D. Wis. 1991). As in RICO, WOCCA prohibits conducting or participating in an enterprise "through a pattern of racketeering activity." Wis. Stat. § 946.83(3) (2008). The "continuity plus relationship" test applies when analyzing the existence of a pattern. 770 F. Supp. at 1363. Though WOCCA actually requires a minimum of three predicate acts, Wis. Stat. § 946.82(3), the continuity analysis of plaintiff's alleged predicate acts remains the same. Thus, because the complaint fails to allege facts sufficient to show plausible continuity, and thus fails to sufficiently show a pattern under RICO, the complaint also fails to show plausible continuity and thus pattern under WOCCA. Because plaintiff has failed to allege facts sufficient to show a plausible pattern of racketeering activity, plaintiff has failed to state a plausible claim to relief under WOCCA.

V. COPYRIGHT INFRINGEMENT

Plaintiff has also alleged that defendants infringed the copyright in its Big Hammer Master Collection Taxonomy and Attributes 2008 ("Master Collection") pursuant to Title 17, Chapter 5 of the U.S. Code. (Second Am. Compl. ¶¶ 176-88); 17 U.S.C. § 501 et seq. Defendants first argue that plaintiff has not stated a claim because the complaint does not allege direct copying from the copyrighted Master Collection, but later recast their argument as a failure to allege substantial similarity. (Defs.' Br. in Supp. 30-31); (Defs.' Reply Br. 18-19). In either case, defendants' arguments fail. Defendants also argue that the copyright in question lacks sufficient originality to be valid and that the merger doctrine bars plaintiff's claim of infringement. (Defs.' Br. in Supp. 31-33).

Proving copyright infringement requires: "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." JCW Invs., Inc. v. Novelty, Inc., 482 F.3d 910, 914 (7th Cir. 2007). Copying can be shown with direct evidence, or by an inference when there is substantial similarity between the works and the defendant is shown to have had access to the copyrighted work. Id. at 915. However, in the case of inferred copying, access may be presumed where the two works are so similar that it is highly probable the later work is a copy. Id. In determining this probability, courts look to the degree of similarity, as well as the degree to which the alleged copy is "unlike anything in the public domain." Id. Because plaintiff has pled sufficient facts to establish the elements of copyright infringement, and has not pled itself out under the merger doctrine, plaintiff has not failed to state a claim for copyright infringement.

A. Establishing the Elements of Valid Copyright and Copying

Plaintiff has sufficiently shown both required elements of a copyright claim. Direct copying of a copyrighted work is not necessary to infringe, so long as protected elements are copied. Thus, copying from an unregistered derivative may constitute infringement. This is clear from the Seventh Circuit's formulation of the elements of infringement in JCW: "copying of constituent elements." 482 F.3d at 914 (emphasis added). Further, while accepted across other circuits, the Seventh Circuit has implicitly recognized this rule. See Harris Custom Builders, Inc. v. Hoffmeyer, 92 F.3d 517, 519-20 (7th Cir. 1996). In Harris, the question concerned whether the plaintiff had forfeited its copyright on architectural plans by publishing an unregistered brochure under the 1976 Copyright Act. Id. The court noted that "[i]f the basis of Harris' claim of copyright was that the underlying architectural plans were registered or published with notice, it could prevail." Id. at 520. The court cited approvingly a case in which the Fifth Circuit held that copying the reproduction of copyrighted floor plans published in an unregistered brochure constituted infringement. Id. (citing Imperial Homes Corp. v. Lamont, 458 F.2d 895 (5th Cir. 1972)).

See, e.g., Montgomery v. Noga, 168 F.3d 1282, 1292-93 (11th Cir. 1999) (infringement where defendant incorporated unregistered computer code that included 70% of the original, copyrighted code, essential to functioning); Gamma Audio Video, Inc. v. Ean-Chea, 11 F.3d 1106, 1112 (1st Cir. 1993) ("Any elements that the author of the derivative work borrowed from the underlying work . . . remain protected by the copyrights of the underlying work."); Russell v. Price, 612 F.2d 1123, 1128 (9th Cir. 1979) ("The established doctrine prevents unauthorized copying or other infringing use of the underlying work or any part of that work contained in the derivative product so long as the underlying work itself remains copyrighted.").

Here, plaintiff alleges that the Master Collection is the subject of copyright registration. (Second Am. Compl. ¶ 177). A certificate of copyright registration provides a prima facie presumption of validity. Mid Am. Title Co. v. Kirk, 59 F.3d 719, 721 (7th Cir. 1995). Thus, plaintiff has alleged facts, taken as true, that show the plausible existence of valid copyright.

As to the second element, plaintiff alleges that the Spreadsheet obtained by defendants contained taxonomy categories. (Second Am. Compl. ¶ 77). Plaintiff also alleges that the Master Collection exists to, among other things, "organize" product data, and that the Master Collection is "a hierarchical classification system that [plaintiff] uses to organize products into various categories and sub-categories." Id. at ¶ 26. Plaintiff then alleges that defendants created a derivative work from the Spreadsheet. Id. at ¶ 78. Read in the light most favorable to plaintiff, the taxonomy categories allegedly contained in the Spreadsheet may be easily inferred to be the exact same organized category information contained in the Master Collection (albeit perhaps only a portion of such categories). Thus, plaintiff has alleged plausible copying of constituent elements and substantial similarity.

Plaintiff also alleges that the Master Collection, or portions of it, was improperly reproduced on defendants' website. Id. at ¶¶ 179-80. Without addressing the sufficiency of alleging that the actual Master Collection was posted to the internet, reading the complaint in the light most favorable to plaintiff raises an inference that constituent elements of the Master Collection were posted. Thus, plaintiff has alleged sufficient facts to show the plausible existence of the elements required to establish a claim for copyright infringement.

B. Originality

Defendants' challenge that plaintiff failed to allege copying of original elements, as required by the second element, is also wrong. (Defs.' Br. in Supp. 31); (Defs.' Reply Br. 19). The bulk of defendants' argument appears either to insist that the complaint is insufficient because plaintiff has not explicitly used the word "original" in its allegations of copying, or that plaintiff has not proved the originality of copied elements. Defendants primarily point to the fact that plaintiff's registration certificate excludes material from vendors or in the public domain, and that the "overwhelming majority" of the Master Collection is not original. (Defs.' Br. in Supp. 31, 32).

It is true that compilations (and other work) may consist of protectable and non-protectable material; that is, original and non-original material. Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 348 (1991). As regards a compilation, it is the "choices as to selection and arrangement" of collected data that are sufficiently original as to be protectable. Id. Here, as discussed above, plaintiff has alleged that the Master Collection contains a classification system that organizes data into categories, that the Spreadsheet contained categories, and that defendants copied from the Spreadsheet. (Second Am. Compl. ¶¶ 26, 77, 78). Plaintiff also alleges that defendants intended to use the Spreadsheet to "add Edgenet's . . . taxonomy categories to the GDSN." Id. at ¶ 79. Because categorization requires selection and arrangement, it is plausible that the categories are original. Further, because defendants allegedly copied the Spreadsheet with intent to add the taxonomy categories to the GDSN, it is plausible that defendants in fact copied the plausibly original categories. Thus, read in the light most favorable to the plaintiff, it is entirely plausible that defendants copied original material. Therefore, because the complaint shows the plausible existence of the required elements and originality,

Additionally, the court finds persuasive the caselaw presented by plaintiff that inquiry into originality is not appropriate at the pleading stage. See, e.g., Kregos v. Associated Press, 937 F.2d 700 (2d Cir. 1991) ("The validity of [a] copyright in a compilation of facts cannot be rejected as a matter of law for lack of the requisite originality and creativity.").

plaintiff has alleged sufficient facts to establish a plausible claim to copyright infringement.

C. Merger Doctrine

Finally, plaintiff's copyright claim does not fail under the merger doctrine. The merger doctrine "refers to the situation in which there is only one feasible way of expressing an idea, so that if the expression were copyrightable it would mean that the idea was copyrightable, and ideas are not copyrightable." Bucklew v. Hawkins, Ash, Baptie Co., LLP, 329 F.3d 923, 928 (7th Cir. 2003). The main thrust of defendants' argument is that plaintiff essentially pled itself out of a claim by alleging that its Master Collection is the only way to express the underlying idea. (Defs.' Br. in Supp. 33). In such a case, the copyright would not be valid and thus fails the first element. Defendants point to paragraph 35 of the complaint, which alleges that "[i]n light of the number and complexity of products and product attributes encompassed in Edgenet's [Master Collection], a competitor could not independently develop a substantially similar arrangement of attributes without stealing or misusing Edgenet's intellectual property." (Second Am. Compl. ¶ 35). Defendants disingenuously present only a portion of that paragraph, taken out of context. The paragraph in question actually leads off by alleging that "[a]ny company that might wish to develop its own version of a collection taxonomy and attributes . . . would have to spend substantial time, money and effort; would need to employ dozens of individuals; and would need unique market access to participants in the hardlines industry." Id. (emphasis added). Simply by use of the word "version," it is clear that plaintiff alleges other ways to create a similar product. Taken in context, the passage cited by defendants becomes an allegation that defendants could not have developed their own version in such a short period without stealing or misusing the Master Collection. Thus, plaintiff has not pled itself out by alleging merger of expression and idea. Any further inquiry into merger is inappropriate at the pleading stage because no further factual record has been developed. As discussed earlier, copyright registration is prima facie evidence of validity. Accordingly, defendants' merger argument fails. Because plaintiff has sufficiently alleged the plausible existence of copyright infringement, and has not pled itself out under the merger doctrine, plaintiff's allegation of copyright infringement does not fail to state a claim.

The term "version" means "a particular form or variant of something." The Random House Dictionary of the English Language, Unabridged 2115 (Stuart Berg Flexner ed., 2d ed. 1987).

VI. MISAPPROPRIATION OF TRADE SECRETS

In Count VII, plaintiff claims defendants misappropriated its trade secrets in violation of Wisconsin's Uniform Trade Secrets Act, Wis. Stat. § 134.90. (Second Am. Compl. ¶¶ 189-98). Defendants challenge this claim, asserting that the complaint does not sufficiently allege the material to be a trade secret, either because the information is readily ascertainable or has not been kept secret, that the complaint fails to specify which portions of the Master Collection are trade secrets, and that it fails to sufficiently allege misappropriation. (Defs.' Br. in Supp. 34-37). Under Wisconsin law, it is a violation to misappropriate a trade secret by acquiring

such through improper means, or by disclosing or using such without express or implied consent in certain situations. Wis. Stat. § 134.90(2). A trade secret is defined as including a "compilation," and the information must "derive[] independent economic value, actual or potential, from not being generally know to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use." Wis. Stat. § 134.90(1)(c). Further, the information must be "the subject of efforts to maintain its secrecy that are reasonable under the circumstances." Wis. Stat. § 134.90(1)(c). The Act is intended to be interpreted in uniformity with the laws of other states using the same model. Wis. Stat. § 134.90(7); see also Minuteman, Inc. v. Alexander, 147 Wis. 2d 842, 858, 434 N.W.2d 773, 779-80 (1989) (decisions in other jurisdictions involving the Act to be given "careful consideration"). Accordingly, to establish a claim for misappropriation of a trade secret, a plaintiff must show: (1) the information is economically valuable; (2) the value is the result of not being generally known to or readily ascertainable by others who could obtain value from it; (3) the plaintiff took reasonable steps to maintain its secrecy; and (4) the defendant misappropriated the information. Defendants do not dispute, and plaintiff sufficiently alleges, the information is economically valuable. See Second Am. Compl. ¶¶ 36-39. The court addresses the remaining three elements and defendants' arguments below, finding the plausibility of the requisite value from not being readily ascertainable, sufficient specificity as to the trade secrets alleged, plausible existence of reasonable efforts to maintain secrecy, and plausible misappropriation.

A. Value From Lack of Ready Ascertainment

Defendants fail in their argument that the Master Collection and the Spreadsheet both consist entirely of information that is readily ascertainable, and thus are not trade secrets. (Defs.' Br. in Supp. 34-35); (Defs.' Reply Br. 20-21). Defendants first stress the point that "mere variations on widely used information" and "combination[s] of otherwise known data" are not trade secrets, citing an Eighth Circuit opinion. Strategic Directions Grp., Inc. v. Bristol-Myers Squibb Co., 293 F.3d 1062, 1065 (8th Cir. 2002). Though these quotations are accurate, the presentation is misleading. The court in Strategic Directions actually wrote, in full, that "[s]imply to assert a trade secret resides in some combination of otherwise known data, is not sufficient." Id. (citing Second Circuit). Thus, contrary to defendants' argument, there are some situations in which a "combination of otherwise known data" may in fact be a trade secret — hence the court's use of the phrase " mere variations." Id. (emphasis added). This is evident from the text of the statute: trade secrets include "compilation[s]." Wis. Stat. § 134.90(1)(c). It is further evident from Seventh Circuit caselaw: "[a] trade secret can exist in a combination of characteristics and components, each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret." Minnesota Mining Mfg. Co. v. Pribyl, 259 F.3d 587, 595-96 (7th Cir. 2001). Thus, even if plaintiff's Master Collection and Spreadsheet were simply compilations of otherwise public data, that alone would not foreclose the claim as a matter of law.

However, plaintiff's Master Collection and Spreadsheet are in fact alleged to be more than just a compilation of public data. These documents allegedly contain taxonomy categories that organize the otherwise potentially public data in particular ways. (Second Am. Compl. ¶¶ 26, 77). Further, plaintiff alleges that such compilations would not be possible to create without extensive effort and money, and that even then, the result would be a "version" of such documents, not the exact same configuration. Id. at ¶ 35. In light of such factual allegations, it is plausible that the compilations contained in the Master Collection and Spreadsheet are not readily ascertainable by reason of being compilations.

Defendants also attempt to distinguish Minnesota Mining by pointing out that the Seventh Circuit determined that the information at issue was a "unified process", 259 F.3d at 596, and then arguing that plaintiff failed to allege that defendants improperly acquired a "unified process." Defendants appear to fault plaintiff for failing to use the same legally conclusory language that it elsewhere attacks as being insufficient under Twombly. Defendants cannot have it both ways. It is clear under the facts alleged in the cited paragraphs that the Master Collection and Spreadsheet are plausibly "unique combinations" as approved of in Minnesota Mining. 259 F.3d at 595-96.

Defendants also unpersuasively argue that the information is readily ascertainable because it may be discovered through reverse engineering. (Defs.' Reply Br. 21); Coenco, Inc. v. Coenco Sales, Inc., 940 F.2d 1176, 1179 (8th Cir. 1991); Norwest Trasnp., Inc. v. Horn's Poultry, Inc., 23 F.3d 1151, 1154 (7th Cir. 1994). Assuming without deciding that the mere possibility of reverse engineering is in fact sufficient to establish ready ascertainment, defendants' argument still fails. "Reverse engineering is the process by which a person takes a legitimately acquired item, disassembles it to learn its component parts, and from that process determines how the product is manufactured." Motorola, Inc. v. Computer Displays Int'l, Inc., 739 F.2d 1149, 1152 n. 4 (7th Cir. 1984) (emphasis added); see also BondPro Corp. v. Siemens Power Generation, Inc., 463 F.3d 702, 708 (7th Cir. 2006) ("lawful availability of products that can be reverse engineered" support terminating an injunction); Laff v. John O. Butler Co., 381 N.E.2d 423, 433 (Ill. App. Ct. 1978) ("a trade secret is open to anyone, not bound by a confidential relationship or a contract with the secret's owner, who can discover the secret through lawful means"). Defendants cite paragraph 77 of the complaint to establish plaintiff's admission that reverse engineering is possible. (Defs.' Reply Br. 21). Plaintiff's allegation states that, after having misappropriated the Spreadsheet, defendants can now "reverse-engineer" it. (Second Am. Compl. ¶ 77). However, in the light most favorable to the plaintiff, this court reads the allegation to refer only to the act of working backward from an item. Under the legal definition, reverse engineering may not occur without legitimate acquisition. Because defendants allegedly acquired the Spreadsheet by non-legitimate methods, they have no ability to reverse engineer the information in

But cf. La Calhene, Inc. v. Spolyar, 938 F. Supp. 523, 529-30 (W.D. Wis. 1996) (in preliminary injunction context, evidence that information may be reverse engineered does not establish that information is not a trade secret); Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 899 (Minn. 1983) (a finding that information cannot be readily reverse engineered can support finding of trade secret).

a manner that supports finding ready ascertainment. To find otherwise would fly in the face of common sense. There is an obvious difference between reverse engineering a product once it is placed in the public sphere and "reverse engineering" information through direct, improper access to the secret itself. Aside from that one apparently poorly chosen phrase, the plaintiff nowhere else alleges facts that show the information is readily ascertainable by reverse engineering. Therefore, the facts alleged do not establish ready ascertainment.

It would make no sense to allow a party that misappropriated a secret to then escape accountability by claiming that because they now have access to the secret it is no longer a secret and thus not protectable.

In fact, it seems a fair inference that were the Master Collection capable of reverse engineering, a competitor would have likely done so by now, given the alleged competitive advantage it provides.

In sum, defendants' arguments as to whether the Master Collection and the Spreadsheet are readily ascertainable appear to be, in reality, disputes over the accuracy of the factual allegations, an inappropriate consideration at the pleading stage. Plaintiff has alleged value through competitive advantage as a result of the information not being generally know or readily ascertainable. (Second Am. Compl. ¶¶ 33-35, 191-92). Thus, plaintiff has satisfied the second element.

B. Sufficiency of Specificity as to Trade Secrets

Defendants' charge of lack of specificity also fails. Defendants cite Minnesota Mining for the proposition that a plaintiff must "point to concrete secrets" as opposed to merely directing the court toward a "broad area" of technology. 259 F.3d at 595 n. 2. The case which the Minnesota Mining court cites in its footnote did in fact express such a proposition, but it did so while reviewing the sufficiency of the evidence supporting a jury verdict. Composite Marine Propellers, Inc. v. Van Der Woude, 962 F.2d 1263, 1265-66 (7th Cir. 1992). In Minnesota Mining, plaintiff is correct to point out that the court was presented with the issue at the summary judgment stage and, in fact, found that a trade secret could still exist even without 3M pointing to specifics within more than 500 pages of manuals. 259 F.3d at 598. In fact, by reading more than just a phrase from that case, it becomes apparent that the issue in Minnesota Mining in fact dealt with whether the manuals constituted a properly protected "compilation." Id. at 595-96. As discussed above, plaintiff has sufficiently alleged a plausible compilation. Defendants cite one other major case to support their specificity argument, but that case was decided on summary judgment. IDX Sys. Corp. v. Epic Sys. Corp., 285 F.3d 581 (7th Cir. 2002). However, not only was the standard of review different, but the original case which the Seventh Circuit affirmed as to the summary judgment noted that "[a]t the complaint stage . . . plaintiff is not and cannot be expected to plead its trade secrets in detail." IDX Sys. Corp. v. Epic Sys. Corp., 165 F. Supp. 2d 812, 816 (W.D. Wis. 2001), aff'd in part rev'd in part, 285 F.3d 581 (7th Cir. 2002). Thus, to the extent that defendants' specificity argument asks for evidence of qualification as a trade secret, such inquiry is improper at the pleading stage. To the extent that defendants' argument is merely an alternate way of arguing that compilations may not be afforded trade secret status, it has been disposed of in prior discussion. And to the extent that defendants' argument is questioning the sufficiency of facts showing a trade secret at all, such argument has also been disposed of above. Therefore, plaintiff has pled sufficiently specific facts for this stage of the litigation.

Confusingly, other cases defendants cite to support their argument have little or no bearing on the issue whatsoever. See Accenture Global Servs. GMBH v. Guidewire Software, Inc., 581 F. Supp. 2d 654, 661-64 (D. Del. 2008) (dismissing for failure to plead improper acquisition, use, or disclosure — not lack of specificity as to the trade secret); Knights Armament Co. v. Optical Sys. Tech., Inc., 568 F. Supp. 2d 1369, 1377 (M.D. Fla. 2008) (dismissing for failure to plead how defendants allegedly used trade secrets — not lack of specificity); Mach 1 Air Servs., Inc. v. Garcia, 2008 WL 3200777 at *3 (D. Ariz. 2008) (dismissed for failure to indicate any trade secret at all as well as how it was improperly used); Del Monte Fresh Produce Co. v. Dole Food Co. Inc., 148 F. Supp. 2d 1322, 1325 (S.D. Fla. 2001) (discussing requirement of compelled trade secret disclosure in order make factual determination of whether trade secret exists); FMC Corp. v. Cyprus Foote Mineral Co., 899 F. Supp. 1477, 1484 (W.D.N.C. 1995) (not enough evidence of trade secrets in seven areas comprising bulk of manufacturing process to justify injunction preventing former employee from working elsewhere); Analog Devices, Inc. v. Michalski, 579 S.E.2d 449, 453-54 (N.C. Ct. App. 2003) (in asking for preliminary injunction, plaintiff did not produce sufficient evidence). To the extent that Analog Devices teaches anything about specificity at the pleading stage, it requires only that particularity sufficient "to enable a defendant to delineate that which he is accused of misappropriating." 579 S.E.2d at 453. It is clear that defendants are easily able to delineate what they are accused of misappropriating: the entire Master Collection.

C. Secrecy

To the extent that defendants argue that plaintiff does not allege reasonable efforts to keep the information secret, it too is a failing argument. Defendants argue that plaintiff has pled itself out of the trade secrets claim because it shared "key aspects" of the Master Collection with customers and suppliers, and failed to identify anything in the Spreadsheet not shared with the "entire supply chain." (Defs.' Reply Br. 21). This appears to be an argument that plaintiff did not make sufficient efforts to protect the secrecy of the information, as required under § 134.90(1)(c). However, plaintiff also alleges that it contracts with both retailers and suppliers to collect and provide data (Second Am. Compl. ¶ 19), and that "clients" were required to sign confidentiality and non-disclosure agreements and were only permitted limited access. Id. at ¶ 34. This raises a plausible inference that the retailers and suppliers are in fact the "clients" required to keep the information in question secret. Plaintiff further alleges a whole host of other efforts taken to keep their information secret. Id. at ¶ 192. Thus, plaintiff sufficiently alleges reasonable efforts to keep the information secret as required by the third element.

D. Misappropriation

Finally, defendants are unsuccessful in their argument that plaintiff has failed to sufficiently allege misappropriation, specifically that plaintiff does not allege theft of the Master Collection, but only of the Spreadsheet, and that no alleged facts suggest the Spreadsheet contains trade secrets. (Defs.' Br. in Supp. 37). In order to be liable for disclosure or use, the defendant must have either: acquired the secret through improper means; or, at the time of use, know or have reason to know he or she obtained the secret from, inter alia, a person owing a duty to the plaintiff to "maintain its secrecy or limit its use." Wis. Stat. § 134.90(2)(b). As explained in the copyright discussion, Section V.B, plaintiff has alleged that the Master Collection contains a classification system that organizes data into categories, that the Spreadsheet contained categories, and that defendants used the Spreadsheet. (Second Am. Compl. ¶¶ 26, 77, 78). Plaintiff also alleges that defendants intended to use the Spreadsheet to "add Edgenet's . . . taxonomy categories to the GDSN." Id. at ¶ 79. Because defendants allegedly copied the Spreadsheet with intent to add the taxonomy categories to the GDSN, it is plausible that defendants obtained categories from the Master Collection through the Spreadsheet, and that the Spreadsheet is simply a portion of the trade secret constituted by the Master Collection. Further, plaintiff sufficiently pled use, id. at ¶ 81, acquisition from one under a duty to keep the material secret, id. at ¶¶ 34, 77, 192, and knowledge or reason to know of that duty, id. at ¶¶ 79-80, 83-84, 194. Therefore, the complaint sufficiently alleges plausible misappropriation.

Accordingly, because plaintiff has alleged economic value, resulting from lack of general knowledge or ready ascertainment, reasonable steps to keep the information secret, and misappropriation, plaintiff has alleged facts sufficient to establish plausible trade secret misappropriation.

VII. NEW JERSEY CONSUMER FRAUD ACT

Plaintiff's eighth claim alleges that defendants GS1 U.S. and 1SYNC ("Nonprofit Defendants") violated the New Jersey Consumer Fraud Act, N.J. Stat. Ann. §§ 56:8-2, 56:8-2.7. (Second Am. Compl. ¶¶ 199-203). Defendants argue that plaintiff has failed to sufficiently allege an ascertainable loss proximately caused by defendants, that plaintiff is not a consumer under the Act, and that the services offered by plaintiff do not qualify for protection under the Act. (Defs.' Br. in Supp. 37-41).

The first section prohibits "[t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, [sic] concealment, suppression, or omission of any material fact with intent that others rely upon such . . . in connection with the sale or advertisement of any merchandise. . . ." N.J. Stat. Ann. § 56:8-2. The second section at issue prohibits selling or offering to sell "any goods, wares, merchandise or services" where the seller falsely represents, or the consumer is falsely led to believe, that the sale is by or on behalf of a nonprofit organization. N.J. Stat. Ann. § 56:8-2.7. The private cause of action is created in a separate section, which provides that "any person" suffering an "ascertainable loss" caused by conduct declared unlawful under the Act may bring an action. N.J. Stat. Ann. § 56:8-19. Stating a claim requires three elements: "(1) unlawful conduct by the defendants; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship between the defendant's unlawful conduct and the plaintiff's ascertainable loss." Dabush v. Mercedes-Benz USA, LLC, 874 A.2d 1110, 1115 (N.J. Super. Ct. App. Div. 2005). Because the court finds that the Act does not apply to the transactions in question, it need not discuss ascertainable loss and proximate cause.

A. Application of the Act to the Alleged Transactions

The court finds no application of § 56:8-2 to the conduct at issue. While defendants somewhat separately argue against both plaintiff's status as a consumer, as well as the status of the services plaintiff provides (Defs.' Br. in Supp. 39-41), the arguments are more properly dealt with as one theory. The Act "is not intended to cover every transaction that occurs in the marketplace. Its applicability is limited to consumer transactions which are defined both by the status of the parties and the nature of the transaction itself." Arc Networks, Inc. v. Gold Phone Card Co., Inc., 756 A.2d 636, 638 (N.J. Super. Ct. Law Div. 2000). There is a distinction under the Act between misrepresentations of fact and mere puffery. Gennari v. Weichert Co. Realtors, 691 A.2d 350, 366 (N.J. 1997); Dabush, 874 A.2d at 1116. In order for a misrepresentation or other unlawful act to occur "in connection with" the sale of services, it must be "one which is material to the transaction and which is a statement of fact, found to be false, made to induce the buyer to make the purchase." Gennari, 691 A.2d at 366.

As the court reads the complaint, plaintiff alleges a number of instances of unlawful conduct. These include the Nonprofit Defendants falsely holding themselves out as nonprofits (Second Am. Compl. ¶¶ 5, 41, 43, 103, 106-07); misrepresenting their status to the IRS and committing fraud in obtaining tax-exempt status, id. at 53, 92, 103-05; committing tax, mail and wire fraud, id. at ¶¶ 40, 62; publishing false statements regarding their ability to meet clients' needs, id. at ¶¶ 50, 60; misrepresenting the purpose and operation of the HEAI project, id. at ¶¶ 64-65, 67, 76; and misrepresenting the process and creation of new attributes, id. at ¶¶ 80, 83-88, 91, 101.

The allegedly false holding out as nonprofits and misrepresentation of status and fraud to the IRS do not fall under the Act. Though Nonprofit Defendants may have procured their nonprofit status through fraud or other impermissible conduct, the fact remains that they are in fact nonprofit organizations. See, e.g., id. at ¶ 47. Thus, any representation of tax-exempt status is not technically false. Nor were any alleged false representations to the IRS made in connection with the sale of services. The Nonprofit Defendants were not selling anything to the IRS. To attach a connection to services sold to clients is too attenuated. Ruling otherwise would morph the Act into a tool to attack nearly any business which allegedly commits tax fraud. This is surely not the intent of the act. Additionally, plaintiff's other general allegations of tax, mail and wire fraud are too conclusory to support a plausible claim to relief under Twombly. Thus, the Act does not cover these actions.

Further, Nonprofit Defendants' alleged false statements, including "1 Source. 1 Solution," the ability to meet all needs, and the statement of belief that all of Home Depot's needs can be met through the GDSN are no more than puffery. Thus, the Act does not apply to these allegations either.

Again, ruling otherwise would expand the Act to ridiculous proportions.

Finally, the alleged misrepresentations regarding the HEAI project and creation of the attributes also fall outside the Act. While such statements, and the standard-setting process, may be tied to the ultimate goal of gaining more customers somewhere down the line, the most immediate characterization is not one of consumer transactions. These statements were made to members of the "product data community," allegedly for purposes of gaining competitive advantage by masking other unlawful conduct, such as copyright infringement. Id. at ¶¶ 80-94. While some of these community members are simultaneously consumers of data pool services, their role in these transactions were more akin to advisers, participants or interested parties. None of the alleged misrepresentations regarding the HEAI project or ultimate standard adoption show any intent to induce consumers to buy Nonprofit Defendants' services. In fact, though other misconduct may have occurred within the standard-setting process, the end result would be to make the allegedly proprietary information available as a service from a broader range of data pool operators. These standards are applicable and available to all certified data pool operators. The alleged misrepresentations in question simply cannot be characterized as consumer transactions, and thus fall outside of the Act.

B. Sale on Behalf of Nonprofit Organization

While no direct arguments are made on the issue of the applicability of section 56:8-2.7 to the transactions in question, the court finds no claim under the alleged facts. Though Nonprofit Defendants may have procured their nonprofit status through fraud or other impermissible conduct, the fact remains that they are in fact nonprofit organizations. See, e.g., Second Am. Compl. ¶ 47. Nor have Nonprofit Defendants violated the section by alleged false representation to the IRS because any such representations were not made to solicit funds, contributions, or sell their services. Thus, because Nonprofit Defendants have not falsely represented themselves as nonprofits while selling their services, they have not violated said section. Because the complaint, read in the light most favorable to plaintiff, still fails to allege facts showing plausible conduct falling under either § 56:8-2 or § 56:8-2.7, there is no plausible claim to relief under the New Jersey Consumer Fraud Act, and the claim must be dismissed.

VIII. COMMON LAW MISAPPROPRIATION AND UNJUST ENRICHMENT

Lastly, plaintiff alleges two claims in the alternative to its claims for copyright infringement and misappropriation of trade secrets. Count IX claims a violation of common law misappropriation, and Count X claims common law unjust enrichment. (Second Am. Compl. ¶¶ 204-18). Defendants argue both are preempted by the Copyright Act. Under section 301 of the Copyright Act, state law claims equivalent to those under the Act are preempted. 17 U.S.C. § 301(a). If the work in question is fixed in tangible form and within the subject matter of the Act, then "to avoid preemption, a state law must regulate conduct that is qualitatively distinguishable from that governed by federal copyright law." Toney v. L'Oreal USA, Inc., 406 F.3d 905, 909-10 (7th Cir. 2005). The Copyright Act guarantees the exclusive right to reproduce, prepare derivative works, distribute copies, perform works publicly, and display works publicly. 17 U.S.C. § 106. As previously discussed, plaintiff has sufficiently alleged that the work in question is a compilation, and compilations are within the subject matter of the Copyright Act. See 17 U.S.C. § 103. Thus, the court must determine whether the state law claims regulate equivalent conduct.

Equivalency may exist where infringement occurs immediately upon taking an action protected under § 106, or where there are additional elements that do not differ in kind from that necessary for copyright infringement. Through the Door, Inc. v. J.C. Penny Co., 2007 WL 2265781, at *2 (W.D. Wis. 2007) (citing Seventh Circuit). Common law misappropriation in Wisconsin requires: "(1) time, labor, and money expended in the creation of the thing misappropriated; (2) competition; and (3) commercial damage to the plaintiff." Mercury Record Prods., Inc. v. Econ. Consultants, Inc., 64 Wis. 2d 163, 174, 218 N.W.2d 705, 709 (1974). As our sister court has noted, "[a]lthough misappropriation under Wisconsin law includes additional elements that the parties be in competition with one another and that there is commercial damage to plaintiff, these elements add nothing of substance to the elements of the copyright claim." 2007 WL 2265781 at *3. Here, plaintiff claims misappropriation harm from improper copying, but the fact that plaintiff is required to have expended money and effort, be in competition, and suffer commercial damage do nothing to qualitatively distinguish the claim from one for improper

copying under copyright law. It simply becomes a more narrow version of the copyright claim.

Plaintiff's claim of unjust enrichment suffers the same fate. Unjust enrichment requires: "(1) a benefit conferred upon the defendant by the plaintiff, (2) appreciation by the defendant of the fact of such benefit, and (3) acceptance and retention by the defendant of the benefit, under circumstances such that it would be inequitable to retain the benefit without payment of the value thereof." Seegers v. Sprague, 70 Wis. 2d 997, 1004, 236 N.W.2d 227, 230 (1975). Again, plaintiff's claim focuses on the benefit conferred as a result of improper copying. Under the facts alleged, improper production of a derivative, as prohibited by the Copyright Act, confers a benefit on the defendant, is appreciated by the defendants, and acceptance of the benefit from a copyright violation without payment would necessarily be inequitable. Thus, the two in this case are qualitatively indistinguishable.

Plaintiff briefly argues that this issue rests on questions of fact and is thus inappropriate for decision at the pleading stage. Plaintiff is incorrect. The court is not determining the merits of the common law claims at this point, nor the merits of the copyright claim. Instead, the court is applying the standard of proof at the pleading stage. Viewed in the light most favorable to the plaintiff, and accepting all well-pleaded facts as true, there are no facts alleged which suggest the plausible existence of a misappropriation or unjust enrichment claim which could exist independent of the copyright claim.

In the case of misappropriation, there exists a possible claim in which a cause of action arises simply from the act of taking information. Because the act of taking does not alone involve reproduction, derivation, distribution, performance, or display, such could still satisfy the other elements of common law misappropriation without implicating copyright infringement. However, in the case at hand, the facts alleged by plaintiff require the use of the supposedly misappropriated information by defendants in order to satisfy the commercial damage prong of the claim. Under these facts, commercial damage only occurs if plaintiff loses its competitive advantage by the integration of its information into the GDSN. Consequently, that use, in order to cause commercial damage, must necessarily involve some form of copying — either reproduction, distribution, or derivation. No other use could support the damages alleged by plaintiff, that is, the loss of competitive advantage and accompanying profits, clients, and so on that would occur from integration of plaintiff's information into GDSN standards. Thus, without use, which is here necessarily regulated by the Copyright Act, plaintiff cannot state an independent claim for common law misappropriation. Therefore, because the claim necessarily lives or dies by the existence of a Copyright claim, it is either: sufficiently plead, but only in a way that leads to preemption due to being qualitatively indistinguishable; or, the requisite elements do not exist and the allegations thus fail to state a claim on their own.

The same logic holds true for the unjust enrichment claim. The only way in which the information obtained can support the existence of a benefit to defendants is if such information is put to use in a way that destroys plaintiff's competitive advantage. As discussed above, such use must necessarily involve one of the protected rights under the Copyright Act. Therefore, the facts alleged either establish a claim that is qualitatively indistinguishable from copyright infringement, or fail to sufficiently show the existence of a benefit and thus fail to state a claim independently.

Additionally, plaintiff is not saved by the fact that the information in question may later be determined insufficiently original to support copyright protection. As the Seventh Circuit has stated, in a decision reviewing 12(b)(6) dismissal, "states may not create copyright-like protections in materials that are not original enough for federal protection." Toney, 406 F.3d at 911. Thus, it is immaterial whether the information is sufficiently original. Rather, it is the conduct regulated that is the heart of a preemption inquiry. Therefore, because the common law claims are either qualitatively indistinguishable from a copyright claim and thus preempted, or would independently fail to state a claim, plaintiff has failed to allege facts sufficient to state a claim for either common law misappropriation or unjust enrichment.

IX. TYPE OF DISMISSAL

Plaintiff and defendants also dispute whether any dismissal should be with or without prejudice, framing the argument in terms of whether plaintiff is entitled to leave to amend. Leave to amend is to be given freely when justice so requires. Fed.R.Civ.P. 15(a)(2). However, dismissal with prejudice remains within the discretion of the court. See James Cape Sons Co. v. PCC Const. Co., 453 F.3d 396, 401 (7th Cir. 2006). At the same time, the procedural history of the case becomes relevant. Fannon v. Guidant Corp., 583 F.3d 995, 1002 (7th Cir. 2009). In Fannon, the court affirmed a dismissal with prejudice where the action began as nine individual complaints, and the plaintiff had a year to review and investigate before filing a consolidated complaint. Id. at 1001. The Fannon defendants filed a motion to dismiss and, while under advisement, the plaintiff twice notified the district court of new information but never attempted to offer an amended complaint. Id. The order for dismissal was entered almost one year and eight months after the consolidated complaint. Id. at 1001-02. In affirming the dismissal, the circuit court wrote that "[t]he district court was entitled to view this case as one in which the plaintiffs had, as a practical matter, a number of opportunities to craft a complaint that complied with the standards of the PSLRA. It was therefore entitled to bring this litigation to a close with a dismissal of prejudice." Id. at 1002.

Given the discretion of the court in this matter, and in light of the more than one year and eight month pendency as well as two amended complaints, the court finds that the wiser exercise of its discretion is to dismiss with prejudice. Fannon is sufficiently analogous to support this decision, teaching that a reasonable opportunity to construct a complaint that states a claim, and failing to do so, is grounds enough for exercise of a court's discretion. Here, plaintiff filed an Amended Complaint, after which defendants moved to dismiss and briefed their motions. Plaintiff then moved for leave to file a Second Amended Complaint, indicating in their brief that the new attorneys had done investigation and research leading to new legal claims and "significantly more detailed" factual allegations. (Docket #34). The new complaint jettisoned most of the first complaint's claims, rendering the pending motions to dismiss moot. Defendants have now moved once more for dismissal and fully briefed again. In sum, plaintiff has had ample time to construct a proper claim. Additionally, though plaintiff argues it should be allowed to re-plead if any deficiencies exist (Pl.'s Br. in Opp. 49), James Cape holds that dismissal with prejudice is not an abuse of discretion where a court has "no way of knowing what the proposed amendment entail[s]." 453 F.3d at 401. Thus, the court is obliged to dismiss the claims in question with prejudice.

CONCLUSION

After lengthy discussion, the court finds that plaintiff has failed to state a claim as to Count I, Monopolization under the Sherman Act, 15 U.S.C. § 2, because of a failure to allege sufficient facts to show the plausible existence of antitrust injury. Plaintiff has also failed to state a claim as to Count II, Monopolization under the Wisconsin Antitrust Act, Wis. Stat. § 133.18, because of a failure to allege sufficient facts to show the plausible existence of antitrust injury. The analysis undertaken for Count I controls the outcome of Count II. Count III of the complaint, a civil violation under RICO, 18 U.S.C. § 1962(c), also fails to state a claim due to a lack of sufficient allegations to show the necessary "pattern of racketeering activity." As to Count IV, civil RICO conspiracy under 18 U.S.C. § 1962(d), no allegations support the plausible existence of a legally possible RICO violation and there can be no conspiracy to violate RICO where the acts conspired to perform would not violate RICO. Thus, Count IV fails to state a claim. Count V, violation of the Wisconsin Organized Crime Control Act under Wis. Stat. § 946.80 et seq., also fails to state a claim due to the same failure to allege sufficient facts showing the plausible existence of the necessary "pattern of racketeering activity." Counts VI and VII, Copyright Infringement under 17 U.S.C. § 501 et seq. and Misappropriation of Trade Secrets under Wis. Stat. § 134.90, both allege sufficient facts to state plausible claims for relief and thus survive this motion. Plaintiff fails to state a plausible claim for relief on Count VIII, violation of the New Jersey Consumer Fraud Act, N.J. Stat. Ann. §§ 56:8-2 and 56:8-2.7, because the Act does not apply to the transactions in question and defendants GS1 U.S. and 1SYNC have not in fact falsely represented themselves as nonprofit organizations. Finally, both Counts IX and X, Common Law Misappropriation and Unjust Enrichment, fail to state a claim because they are either preempted by the Copyright Act or would fail to state a claim if they fell outside preemption.

Accordingly, IT IS ORDERED that the defendants' Motion to Dismiss Second Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) (Docket #56) be and the same is hereby GRANTED in part and DENIED in part; and

IT IS FURTHER ORDERED that Counts One, Two, Three, Four, Five, Eight, Nine, and Ten of the plaintiff's Second Amended Complaint (Docket #43) be and the same are hereby DISMISSED with prejudice.

Dated at Milwaukee, Wisconsin, this 27th day of September, 2010.