1 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY 

DEMODULATION, INC., 

 Plaintiff, 

 v. 

APPLIED DNA SCIENCES, INC., et al.,

 Defendants.

Civ. No. 2:11-cv-00296 (WJM) 

OPINION

 

WILLIAM J. MARTINI, U.S.D.J.: 

Plaintiff Demodulation, Inc. (“Demod”) brings this action against four 

Defendants: (1) Corning Inc. (“Corning”); (2) Alfred University (the “University”); (3) 

Alfred Technology Resources, Inc. (“ATRI”); and (4) Applied DNA Sciences, Inc. 

(“Applied DNA”). All four Defendants have filed motions to dismiss. There was no oral 

argument. Fed. R. Civ. P. 78(b). For the reasons set forth below, all four motions are 

GRANTED in part, and DENIED in part. 

I. BACKGROUND 

The following facts are drawn from the Amended Complaint.1

 Plaintiff Demod is 

a technology start-up company with its principal place of business in Westwood, New 

Jersey. First Amended Complaint (“FAC” or “Amended Complaint”) ¶ 1, ECF No. 34. 

Defendant Applied DNA is a competing technology start-up company with its principal 

place of business in Stony Brook, New York. Id. ¶ 3. Peter Brocklesby was the former 

CEO of Applied DNA. Id. ¶ 41. He was replaced by Dr. James Hayward. Id. ¶ 29. 

Defendant Corning is a corporation with its principal place of business in Corning, New 

York. Id. ¶ 4. Defendant University is a private university located in Alfred, New York. 

Id. ¶ 5. Defendant ATRI is a non-profit joint venture between Corning and the 

University with its principal place of business in Alfred, New York. Id. ¶¶ 6, 20-21. 

 

1

 Plaintiff’s 17-Count Amended Complaint is not a model of focus or clarity, and many of the 

allegations appear to be out of chronological order. The following summary represents the 

Court’s best attempt to summarize the allegations. 

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Robert Ecklin was an Executive Vice President at Corning and the President of ATRI. 

Id. ¶ 19. 

ATRI and the University own and operate the Ceramics Corridor Innovation 

Center (the “CCIC”), a business incubator that helps start-up companies develop and 

market emerging ceramics-related technology. Id. ¶¶ 19-20. The CCIC was established 

with the help of grants from the New York State government. Id. The CCIC advertises 

that companies “under its care” can take advantage of services, including “intellectual 

property management,” “investor/strategic partner linkages,” “international trade 

assistance,” and “technology commercialization.” Id. ¶ 20. 

Demod owned certain patents and other intellectual property related to an 

amorphous glass-coated metal microwire. FAC ¶ 9. Microwire is a high-tech hair-like 

fiber with a unique signature that can be encoded and modified. Id. ¶¶ 13-15. 

Microwire is practically invisible, but the signal from a small strand of microwire can be 

detected from several kilometers away, even if no power source is connected to the 

microwire. Id. The properties of the microwire change based on changes in temperature 

and pressure, and biological and chemical conditions. Id. ¶ 15. Demod’s patents 

concern, among other things, several specific methods and systems for manufacturing 

and engineering microwire, and detecting and reading the signal produced by microwire 

at both short and long distances. Id. ¶ 14. The U.S. Department of Energy conducted an 

evaluation of Demod’s microwire technology and concluded that it had myriad 

applications for homeland security, national defense, article tracking and authentication, 

and the energy industry. Id. ¶ 15. 

In 2003, Demod entered into an agreement with the University to commercialize 

its microwire. FAC ¶ 17. Pursuant to this agreement, the University was granted a one 

percent (1%) royalty on all gross revenue recognized from the eventual sale of microwire 

products, in exchange for the University’s efforts to obtain state and federal funding for 

the research and development of the microwire technology. Id. At the time the parties 

entered the agreement, experts at the University determined that the annual market for 

microwire products was likely to be between $250,000,000 and $2,000,000,000. Id. ¶ 

18. As part of its agreement with Demod, the University invited Demod to become a 

tenant of the CCIC. FAC ¶ 19. Demod accepted this offer and moved into the CCIC in 

2003. Id. ¶ 21. Demod executed written non-disclosure agreements (“NDAs”) with the 

University, ATRI, and Corning to protect its trade secrets relating to the microwire. Id. ¶ 

22. Demod “revealed extensive trade secrets to these defendants.” Id. 

Demod alleges that the University, ATRI, and Corning failed to disclose various 

conflicts of interest while Demod was at the CCIC. FAC ¶ 23. Demod identifies four 

conflicts specifically. First, Demod alleges that Mr. Ecklin, the Corning and ATRI 

executive, was on the Board of Directors of the SUNY Research Foundation (the 

“Foundation”) with Dr. Hayward, the CEO of Demod’s competitor Applied DNA. Id. ¶ 

44. Second, Demod alleges that Corning had an undisclosed $57,000,000 venture with 

Elbit Systems, Ltd. (“Elbit”), a large Israeli defense contractor. Id. ¶¶ 23, 24. Elbit’s 

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subsidiary, Advanced Coding Systems (“ACS”), was producing “glass coated amorphous 

magnetic MicroWires” in Israel. Id. ¶ 23. Third, Corning allegedly paid $800,000,000 

to acquire Intellisense, a company that produced devices that could be used in wireless 

sensors. Id. ¶ 25. Fourth, Corning and the University allegedly formed the Center for 

Excellence in Photonics (“Infotonics”), a business incubator like the CCIC, to develop 

applications for remote micro-sensors. Id. at 26. 

Demod alleges that Defendants intentionally “blackball[ed]” Demod in order to 

protect their conflicting interests. FAC ¶ 38. Demod identifies five specific examples. 

First, Demod alleges that Corning provided Applied DNA with proprietary information 

concerning the characteristics and specifications of Demod’s microwire, and its methods 

for encoding and detecting microwire. Id. ¶ 29. Second, Demod alleges that Mr. Ecklin 

and Dr. Hayward used their positions at the Foundation to ensure that grants from the 

Foundation and “similar New York State entities” went to Applied DNA instead of 

Demod. Id. ¶¶ 29, 44. Third, Demod alleges that Mr. Ecklin publicly made false 

statements concerning Demod’s technology, telling various government officials that it 

was “insignificant and not deserving of investment,” and that Demod had stolen the 

technology from Corning. Id. ¶¶ 30-33. Fourth, Demod alleges that, after it began 

negotiations with a company called In-Q-Tel, a Corning executive who was on the Board 

at In-Q-Tel directed In-Q-Tel to deny Demod funding. Id. ¶ 36. Finally, Demod alleges 

that it provided confidential information to the Empire State Development Corporation 

(“ESDC”) to seek research funding, but was not told that the Chairman of the ESDC was 

a shareholder of Applied DNA. Id. ¶ 37. 

Demod alleges that, while it was being harmed, Applied DNA was benefiting from 

Defendants’ misconduct. Applied DNA received large amounts of funding from the 

Foundation, and secured military contracts for its products. Id. ¶ 39. Applied DNA also 

formed a business relationship with ACS to acquire ACS’s microwire product. Id. ¶ 40. 

In response to a press release announcing the joint venture between Applied DNA and 

ACS, Demod contacted Applied DNA’s then-CEO, Mr. Brocklesby. FAC ¶¶ 40-41. 

Demod asked Mr. Brocklesby how Applied DNA came into contact with ACS. Id. Mr. 

Brocklesby responded that he was “directed” to ACS by “an individual from New York.” 

Id. ¶ 41. Demod notified Mr. Brocklesby that the Applied DNA-ACS venture would 

likely infringe Demod’s patents. Id. ¶¶ 40-42. Mr. Brocklesby responded by telling 

Demod that Applied DNA had terminated its relationship with ACS. Id. ¶ 42. Shortly 

thereafter, Mr. Brocklesby was replaced by Mr. Hayward, and Applied DNA continued 

its relationship with ACS. Id. ¶ 44. In late 2006 or 2007, Applied DNA made a proposal 

to the Far East Empire Group in which Applied DNA represented that it produced “DNA 

Embedded Amorphous Micro Wire security products.” Id. ¶ 43. 

Demod’s tenancy at the CCIC was terminated in 2008. FAC ¶¶ 91, 57(b). Demod 

alleges that it suffered damages as a result of Defendants’ misconduct, including the loss 

of a lucrative contract with Family Dollar and the loss of the capital it used to pursue 

funding and business relationships. Id. ¶¶ 47-48. In addition, without any funding or 

investment, Demod was unable to pay the fees to maintain some of its patents. Id. ¶ 49. 

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II. LEGAL STANDARD 

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, 

in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. 

The moving party bears the burden of showing that no claim has been stated. Hedges v. 

United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under 

Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in 

the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); 

Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 

1998). 

Although a complaint need not contain detailed factual allegations, “a plaintiff’s 

obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels 

and conclusions, and a formulaic recitation of the elements of a cause of action will not 

do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations 

must be sufficient to raise a plaintiff’s right to relief above a speculative level, such that it 

is “plausible on its face.” See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc., 

542 F.3d 59, 64 (3d Cir. 2008). 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, 129 S.Ct. 1937, 1949 (2009) (citing 

Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin to a 

‘probability requirement’ . . . it asks for more than a sheer possibility.” Iqbal, 129 S.Ct. 

at 1949 (2009). 

Pursuant to Federal Rule of Civil Procedure 9(b), a plaintiff alleging fraud must 

state the circumstances of the alleged fraud with sufficient particularity to place the 

defendant on notice of the “precise misconduct with which [it is] charged.” Frederico v. 

Home Depot, 507 F.3d 188, 200 (3d Cir. 2007) (quoting Lum v. Bank of America, 361 

F.3d 217, 223-224 (3d Cir.2004)) (internal quotation marks omitted). To satisfy this 

standard, the plaintiff must plead or allege the date, time and place of the alleged fraud or 

otherwise inject precision or some measure of substantiation into a fraud allegation. Id.

III. DISCUSSION 

Demod asserts seventeen causes of action in its Amended Complaint: 

(1) Count 1 – NJ Civil RICO (NJSA 2C:41-2(c)) against all Defendants; 

(2) Count 2 – NJ RICO Conspiracy (NJSA 2C:41-2(d)) against all Defendants; 

(3) Count 3 – Federal Civil RICO against Corning and the University; 

(4) Count 4 – State and Federal Antitrust Violations against all Defendants; 

(5) Count 5 – Breach of Contract against the University; 

(6) Count 6 – Piercing the Corporate Veil against the University and Corning; 

(7) Count 7 – Breach of Contract against ATRI; 

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(8) Count 8 – Breach of Contract against Corning; 

(9) Count 9 – Trade Libel against Corning; 

(10) Count 10 – Misappropriation of Trade Secrets against all Defendants; 

(11) Count 11 – Unfair Competition against Corning, the University, and ATRI; 

(12) Count 12 –NY General Business Law Violations against ATRI; 

(13) Count 13 – Section 1983 Violations against ATRI; 

(14) Count 14 – Patent Infringement against Applied DNA; 

(15) Count 15 – Fraud against the University, Corning, and ATRI; 

(16) Count 16 – Unjust Enrichment against the University; and 

(17) Count 17 – Breach of Fiduciary Duty against ATRI. 

Defendants have moved to dismiss every Count except for Count 5 (Breach of 

Contract against the University). The University has also requested that the Court strike 

the deposition transcript attached to Demod’s brief, along with the brief itself. The Court 

will address the request to strike, and will then address each Count in turn. 

A. The University’s Request to Strike the Goldstein Deposition 

Demod attached to its opposition brief a 36-page transcript for the “Deposition of 

Alan Goldstein.” ECF No. 57-3. The University argues that Demod took the Goldstein 

deposition in violation of the Federal Rules, and that the Court should strike the 

deposition and Demod’s brief as a sanction. 

The Court finds that the Goldstein deposition was taken in violation of the Federal 

Rules. Demod took this deposition before discovery began, without notice to any of the 

other parties, and without the presence of any attorneys for Defendants. This was a 

violation of Federal Rules of Civil Procedure 30(b)(1) and 26(d)(1). In addition, Mr. 

Goldstein was subject to a confidentiality agreement with the University, and the 

University had previously denied a request from Demod’s counsel for permission to 

speak with him. As a sanction for these violations, the Court will strike the Goldstein 

deposition. The Court will not strike Demod’s opposition brief. However, the Court 

cautions Plaintiff’s counsel that any further violations of the Federal Rules will result in 

the imposition of more serious sanctions. 

B. Counts 1 and 2 – NJ Civil RICO Claims against All Defendants 

In Counts 1 and 2, Plaintiff asserts claims for violations of the New Jersey Civil 

RICO statute (N.J.S.A. 2C:41-2(c)) and the New Jersey Civil RICO conspiracy statute 

(N.J.S.A. 2C:41-2(d)) against all Defendants. All four Defendants have moved to 

dismiss. The Court finds that the motions to dismiss Counts 1 and 2 should be granted. 

 New Jersey RICO, which is targeted to “organized crime and organized crime type 

activities,” N.J.S.A. § 2C:41-1.1, makes it unlawful for anyone associated with an 

enterprise engaged in or associated with commerce to participate in the conduct of the 

enterprise through a pattern of racketeering activity. N.J.S.A. § 2C:41-2(c). To establish 

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an entitlement to relief for a violation of N.J. RICO, a plaintiff must prove: 1) the 

existence of an enterprise; 2) engaged in or conducting activities affecting commerce; 3) 

in which the defendant was associated; 4) and engaged in the conduct of the enterprise’s 

affairs; and 5) that defendant’s participation in the conduct of the enterprise was done 

through a pattern of racketeering activity. Ford Motor Co. v. Edgewood Prop., Inc., No. 

06-1278, 2009 U.S. Dist. LEXIS 4172, at *38 (D.N.J. 2009). In addition, a plaintiff must 

allege that it was injured as a result of the violation. Maxim Sewerage Corp. v. 

Monmouth Ridings, 273 N.J. Super. 84, 94 (Law. Div. 1993); N.J.S.A. § 2C:41-4(c). 

In this case, Plaintiff alleges that there were two enterprises: (1) the “ADNAS 

Enterprise,” which involved all four Defendants; and (2) the “CCIC Enterprise,” which 

involved Corning, the University, and ATRI. FAC ¶ 52. Plaintiff alleges that the goal of 

the enterprise was to “unlawfully capture and control emerging technologies like 

Demod’s and the funding of those technologies for [Defendants’] own direct or indirect 

benefit.” FAC ¶ 56. Plaintiff alleges that Defendants committed a total of eleven 

predicate acts in furtherance of the pattern of racketeering activity, including economic 

espionage (18 U.S.C. § 1831) and mail and wire fraud (18 U.S.C. §§ 1341, 1343, 1346). 

Plaintiff has failed to state a claim for N.J. RICO because Plaintiff failed to 

properly allege the existence of an enterprise. In determining whether a group has the 

“high degree of planning, cooperation and coordination” necessary to constitute an 

enterprise, courts look at many factors, including how the group is structured, “how the 

participants associated with each other, whether the participants each performed discrete 

roles in carrying out the scheme, the level of planning involved, how decisions were 

made, [and] the coordination involved in implementing decisions.” State v. Ball, 141 

N.J. 142, 162-63 (1995). In this case, Plaintiff did not even allege facts suggesting that 

Defendants worked together as a group, let alone that the group had a structure or made 

plans or coordinated any activities. Further, Plaintiff asserts that there are two 

enterprises, but does not explain what each enterprise did or how they are distinct.2

Accordingly, the motions to dismiss Counts 1 and 2 are GRANTED, and both 

Counts are DISMISSED WITHOUT PREJUDICE.

3

 

2

 Further, many of the predicate acts listed in the Amended Complaint are improperly pled. For 

example, Plaintiff alleges that Defendants violated 18 U.S.C. § 1831, an economic espionage 

statute that punishes those who leak trade secrets to a foreign government, but Plaintiff fails to 

allege the involvement of any foreign government. 

3

 Throughout the motions to dismiss, Defendants argue that Plaintiff’s claims are time-barred by 

the applicable statute of limitations. For example, Defendants argue that the N.J. RICO claims 

are time-barred by New Jersey’s four-year statute of limitations. Unfortunately, the Amended 

Complaint is a morass of disjointed vignettes with no clear chronology and very few dates, so the 

Court is unable to make statute of limitations determinations at this time. See Bethel v. Jendoco 

Constr. Corp., 570 F.2d 1168, 1174 (3d Cir. 1978) (if a statute of limitations “bar is not apparent 

on the face of the complaint, then it may not afford the basis for a dismissal of the complaint 

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C. Count 3 – Federal Civil RICO Claim against Corning and the 

University 

In Count 3, Plaintiff asserts a claim for Federal Civil RICO under 18 U.S.C. § 

1962(c) against Corning and the University. Both Defendants move to dismiss. The 

Court finds that the motions to dismiss Count 3 should be granted. 

RICO makes it unlawful for “any person employed by or associated with any 

enterprise ... to participate ... in the conduct of such enterprise’s affairs through a pattern 

of racketeering activity.” 18 U.S.C. § 1962(c). In order to state a violation of Section 

1962(c), a plaintiff must show 1) an enterprise affecting interstate commerce, 2) in which 

the defendant was associated, 3) and in the conduct or affairs of which the defendant 

participated, 4) through a pattern of racketeering activities. In re Ins. Brokerage Antitrust 

Litig., 618 F.3d 300, 362 (3d Cir. 2010). To establish a pattern of racketeering, a plaintiff 

must show that each defendant committed at least two predicate acts of racketeering from 

the list of acts set forth in 18 U.S.C. § 1961. 18 U.S.C. § 1961(5); H.J. Inc. v. 

Northwestern Bell Tel. Co., 492 U.S. 229, 240 (1989). Plaintiff must also demonstrate 

that it suffered harm as a proximate result of the alleged RICO activity. 

In this case, Plaintiff failed to state a claim for a Federal RICO violation. Plaintiff 

alleges that Corning and the University operated the CCIC as a RICO enterprise. 

However, Plaintiff fails to allege any racketeering activity. Plaintiff does not specify the 

predicate acts upon which its Federal RICO claim is based, except to say that Defendants 

committed wire fraud by listing Plaintiff as a CCIC graduate on the CCIC website. 

Plaintiff fails to explain how listing it as a graduate constitutes wire fraud. Even if it 

were wire fraud, it would only constitute one predicate act. Further, Plaintiff fails to 

explain how this website listing proximately caused it any injury. 

Accordingly, the motions to dismiss Count 3 are GRANTED, and Count 3 is 

DISMISSED WITHOUT PREJUDICE. 

D. Count 4 – State and Federal Antitrust Violations against All 

Defendants 

In Count 4, Plaintiff asserts a claim against all Defendants for violations of Section 

1 of the Sherman Act and New Jersey’s parallel antitrust statute, N.J.S.A. § 56:9-3. All 

four Defendants have moved to dismiss. The Court finds that the motions to dismiss 

Count 4 should be granted for at least two reasons. 

First, Plaintiff has failed to adequately allege an agreement on the part of 

Defendants to restrain interstate commerce. In order to establish a Section 1 violation, a 

plaintiff must establish the existence of an illegal agreement and a resulting injury to 

 

under Rule 12(b)(6)”). Defendants may re-raise their statute of limitations arguments later in the 

litigation. 

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commerce. See 15 U.S.C. § 1; W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 

85, 99 (3d Cir. 2010). To plead such an illegal agreement, a plaintiff may allege direct 

evidence, circumstantial evidence, or a combination thereof. Id. at 99. In this case, 

Plaintiff fails to plead facts suggesting that the four Defendants had come to any sort of 

agreement to restrain trade or boycott Plaintiff. Plaintiff’s allegations are therefore 

insufficient to state an antitrust claim. See Burtch v. Milberg Factors, Inc., 662 F.3d 212, 

225 (3d Cir. 2011). 

Second, the Amended Complaint contains no allegations concerning the relevant 

market, an essential component of any antitrust claim. See Queen City Pizza, Inc. v. 

Domino’s Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997). The boundaries of the relevant 

product market are drawn by establishing a “reasonable interchangeability of use or the 

cross-elasticity of demand between the product itself and substitutes for it.” Id. at 436. 

While the Amended Complaint references microwire and states that Defendants are 

Plaintiff’s competitors, it does not include any allegations regarding the relevant market 

size, geographical location, or what would constitute interchangeable substitute products. 

Thus, Plaintiff has failed to state a claim. 

Accordingly, the motions to dismiss Count 4 are GRANTED, and Count 4 is 

DISMISSED WITHOUT PREJUDICE. 

E. Count 6 – Piercing the Corporate Veil against the University and 

Corning 

In Count 6, Plaintiff asserts that the Court should pierce the corporate veil and 

hold Corning and the University liable for ATRI’s conduct. Corning and the University 

move to dismiss. The Court finds that the motions to dismiss Count 6 should be granted. 

New York courts4

 typically decline to pierce the corporate veil absent 

extraordinary circumstances. See Bridgestone/Firestone, Inc. v. Recovery Credit Servs., 

Inc., 98 F.3d 13, 17 (2d Cir. 1996) (noting that “New York courts disregard corporate 

form reluctantly”). To justify piercing the corporate veil, a plaintiff must show that 1) the 

owner of the corporate entity dominated the corporation such that the corporation has 

become a mere instrumentality of its owner; and 2) the owner used its domination of the 

entity to commit a fraud or wrong against the plaintiff which resulted in the plaintiff’s 

injury. Matter of Morris v. N.Y. State Dep’t of Taxation and Fin., 603 N.Y.S.2d 807, 

810-11 (1993); Thrift Drug, Inc. v. Universal Prescription Adm’rs, 131 F.3d 95, 97 (2d 

Cir. 1997). With regard to the first element of the test, New York courts consider a 

number of factors to determine whether the requisite degree of domination is present, 

including the absence of corporate formalities such as the election of directors; 

intermingling funds; overlap in officers, directors, and personnel; common office space; 

 

4

 Defendants assert that New York law applies to this claim. Plaintiff does not dispute that New 

York law applies. Thus, the Court will apply New York law. 

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and the arm’s lengths dealings between the owner and the corporate entity. Wm. 

Passalacqua Builders v. Resnick Developers, 933 F.2d 131, 139 (2d Cir. 1991). 

In this case, the allegations in the Amended Complaint are insufficient to satisfy 

the domination prong of the veil piercing test. With the exception of a single allegation 

that “Employees of both Corning and [the University] simultaneously served as the 

management of ATRI,” FAC ¶ 98, Plaintiff does not allege any facts to establish the 

absence of corporate formalities or the existence of any of the other Passalacqua factors. 

That one allegation, without more, cannot support a claim for piercing the corporate veil.5

 

See In re Currency Conversion Fee Antitrust Litig., 265 F. Supp. 2d 385, at 426-27 

(S.D.N.Y. 2003); Goldman v. Chapman, 844 N.Y.S.2d 126, 127-28 (2d Dep’t 2007). 

Accordingly, the motions to dismiss Count 6 are GRANTED, and Count 6 is 

DISMISSED WITHOUT PREJUDICE. 

F. Count 7 – Breach of Contract against ATRI 

In Count 7, Plaintiff asserts a claim for breach of contract against ATRI. ATRI 

moves to dismiss. The Court finds that the motion to dismiss Count 7 should be granted. 

Under New York6

 law, a complaint for breach of contract must allege: “(1) the 

existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) 

breach of contract by the defendant, and (4) damages.” Harsco Corp. v. Segui, 91 F.3d 

337, 348 (2d Cir. 1996). A “court cannot enforce a contract unless it is able to determine 

what in fact the parties have agreed to... If an agreement is not reasonably certain in its 

material terms, there can be no legally enforceable contract.” 166 Mamaroneck Ave. 

Corp. v. 151 East Post Road Corp., 571 N.Y.S.2d 686, 687 (1991). 

In this case, Plaintiff fails to allege the most basic of the four requirements: the 

existence of an agreement. The Amended Complaint does not identify any contract 

between the parties: not a lease, or a partnership agreement, or even an oral contract. 

Instead, the Amended Complaint simply quotes various CCIC advertising materials, and 

then states that the advertised services were not provided to Plaintiff. See FAC ¶¶ 20-21. 

The Amended Complaint also fails to identify when the alleged agreement was entered 

into, what the terms of the agreement were, how long the agreement was to last, and what 

consideration was provided by each party. Plaintiff has therefore failed to state a claim 

 

5

 Plaintiff attaches advertising and financial documents to its opposition brief, and makes new 

allegations regarding the overlap in the entities’ officers and directors. However, these 

allegations were not included in the Amended Complaint, and these documents are not properly 

considered on a motion to dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 

1426 (3d Cir. 1997) (A district court ruling on a motion to dismiss may not consider matters 

extraneous to the pleadings). 

6

 Plaintiff concedes that New York law applies to Count 7. Pl.’s Opp Br. at 26. 

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for breach of contract. See Chrysler Capital Corp. v. Hilltop Egg Farms Inc., 514 

N.Y.S.2d 1002, 1003 (3d Dept. 1987). 

Accordingly, the motion to dismiss Count 7 is GRANTED, and Count 7 is 

DISMISSED WITHOUT PREJUDICE. 

G. Count 8 – Breach of Contract against Corning 

In Count 8, Plaintiff asserts a claim for breach of contract against Corning. 

Corning moves to dismiss. The Court finds that the motion to dismiss Count 8 should be 

denied. 

To plead a breach of contract claim under New Jersey7

 law, a plaintiff must allege 

that (1) there was a contract; (2) that contract was breached; (3) the breach resulted in 

damages; and (4) the person suing for breach performed his own contractual duties. See

Cotter v. Newark Housing Auth., 422 Fed. App’x. 95, 98 (3d Cir. 2011). In this case, 

Plaintiff alleges that it entered into an NDA with Corning, Corning breached the NDA by 

sharing Plaintiff’s confidential information with other entities (including Applied DNA), 

and Plaintiff was damaged when its trade secrets were leaked to a competitor. See FAC 

¶¶ 109-115. Thus, Plaintiff has stated a breach of contract claim against Corning.8

Corning argues that Plaintiff’s claim is barred by New Jersey’s six-year statute of 

limitations for breach of contract actions. N.J.S.A. § 2A:14-1. In support of its 

argument, Corning attached a series of documents to its motion, including a January 9, 

2005 letter from Plaintiff to Corning, raising concerns that Corning had breached the 

NDA. However, it is well-settled that if a statute of limitations “bar is not apparent on 

the face of the complaint, then it may not afford the basis for a dismissal of the complaint 

under Rule 12(b)(6).” Bethel v. Jendoco Constr. Corp., 570 F.2d 1168, 1174 (3d Cir. 

1978); see also Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n. 1 

(3d Cir. 1994) (“Fed.R.Civ.P. 8(c) indicates that a statute of limitations defense cannot be 

used in the context of a Rule 12(b)(6) motion to dismiss[; the only] exception is [if] the 

complaint facially shows noncompliance with the limitations period”); 5A Wright and 

Miller, Federal Practice and Procedure: Civil 2d, § 1357. Corning’s statute of limitations 

argument is based entirely on documents that are not properly considered on a motion to 

dismiss. 

Accordingly, the motion to dismiss Count 8 is DENIED. 

 

7

 The parties agree that New Jersey law governs this claim because the NDA between Plaintiff 

and Corning includes a New Jersey choice of law provision. 

8

 It is unclear if Plaintiff is alleging the breach of an additional contract with Corning. Compare

FAC ¶ 109 (“Demod entered one or more contracts with Corning”) with FAC ¶¶ 110-112 (stating 

that Corning “breached the contract”). If Plaintiff is alleging the breach of a contract other than 

the NDA, that claim is dismissed without prejudice for failure to identify the contract. 

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H. Count 9 – Trade Libel against Corning 

In Count 9, Plaintiff asserts a claim for trade libel against Corning. Corning 

moves to dismiss. The Court finds that the motion to dismiss Count 9 should be granted. 

To state a claim for trade libel under New York9

 law, a plaintiff must allege that 

the defendant: 1) published an oral defamatory statement concerning the quality of 

another’s goods; 2) to a third party; 3) with malice; 4) resulting in special damages to the 

plaintiff. Alt. Electrodes, LLC v. Empi, Inc., 597 F. Supp. 2d 322, 336-37 (E.D.N.Y. 

2009). “[S]pecial damages must be fully and accurately stated, with sufficient 

particularity to identify actual losses.” MapInfo Corp. v. Spatial Re-Engineering 

Consultants, No. 02-1008, 2006 WL 2811816, at *13 (N.D.N.Y Sept. 28, 2006); see also

Alt. Electrodes, 597 F. Supp. 2d at 337-38 (dismissing trade libel claim because plaintiff 

failed to itemize special damages). 

In this case, Plaintiff fails to state a claim for trade libel. In Count 9 of the 

Amended Complaint, Plaintiff states that its libel claim is based on “statements described 

above,” made by Corning representatives. FAC ¶¶ 117-121. However, the only 

“statement[] described above” that maligned the quality of Plaintiff’s goods is a 

comment, allegedly made by Mr. Ecklin, that Plaintiff’s technology was “insignificant 

and not deserving of investment.” FAC ¶ 30. Plaintiff fails to tie this comment to any 

actual loss. In addition, Plaintiff does not even attempt to itemize its special damages. 

Accordingly, the motion to dismiss Count 9 is GRANTED, and Count 9 is 

DISMISSED WITHOUT PREJUDICE. 

I. Count 10 – Misappropriation of Trade Secrets against all Defendants 

In Count 10, Plaintiff asserts a claim for misappropriation of trade secrets against 

all Defendants. All four Defendants move to dismiss. The Court finds that Corning, the 

University, and ATRI’s motions to dismiss Count 10 should be denied, and Applied 

DNA’s motion should be granted. 

The Court must first determine whether New York or New Jersey law applies to 

the misappropriation claim. The parties raised the choice of law issue, but did not brief 

the issue or take a position on which state’s law applies. Under the first step of New 

Jersey’s two-step “most significant relationship” test, the Court finds that an actual 

conflict exists between New York and New Jersey law. See P.V. v. Camp Jaycee, 197 

N.J. 132, 142-43 (2008). A New Jersey plaintiff must allege six factors to state a claim 

for misappropriation, while a New York plaintiff need only allege two. Compare 

Rycoline Prod., Inc. v. Walsh, 334 N.J. Super. 62, 71 (App. Div. 2000) with Novus 

Partners, Inc. v. Vainchenker, 938 N.Y.S.2d 228 (Sup. Ct. N.Y. 2011). Under the second 

 

9

 Corning asserts that New York law applies to this claim. Plaintiff does not dispute that New 

York law applies. Thus, the Court will apply New York law. 

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step, the Court finds that New York has the most significant relationship to the claim. 

The Defendants and the CCIC are all located in New York, and all of the alleged 

misappropriation took place in New York. Thus, the Court will apply New York law.

Under New York law, a plaintiff must allege that the defendant (1) came into 

possession of a trade secret of plaintiff’s, and (2) used that trade secret in breach of an 

agreement, confidence, or duty or as a result of discovery by improper means. Novus 

Partners, 938 N.Y.S.2d at 228. Plaintiff alleges that it entered NDAs with Corning, the 

University, and ATRI, and then disclosed trade secrets to those Defendants regarding the 

methods and systems for manufacturing and engineering microwire. See FAC ¶¶ 14, 22-

23. Plaintiff alleges that the Defendants disclosed Plaintiff’s trade secrets to Plaintiff’s 

competitors, in breach of the NDAs. See, e.g., FAC ¶ 29. Thus, Plaintiff stated a claim 

for misappropriation against Corning, the University, and ATRI. Plaintiff fails to state a 

claim against Applied DNA, as Plaintiff does not allege the existence of an NDA, or a 

confidence or duty that Applied DNA owed to Plaintiff. 

Accordingly, Corning, the University, and ATRI’s motions to dismiss Count 10 

are DENIED. Applied DNA’s motion is GRANTED, and Count 10 is DISMISSED 

WITHOUT PREJUDICE with respect to Applied DNA. 

J. Count 11 – Unfair Competition against Corning, the University, and 

ATRI 

In Count 11, Plaintiff asserts a claim for unfair competition and tortious 

interference with prospective business relations against Corning, the University, and 

ATRI. Defendants move to dismiss this claim. The Court finds that the motion to 

dismiss Count 11 should be denied. 

Under New Jersey10 law, to state a claim of tortious interference with prospective 

economic advantage, a plaintiff must allege that: (1) the plaintiff has a reasonable 

expectation of economic advantage; (2) the interference or harm was done intentionally 

and with “malice”; (3) the interference caused the alleged loss of prospective economic 

gain; and (4) the injury caused damages. Printing Mart–Morristown v. Sharp Elecs. 

Corp., 563 A.2d 31, 37 (N.J. 1989). In this case, Plaintiff alleges that (1) it had 

reasonable expectations that it would be able to sell its microwire products to a large 

market; (2) Defendants intentionally interfered by blocking Plaintiff’s attempts to 

develop relationships with potential clients and investors; (3) the interference caused 

Plaintiff to lose these opportunities, and (4) the loss of these opportunities caused 

Plaintiff damages, including numerous out of pocket costs and the loss of some of its 

patents. Defendants argue that this claim duplicate’s Plaintiff’s breach of contract claims, 

but that is not the case. The contract claims allege that Defendants disclosed Plaintiff’s 

 

10 Defendants cite to the law of New Jersey, and Plaintiff does not take a position on choice of 

law. Thus, for the purposes of this motion, the Court will apply New Jersey law. 

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trade secrets, while the tortious interference claim alleges that Defendants interfered with 

Plaintiff’s prospective business opportunities. 

Accordingly, the motions to dismiss Count 11 are DENIED. 

K. Count 12 – NY General Business Law Violations against ATRI 

In Count 12, Plaintiff asserts a claim for violations of New York General Business 

Law §§ 349 and 350 against ATRI. ATRI moves to dismiss. The Court finds that the 

motion to dismiss Count 12 should be granted. 

To make out a prima facie case under Section 349, a plaintiff must demonstrate 

that: 1) the defendant’s deceptive acts were directed at consumers, 2) the acts are 

misleading in a material way, and 3) the plaintiff has been injured as a result. See 

Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25 

(1995). “Private contract disputes, unique to the parties . . . would not fall within the 

ambit of the statute.” Id. The same standards are applied to Section 350. See Galerie 

Furstenberg v. Coffaro, 697 F. Supp. 1282, 1291-92 (S.D.N.Y.1988) (denying recovery 

under Section 350 where plaintiff was not an injured consumer and did not allege injury 

to public at large). 

In this case, Plaintiff alleges that ATRI falsely listed Plaintiff as a graduate of the 

CCIC and failed to provide Plaintiff with the business incubation services that it 

advertised. Thus, ATRI’s deceptive acts were directed at Plaintiff, and not at any set of 

consumers. See Maurizio v. Goldsmith, 230 F.3d 518, 522 (2d Cir. 2000) (dismissing 

claim because “dispute [was] fairly characterized as private”). Further, Plaintiff fails to 

specify what, if any, harm it sustained as a result of these alleged violations. 

Accordingly, the motion to dismiss Count 12 is GRANTED, and Count 12 is 

DISMISSED WITHOUT PREJUDICE. 

L. Count 13 – Section 1983 Violations against ATRI 

In Count 13, Plaintiff asserts a claim for violations of 42 U.S.C. § 1983 against 

ATRI. ATRI moves to dismiss. The Court finds that the motion to dismiss Count 13 

should be granted. 

Section 1983 allows an individual to bring suit against persons who, under color of 

state law, have caused him to be “deprived of any rights, privileges, or immunities 

secured by the Constitution and laws” of the United States. Lugar v. Edmondson Oil Co., 

Inc., et al., 457 U.S. 922 (1982); 42 U.S.C. § 1983. Where the defendant is a private 

entity, “the plaintiff must show that there is such a close nexus between the State and the 

challenged action that seemingly private behavior may be fairly treated as that of the 

State itself.” Tancredi v. Metro. Life Ins. Co., 316 F.3d 308, 312 (2d Cir. 2003); see also 

West v. Atkins, 487 U.S. 42, 49 (1988). Plaintiff argues that ATRI was acting under color 

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of state law because ATRI received funding from the State of New York. However, 

accepting government grants does not render an entity a “state actor” under Section 1983. 

Rendell-Baker v. Kohn, 457 U.S. 830 (1982). In fact, no reasonable interpretation of the 

facts of this case could support a showing that ATRI’s actions were “fairly attributable” 

to the state. Blum v. Yaretsky, 457 U.S. 991, 1004 (1982). 

Accordingly, the motion to dismiss Count 13 is GRANTED, and Count 13 is 

DISMISSED WITH PREJUDICE. 

M. Count 14 – Patent Infringement against Applied DNA 

In Count 14, Plaintiff asserts a claim against Applied DNA for direct infringement 

of Plaintiff’s patents. Applied DNA moves to dismiss. The Court finds that the motion 

to dismiss Count 14 should be denied. 

The Federal Circuit has held that a plaintiff can state a claim for direct 

infringement by pleading the factors set forth in Federal Rule of Civil Procedure Form 

18, namely: “(1) an allegation of jurisdiction; (2) a statement that plaintiff owns the 

patent; (3) a statement that defendant has been infringing the patent by ‘making, selling, 

and using [the device] embodying the patent’; (4) a statement that the plaintiff has given 

the defendant notice of its infringement; and (5) a demand for an injunction and 

damages.” McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007). In this 

case, the Amended Complaint alleges that: (1) the Court has jurisdiction; (2) Plaintiff 

owns or owned 13 microwire-related patents; (3) Applied DNA infringed those patents 

by making, selling, and using “DNA Embedded Amorphous Micro Wire security 

products” (FAC ¶ 43); (4) Plaintiff gave Applied DNA written notice of infringement; 

and (5) Plaintiff is entitled to damages. Thus, Plaintiff has properly stated a claim for 

direct infringement. 

Accordingly, the motion to dismiss Count 14 is DENIED. 

N. Count 15 – Fraud against the University, Corning, and ATRI 

In Count 15, Plaintiff asserts a claim for fraud against the University, Corning, and 

ATRI. Defendants move to dismiss. The Court finds that the motion to dismiss Count 15 

should be granted. 

Under New Jersey11 law, a plaintiff claiming fraud must allege that a defendant 1) 

misrepresented a fact; 2) fraudulently; 3) intending to cause the plaintiff to rely thereon; 

4) inducing such reliance; and 5) to plaintiff’s injury. Averbach v. Rival Mfg. Co., 809 F. 

2d 1016, 1019 (3d Cir. 1987). A plaintiff must allege fraud with precision. Fed. R. Civ. 

P. 9(b). In Count 15, Plaintiff alleges that “defendants knowingly made material 

misrepresentations or omissions of fact,” but Plaintiff does not identify any of these 

 

11 The parties agree that New Jersey law applies to this claim. 

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statements or omissions. FAC ¶ 146. In its opposition brief, Plaintiff directs the Court to 

a few scattered allegations elsewhere in the Amended Complaint, but these allegations 

are far too imprecise to survive Rule 9(b). For example, Plaintiff alleges that “Corning, 

[the University,] and ATRI created the false impression that they were operating the 

CCIC as a legitimate business incubator,” FAC ¶ 57(a), but Plaintiff does not specify 

what was said, who said it, when it was said, where it was said, etc. Thus, Plaintiff failed 

to state a claim for fraud. 

Accordingly, the motion to dismiss Count 15 is GRANTED, and Count 15 is 

DISMISSED WITHOUT PREJUDICE. 

O. Count 16 – Unjust Enrichment against the University 

In Count 16, Plaintiff asserts a claim for unjust enrichment against the University. 

The University moves to dismiss this claim. The Court finds that the motion to dismiss 

Count 16 should be granted. A “[p]laintiff may not bring an unjust enrichment claim 

while also pleading the existence of a contract.” Am. Rubber & Metal Hose Co., Inc. v. 

Strahman Valves, Inc., No. 11-1279, 2011 WL 3022243 (D.N.J. July 22, 2011) (quoting 

Oswell v. Morgan Stanley Dean Witter & Co., Inc., No. 06–5814, 2007 WL 1756027, at 

*9 (D.N.J. June 18, 2007)). In Count 5, Plaintiff asserts a breach of contract claim 

against the University. Thus, Plaintiff cannot state a claim for unjust enrichment. 

Accordingly, the motion to dismiss Count 16 is GRANTED, and Count 16 is 

DISMISSED WITH PREJUDICE. 

P. Count 17 – Breach of Fiduciary Duty against ATRI 

In Count 17, Plaintiff asserts a claim for breach of fiduciary duty against ATRI. 

ATRI moves to dismiss. The Court finds that the motion to dismiss Count 17 should be 

granted. A fiduciary is bound by a standard of utmost good faith, fairness and loyalty. 

See Newburger, Loeb & Co. v. Gross, 563 F.2d 1057, 1078 (2d Cir. 1977). To state a 

claim for breach of fiduciary duty, a plaintiff must show that there is a “special 

relationship” between the parties that gives rise to this heightened duty. Litton Indus., 

Inc. v. Lehman Bros. Kuhn Loeb Inc., 767 F. Supp. 1220, 1231 (S.D.N.Y. 1991), rev'd on 

other grounds, 967 F.2d 742 (2d Cir. 1992). In this case, Plaintiff has failed to allege 

anything more than a business relationship: Plaintiff alleges that ATRI advertised its 

business incubation services, and Plaintiff sought to take advantage of those services. 

Offering business services does not give rise to a heightened duty. Accordingly, the 

motion to dismiss Count 17 is GRANTED, and Count 17 is DISMISSED WITHOUT 

PREJUDICE. 

IV. CONCLUSION 

For the reasons stated above, Defendants’ motions to dismiss are GRANTED in 

part, and DENIED in part. Counts 13 and 16 are dismissed with prejudice. Counts 1, 2, 

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3, 4, 6, 7, 9, 10 (against Applied DNA), 12, 15, and 17 are dismissed without prejudice. 

Counts 5, 8, 10 (against Corning, the University, and ATRI), 11, and 14 will proceed. 

Plaintiff will be permitted to file a Second Amended Complaint. However, Plaintiff 

should be mindful that having one well-pleaded claim is better than having one hundred 

poorly-pleaded claims, and that failure to plead viable claims in the Second Amended 

Complaint will likely result in dismissal with prejudice. An appropriate order follows. 

 /s/ William J. Martini 

 WILLIAM J. MARTINI, U.S.D.J. 

Date: December 12, 2012 

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