CSS, Inc. v. Herrington

• Decision Date: 03 August 2017
• Docket Number: CIVIL ACTION NO. 2:16-cv-01762
• Parties: CSS, INC., Plaintiff, v. CHRISTOPHER HERRINGTON, et al., Defendants.
• Court: U.S. District Court — Southern District of West Virginia

CSS, INC., Plaintiff, v. CHRISTOPHER HERRINGTON, et al., Defendants.

CIVIL ACTION NO. 2:16-cv-01762

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA CHARLESTON DIVISION

August 3, 2017

AMENDED MEMORANDUM OPINION AND ORDER

Pending before the court is Plaintiff's Motion for Preliminary Injunction [ECF No. 65]. For the following reasons, the Motion is DENIED.

I. Background

The plaintiff, CSS, Inc. ("CSS"), has asked the court to preliminarily enjoin defendants, Christopher Herrington, Gene Yoho, and Compiled Technologies, LLC (collectively, "CT"), from "advertis[ing], licens[ing], offer[ing] to license, sell[ing] or otherwise mak[ing] available for use" CT's land indexing and estate management software; "offer[ing] or . . . provid[ing] support services" for CSS's software; or "mak[ing] use of any trade secrets, confidential information or proprietary information of CSS." Pl.'s Mot. Prelim. Inj. 1 [ECF No. 65]. However, CSS is unable to show a likelihood of success on any of the claims presently before the court, that irreparable harm will occur absent the injunction, that the balance of the hardships weighs in its favor, nor that an injunction is in the public interest. Thus, a preliminary injunction is not warranted.

II. Procedural History

CSS filed its Complaint [ECF No. 1] on February 23, 2016. On September 16, 2016, CSS filed its First Amended Complaint. First Am. Compl. [ECF No. 59]. CSS brings actions against CT for copyright infringement, breach of contract, violation of the duty of loyalty, tortious interference with business relationships, and misappropriation of trade secrets under the West Virginia Uniform Trade Secrets Act ("WVUSTA"). In their Answer, CT filed a counterclaim against CSS for tortious interference. Answer 11 [ECF No. 61].

On November 23, 2016, CSS filed Plaintiff's Motion for Preliminary Injunction wherein it asserted that it was likely to succeed on its copyright infringement, misappropriation of trade secrets claims, and breach of contract. Pl.'s Mot. Prelim. Inj. [ECF No. 65]. CT responded on December 13, 2016. Defs. Mem. Opp. Pls. Mot. Prelim. Inj. [ECF No. 68]. On December 16, 2016, CSS moved for an extension of time to reply to the defendants' response. Unopposed Mot. for Extension of Time to File a Reply to Defs. Mem. Opp. Pls. Mot. Prelim. [ECF No. 72]. I granted this Motion [ECF No. 73], and CSS filed a Reply Brief [ECF No. 74] on December 29, 2016.

On January 25, 2017, the court conducted a hearing on the Plaintiff's Motion for Preliminary Injunction. Prelim. Inj. Mot. Hr'g [ECF No. 82]. Because of the volume and length of evidence put forth, the hearing could not be completed in one afternoon. This matter was continued to February 23, 2017, and it was ultimately completed on February 24, 2017. See Order Continuing Prelim. Inj. Hr'g[ECF No. 84]; Mot. Hr'gs [ECF Nos. 89, 90]. On March 22, 2017, both parties filed their proposed findings of fact and conclusions of law. [ECF Nos. 106, 109, 110]. CSS's Motion is ripe for my review.

III. Findings of Fact

I need only make findings of fact pertinent to determining whether a preliminary injunction should issue. I FIND that the facts of this case are as follows:

1. CSS is a company that provides software and related support services to local government entities, namely county clerks in West Virginia. See Hr'g Tr., Jan. 25, 2017, Auburn Direct, 28:1-9.

2. CSS has been in business since 1983. See Hr'g Tr., Feb. 23, 2017, D. Herrington Direct, 105:11.

3. Kofile acquired CSS in May 2014. See Hr'g Tr., Jan. 25, 2017, Auburn Direct, 39:18-19.

4. For over twenty years, CSS has provided various software solutions including: a land records indexing package, an estate management package as well as utility billing, sheriff's tax collection, and other applications. See Hr'g Tr., Jan. 25, 2017, Auburn Direct, 28:1-4.

5. Defendant Christopher Herrington was first employed by CSS in October 1991. See Hr'g Tr., Feb. 23, 2017, C. Herrington Direct, 157:8-12, 190:14-15.

6. Christopher Herrington worked at CSS in the computer software, applications, and programming business related to county government information and document management systems. See Hr'g Tr., Feb. 23, 2017, C. HerringtonDirect, 157:8-12; see also Hr'g Tr., Jan. 25, 2017, Auburn Direct, 42:10-13.

7. During most of his employment with CSS, Christopher Herrington was a programmer, and his work included development of CSS's software, bug fixes, and modifications. See Hr'g Tr., Jan. 25, 2017, Auburn Direct, 14:14-23, 16:22-17:5.

8. Christopher Herrington also provided support for CSS software packages. Id. at 15:13-23.

9. Christopher Herrington's duties included programming responsibilities and support responsibilities for both the CSS land indexing software and the CSS estate management software. Id. at 16:2-9.

10. On August 23, 2014, Christopher Herrington resigned as an employee of CSS. See Hr'g Tr., Feb. 23, 2017, C. Herrington Direct, 190:14-15.

11. On September 6, 2014, Christopher Herrington returned to CSS. See Hr'g Tr., Feb. 23, 2017, C. Herrington Direct, 203:22-24.

12. On September 12, 2014, Christopher Herrington was required to sign a confidentiality agreement. See Hr'g Tr., Jan. 25, 2017, Auburn Direct, 44:14-45:2.

13. CSS had never required Christopher Herrington to sign a confidentiality agreement prior to September 12, 2014. See Hr'g Tr., Feb. 23, 2017, McCasker Redirect, 97:6-17; see also Hr'g Tr., Feb. 23, 2017, C. Herrington Cross, 239:3-8.

14. Christopher Herrington was employed by CSS until June 5, 2015. See Hr'g Tr.,Feb. 23, 2017, C. Herrington Direct, 203:22-24.

15. On August 12, 2015, Gene Yoho formed CT. See Hr'g Tr., Feb. 24, 2017, C. Herrington Direct, 43:19-44:5.

16. Gene Yoho and Christopher Herrington operate CT. See Hr'g Tr., Feb. 24, 2017, C. Herrington Direct, 43:19-44:5.

17. CT is in the business of licensing custom computer software applications. CT offers one program for land records recording and indexing and one for an estate management application. See Hr'g Tr., Feb. 24, 2017, C. Herrington Direct, 44:3-5; see also Hr'g Tr., Feb. 23, 2017, C. Herrington Cross, 242:9-11.

18. CT also provides support services to county clerks' offices related to these applications. See Hr'g Tr., Feb. 23, 2017, C. Herrington Cross, 242:9-11.

19. CT competes with CSS for West Virginia county clerk contracts. See Hr'g Tr., Feb. 24, 2017, C. Herrington Direct, 43:19-44:5.

20. CT's code is not a literal¹ copy of CSS's code. See Mot. by Defs. for Leave to File Under Seal Ex. 1, at 26 [ECF No. 70-1] ("McCasker Expert Report"); see also Hr'g Tr., Feb. 23, 2017, McCasker Cross, 9:7-10.

21. The programming language RM/COBOL ("COBOL") was used in the software of both CSS and CT. See McCasker Expert Report at 25; see also Mot. by Defs. for Leave to File Under Seal Ex. 2, at 3 [ECF No. 70-2] ("Zeidman Expert Report").

22. CSS uses COBOL version 11, and CT uses COBOL version 12. See McCasker Expert Report at 25.

23. CT's COBOL data files are structured differently than CSS's COBOL data files. See Hr'g Tr., Jan. 25, 2017, McCasker Direct, 115:14-15.

24. The parts of CSS's software relevant to this case consist of the following architecture and technology: a client application written in the Microsoft Visual Basic 6 computer language (VB6), a VanGUI Network Communication Interface Builder ("VanGUI"), TCP (Transmission Control Protocol) Sockets, an application server with data files written in COBOL, a Relativity Server, an ODBC (Open Database Connectivity) Interface, and Crystal Reports OCX. See McCasker Expert Report at 7-9.

25. The parts of CT's software relevant to this case consist of the following architecture and technology: a client application written in the C# computer language (pronounced "C-Sharp"), a Louis Network Communication Interface, TCP Sockets, an application server with data files written in COBOL, a Relativity Server, an ODBC Interface, and Crystal Reports. See Hr'g Tr., Feb. 24, 2017, C. Herrington Direct, 9-13.

26. CSS's software includes third-party components such as VB6, the VanGUI interface, the COBOL programming language, the Relativity server, and Crystal Reports. See Zeidman Expert Report at 14-18.

27. The intellectual property rights to the third-party components—VB6, the VanGUI interface, the COBOL programming language, the Relativity Server,and Crystal Reports—are not owned by any party to this case. See Hr'g Tr., Feb. 23, 2017, D. Herrington Cross, 148:21-149:12.

28. The source code was initially provided along with CSS's software applications and installed on servers owned by the various West Virginia county clerks' offices. See Hr'g Tr., Jan. 25, 2017, Auburn Direct, 31:1-9, 35:12-18; Defs. Exs. 2, 14 from Prelim. Inj. Mot. Hr'g [ECF Nos. 96-2, 96-13].

29. At some point after 2014, this practice was discontinued, and all of CSS's source code was removed from all county servers. See Hr'g Tr., Jan. 25, 2017, Auburn Direct, 31:1-9, 35:12-18.

30. Source code present on the county servers was available to anyone who had administrative rights² authorized by the county. Id. at 31:3-20, 35:15-18.

31. Some of CSS's contracts with county clerks' offices did not have any language requiring the county clerks to protect CSS's source code on the county servers. Id.

32. Some of CSS's contracts with the county clerks' offices did stipulate that the county must protect CSS's source code. Id. at 32:12-22.

33. CSS's corporate representative, Hubert "Bert" Auburn, does not know how many of CSS's contracts required the clerks' offices to protect CSS's source code. See Hr'g Tr., Jan. 25, 2017, Auburn Direct, 31:1-9; 35:15-18.

34. Bert Auburn does not know how many people had access to CSS's source code. Id. at 35.35. CSS founder, current employee, and father of defendant, Chris Herrington, Doug Herrington does not know how many people had access to CSS's source code. See Hr'g Tr., Feb. 23, 2017, D. Herrington Direct, 105:12-13, 106:14-17, 120:13-16, 121:24-122:1.

36. Bert Auburn does

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