Nielsen Consumer Llc V Circana Llc

Key Facts

Transaction Type

Issues

• Whether NielsenIQ adequately alleged that Circana misappropriated trade secrets by using LI Materials to create and sell Audiences on LiveRamp after the MSA terminated, without express or implied consent, and whether the LI Materials constitute protectable trade secrets
• Whether NielsenIQ sufficiently alleged that Circana breached the Master Services Agreement by continuing to create and sell Processed Materials (Audiences) using LI Materials after the MSA terminated on June 30, 2023, without paying required revenue shares or deleting the data as required
• Whether NielsenIQ's trademark infringement claim regarding Circana's use of the Label Insight mark after termination should be dismissed based on the September 2020 SOW's authorization of co-branded audiences, or whether the trademark claim can logically survive the motion to dismiss

Holdings

Remedies

Legal Principles

• Rule 12(b)(6) motion to dismiss standard requires that plaintiff's complaint allege facts which, when taken as true, plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level. Courts take well-pleaded factual allegations as true and draw reasonable inferences in the plaintiff's favor at the pleading stage. Winnowing of a claim properly occurs at summary judgment, not at the pleadings stage when the question is simply whether there are sufficient facts alleged to state a plausible claim for relief on some legal theory. Rule 12(b)(6) authorizes the dismissal of claims, not evidentiary rulings about the relevance of specific allegations set forth in a complaint, and does not permit piecemeal dismissal of parts of claims.
• Breach of contract claim requires establishing four elements: (1) the existence of a valid and enforceable contract, (2) performance by the plaintiff, (3) a breach of contract by the defendant, and (4) resultant injury to the plaintiff. In construing contracts under Illinois law, courts aim to ascertain the parties' intent by first consulting the plain and ordinary meaning of the contract language. If the language is susceptible to more than one meaning, it is ambiguous, and the court can look to extrinsic evidence to determine the parties' intent.
• Trade secret misappropriation requires showing that (1) a trade secret existed, (2) the trade secret was misappropriated, and (3) the owner of the trade secret was damaged by the misappropriation. Misappropriation may be satisfied by alleging that the disclosure or use of a trade secret was without express or implied consent. The misappropriation analysis tracks the breach of contract analysis. A plaintiff need not prove its case at the pleading stage but must adequately plead sufficient facts such that its claim is plausible and puts the defendant on notice of the claims against them.

Precedent Name

• Page v. Alliant Credit Union
• Covenant Aviation Sec., LLC v. Berry
• Packaging Corp. of Am., Inc. v. Croner
• Smith v. First Hosp. Lab'y's, Inc.
• PNC Bank, Nat'l Ass'n v. Boytor
• Reardon v. Danley
• Choice v. Kohn L. Firm, S.C.
• Allstate Ins. Co. v. Ameriprise Fin. Servs.
• Cochran v. Ill. State Toll Highway Auth.
• BBL, Inc. v. City of Angola
• McInerney v. CareerBuilder, LLC

Key Disputed Contract Clauses

• The Master Services Agreement (MSA) and Statements of Work (SOWs) established three permitted uses for Circana's access to NielsenIQ's LI Materials: (1) creating Processed Materials through copying, distributing, displaying, transmitting, modifying, and preparing derivative works; (2) incorporating such Processed Materials into Circana's services; and (3) providing these services to third-party clients pursuant to Company Contracts. The dispute centered on whether Circana's continued creation of new Audiences after contract termination constituted a breach of these permitted uses.
• The September 2020 SOW expressly authorized the sale of co-branded audiences, permitting Circana to include the phrase 'Label Insight' on the audience for a designated period after termination. This provision became central to the trademark infringement dispute, as Circana argued this authorization meant NielsenIQ's trademark claim could not be premised on the allegation that NielsenIQ 'never' authorized use of the LI Mark, while NielsenIQ argued that Circana's use of the mark after termination of the MSA in connection with the sale of audiences terminated Circana's right to use the mark.
• The MSA and SOWs were terminated on June 30, 2023, which triggered specific obligations: (1) all rights, licenses, consents, and authorizations granted by NielsenIQ to Circana, including use of Label Insight Materials, would immediately terminate; and (2) Circana was required to permanently delete all LI Materials within seven business days after termination, except as necessary to fulfill Customer Contracts. The core dispute was whether Circana continued using LI Materials after termination, thereby breaching these termination obligations.
• Both SOWs required Circana to pay Label Insight, Inc. (subsequently NielsenIQ) a revenue share for use of LI Materials. The July 2020 SOW required payment of a portion of all revenue from licensing Processed Materials during the given period. The September 2020 SOW permitted Circana to continue licensing Joint LI-IRI Audiences to existing clients for up to 24 months after termination, provided it continued to timely pay NielsenIQ a revenue share. NielsenIQ alleged Circana had not paid any royalties for either its use of LI Materials or Processed Materials.

Cited Statute

• Federal Defend Trade Secrets Act (DTSA)
• Illinois Trade Secrets Act (ITSA)

Judge Name

Passage Text

• In sum, the court cannot agree that NielsenIQ's allegations are merely conclusory. Rather, it has alleged facts to support the reasonable inference that Circana continued to create new Audiences using NielsenIQ data after June 30, 2023. NielsenIQ now also alleges breach via nonpayment, which Circana does not contest. For now, it has met its Rule 12(b)(6) pleading standard on the breach of contract claim.
• NielsenIQ 'need not prove [its] case at this point in time[; it] need only adequately plead sufficient facts such that [its] claim is 'plausible' and puts the defendant[] on notice of the claims against them such that the defendants can respond.' Vulcan Golf, LLC v. Google, Inc., 552 F. Supp. 2d 752, 769 (N.D. Ill. 2008). The amended complaint adequately alleges that its trade secrets are comprised of the LI Materials and that Circana's use of this information constituted misappropriation under the MSA.
• The court declines to dismiss or narrow NielsenIQ's trademark infringement claims based on arguably contradictory assertions raised by the September 2020 SOW. It already concluded that NielsenIQ stated a claim for trademark infringement, and the 'winnowing of a claim properly occurs at summary judgment, not at the pleadings stage when the question is simply whether there are sufficient facts alleged to state a plausible claim for relief on some legal theory.' McInerney v. CareerBuilder, LLC, 2019 WL 6497369, at *4 (N.D. Ill. Dec. 3, 2019). 'Rule 12(b)(6) authorizes the dismissal of claims, not evidentiary rulings about the relevance of specific allegations set forth in a complaint,' id., and it 'doesn't permit piecemeal dismissal of parts of claims.' BBL, Inc. v. City of Angola, 809 F.3d 317, 325 (7th Cir. 2015) (emphasis in original). These arguments can and should be addressed at summary judgment.