Digital Drilling Data Sys., L. L.C. v. Petrolink Servs., Inc.

• Decision Date: 02 July 2020
• Docket Number: No. 19-20116,19-20116
• Citation: 965 F.3d 365
• Parties: DIGITAL DRILLING DATA SYSTEMS, L.L.C., Plaintiff - Appellant Cross-Appellee v. PETROLINK SERVICES, INCORPORATED, Defendant - Appellee Cross-Appellant
• Court: U.S. Court of Appeals — Fifth Circuit

965 F.3d 365

DIGITAL DRILLING DATA SYSTEMS, L.L.C., Plaintiff - Appellant Cross-Appellee

v.PETROLINK SERVICES, INCORPORATED, Defendant - Appellee Cross-Appellant

No. 19-20116

United States Court of Appeals, Fifth Circuit.

FILED July 2, 2020

J. David Cabello, Esq., Cabello Hall Zinda, P.L.L.C., Barry Abrams, Munira Jesani, Stephen D. Zinda, Blank Rome, L.L.P., Patrick Kevin Leyendecker, Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing, P.C., Houston, TX, for Plaintiff - Appellant Cross-Appellee.

Peter Elton Mims, Sean M. Hill, Vinson & Elkins, L.L.P., Jason Ryan Bernhardt, Winstead, P.C., Houston, TX, Michael A. Heidler, Vinson & Elkins, L.L.P., Austin, TX, for Defendant - Appellee Cross-Appellant.

Before BARKSDALE, HIGGINSON, and DUNCAN, Circuit Judges.

STUART KYLE DUNCAN, Circuit Judge:

Digital Drilling Data Systems, L.L.C. ("Digidrill"), a company that provides software used in oil drilling operations, sued its competitor, Petrolink Services, Inc. ("Petrolink"), alleging Petrolink hacked into its software at various oil drilling sites in order to "scrape" valuable drilling data in real time. The district court granted Petrolink's motion for summary judgment on Digidrill's copyright claims, but allowed Digidrill's unjust enrichment claim to proceed to trial, where a jury ultimately returned a verdict in Digidrill's favor. Both parties appealed. We affirm in part, vacate in part, and remand for further proceedings.

I.

A.

When oil and gas exploration companies ("operators") drill below the Earth's surface, they often engage directional drilling companies to steer drill bits into specific targets deep underground—a process known as "geosteering." To assist with this process, the directional drillers in turn hire "measurement while drilling" ("MWD") companies who attach specialized tools near the end of the drill pipe just above the drill bit. These MWD tools send "downhole" data up to the surface, including raw data about the location and orientation of the drill bit and about the characteristics of the surrounding geological formation. MWD companies then rely on other companies who furnish data logging and visualization services—hardware and software packages at the surface that collect and store the data from the MWD tools, and also display the data on computer screens in real-time to assist with the geosteering process.

Digidrill is one such data logging and visualization service provider. Digidrill's initial commercial product, a software program called "DataLogger," was designed to be installed on an MWD company's computer to collect raw data from downhole instruments, filter and correct the raw data (based partly on calibration inputs provided by the MWD company), and then log both the raw and corrected data to a database. To prevent unauthorized use of DataLogger, Digidrill designed the program to run only when a USB security dongle is plugged into the laptop.

At the filtering and correction stage, DataLogger applies certain algorithms and scaling factors to account for the context of the raw data. For example, DataLogger applies a formula to raw gamma data received from the downhole gamma ray sensor, scaling and correcting for factors such as gamma ray absorption by drill components located near the sensor. DataLogger similarly corrects the raw depth measurement values received from the drill bit.

At the logging stage, the data—both raw and corrected—is written to a computer database consisting of 27 interrelated data tables encompassing a total of 433 columns worth of data. For instance, the corrected gamma data is written in a field called "API" in a table called "GAMMA." Although Digidrill designed the relational structure of the database—i.e., its "schema"—Digidrill did not write the database program itself. Instead, Digidrill developed DataLogger to incorporate an open source database application called Firebird, allowing users to use off-the-shelf programs to access and query the database.¹ But Digidrill did change the file extension for the database files created by DataLogger from ".fdb" (the default extension for Firebird database files) to ".ddb" (for "Digidrill Database"). Digidrill also ensured that the database was protected by an internal password, but left the username and password set to the publicly available Firebird defaults.²

Meanwhile, in addition to writing to the database, DataLogger forwards the continuous stream of raw MWD data—but not the corrected data—to the drilling rig's electronic data recorder ("EDR") in a standardized feed called Wellsite Information Transfer Specification ("WITS") for use by other entities at the site.

The DataLogger program itself does not offer real-time visualization of the data it collects or manipulates, although it does allow the data to be exported—after the fact or at intervals—in a standardized report format (".las") or as PDF files. To provide real-time visualization, Digidrill developed a second product called LiveLog. LiveLog provides real-time, off-site visualization of filtered and corrected data transmitted out of DataLogger. The corrected data is pushed out from DataLogger to the internet in a proprietary format developed by Digidrill and can then be viewed using the company's CommandCenter application.

B.

Petrolink competes with Digidrill as, among other things, a visualization services provider. Petrolink developed a program called "PowerCollect" to take raw MWD data, such as that forwarded from DataLogger to the EDR, filter the raw data to some extent, and transmit the filtered data to another Petrolink program called "PetroVault" for real-time visualization. However, PowerCollect's reliance on raw data and its inability to provide corrected data in real time resulted in unreliable visualizations, to the frustration of some operators using the program.

When Petrolink learned that one of its largest customers, EOG Resources ("EOG"), might switch over to Digidrill's visualization service, Petrolink took action. Instead of paying Digidrill for access to the corrected drilling data via LiveLog, Petrolink obtained a laptop running DataLogger—along with the corresponding USB security dongle—and then, after realizing DataLogger used an open source Firebird database, managed to gain access to the database by using Firebird's default administrator username and password. Armed with this access, Petrolink developed a program named "RIG WITSML" (dubbed "the scraper" or "the hack") that could be installed on an MWD company's computer running DataLogger in order to—in real time—query corrected drilling data from the DataLogger database and transfer that information to PetroVault for visualization. Petrolink then began installing this RIG WITSML program on MWD computers running DataLogger at more than 300 well sites. The parties agree that Petrolink never sought permission from Digidrill to copy the data or the database schema from the DataLogger databases.

To be sure, RIG WITSML did not scrape all the data from the DataLogger database. Out of 433 columns across 27 tables, RIG WITSML read data from 22 columns across 5 tables, and selected data from an even smaller subset: 17 columns across 4 tables. With respect to these portions of the database, however, the RIG WITSML program not only scraped data from the database, it also copied the relevant portions of the database schema , e.g., the table names and the names of certain columns within those tables. These portions of the database schema were copied into the host computer's RAM and RIG WITSML's own memory each time the program queried the DataLogger database (at ten second intervals), and were also copied in the RIG WITSML source code itself.³

C.

After learning about RIG WITSML, Digidrill sued Petrolink and its president, Lee Geiser, asserting claims of copyright infringement, violation of the Digital Millennium Copyright Act ("DMCA"), unfair competition, unjust enrichment, and various other claims for computer fraud and trademark dilution. Although Digidrill averred that Petrolink's conduct violated the terms of DataLogger's license agreement, which prohibits unauthorized linking of third-party devices to computers running DataLogger, Digidrill did not sue the DataLogger licensees themselves (the MWD companies using the software).⁴ Early in the litigation, Petrolink agreed to a preliminary injunction and stopped using RIG WITSML. Digidrill subsequently abandoned all but its claims for copyright infringement, violations of the DMCA, and unjust enrichment. The parties then cross-moved for summary judgment.

The district court granted summary judgment for Petrolink on Digidrill's copyright infringement and DMCA claims, but allowed Digidrill's unjust enrichment claim to proceed to trial. As to copyright infringement, the court first concluded that while the corrected data values generated by DataLogger and written to its database were "mere facts" and therefore not copyrightable, the schema of the database itself—its creative arrangement of tables and columns—was covered by the DataLogger copyright as a non-literal element of DataLogger's source code. However, the district court held that no copyright infringement occurred because even though Petrolink directly and identically copied aspects of DataLogger's database schema, Digidrill failed to meet its burden to show substantial similarity between the original work and the copied work. As to the DMCA claim, the court ruled that the "Interface Process" and the USB security dongle were not measures that effectively controlled access to the DataLogger database and, further, that although an internal password was in place to guard access to the database, Petrolink did not "circumvent" that measure when it gained access via the publicly available default Firebird password.

As for Digidrill's state law unjust enrichment claim, the district court rejected Petrolink's contentions that the claim was preempted by federal copyright law and that, as a matter of law, the claim...