## Facts

- AlterG, Inc., a medical device company, developed “anti-gravity” treadmills using Differential Air Pressure technology.
- From 2012–2015, AlterG pursued a “Low-Cost Platform Project” to design a lower-cost treadmill but ultimately did not commercialize it.
- Three former AlterG employees (including a former director) left the company, formed Boost Treadmills LLC, and developed competing treadmills.
- AlterG alleged the former employees had access to confidential R&D and business information and used that information—particularly from the low-cost project—to speed Boost’s product development.
- AlterG asserted ten claims, including patent infringement, trade secret misappropriation (federal and California), breach of contract (confidentiality agreements), breach of fiduciary duty, interference claims, false advertising, trade libel, unfair competition, and conspiracy.
- AlterG also alleged Boost made misleading claims about its product and disparaging statements about AlterG’s financial condition to potential customers.

## Issues

1. Whether the complaint plausibly alleged patent infringement by linking features of the accused products to each element of at least one asserted patent claim.
2. Whether the complaint identified alleged trade secrets with sufficient particularity and pleaded plausible misappropriation under federal and California law.
3. Whether the complaint adequately pleaded the material terms of the confidentiality agreements and specific conduct constituting breach.
4. Whether the complaint plausibly alleged a continuing fiduciary duty owed by a former director after departure and a breach of that duty.
5. Whether the complaint pleaded interference, false advertising, trade libel, unfair competition, and conspiracy with sufficient factual detail (and particularity where required).

## Decision

- The court granted defendants’ Rule 12(b)(6) motion and dismissed all causes of action.
- Patent infringement was dismissed because the pleading did not allege facts showing the accused treadmills practiced every limitation of an exemplary asserted claim.
- Trade secret misappropriation was dismissed because the alleged secrets were described in broad categories and were not separated from general industry knowledge, and the alleged misuse was not tied to specific information.
- Breach of contract was dismissed because the complaint did not set out the relevant confidentiality agreement terms or specify how particular provisions were breached.
- Breach of fiduciary duty was dismissed because the complaint did not plausibly allege a legally recognized continuing fiduciary obligation after the defendant ceased serving as a director.
- The remaining tort and statutory claims were dismissed for lack of specific facts about the challenged statements or conduct, the affected relationships or customers, and resulting harm; derivative claims failed with the underlying claims.
- Most dismissals were with leave to amend.

## Legal Principles

- Under Rule 12(b)(6), a complaint must allege nonconclusory facts that make liability plausible, not merely possible.
- A patent infringement claim must plausibly connect the accused product’s features to each element of at least one asserted claim; general assertions that a product “practices” patented technology are insufficient.
- Trade secret claims require identification of the alleged secrets with enough particularity to distinguish them from general skill or knowledge and to permit a meaningful response; categorical descriptions of broad business and technical information are inadequate.
- Contract claims must allege the essential contractual terms at issue and facts showing how the defendant’s conduct violated those terms.
- Fiduciary-duty allegations against former directors require a plausible basis for any post-departure duty; duties ordinarily end when the directorship ends absent pleaded special circumstances.
- Interference and related business torts must identify specific relationships or contracts, wrongful acts directed at them, and non-speculative damages; claims sounding in fraud require heightened particularity as to the misrepresentations.

## Conclusion

The court dismissed AlterG’s complaint in its entirety because it relied on generalized accusations rather than specific factual allegations tying defendants’ conduct to the elements of each claim, while allowing amendment to plead greater detail where a viable theory could be stated.


AlterG, Inc. v. Boost Treadmills LLC, 388 F. Supp. 3d 1133 (N.D. Cal. 2019)