Exactlogix, Inc. v. JobProgress, LLC

• Decision Date: 21 December 2020
• Docket Number: Case No. 3:18-cv-50213
• Parties: EXACTLOGIX, INC. d/b/a Acculynx.com, Plaintiff, v. JOBPROGRESS, LLC, Double D Construction, LLC, Dennis A. Darrow, and David Buzzelli, Defendants.
• Court: U.S. District Court — Northern District of Illinois

508 F.Supp.3d 254

EXACTLOGIX, INC. d/b/a Acculynx.com, Plaintiff,

v.JOBPROGRESS, LLC, Double D Construction, LLC, Dennis A. Darrow, and David Buzzelli, Defendants.

Case No. 3:18-cv-50213

United States District Court, N.D. Illinois, Western Division.

Signed December 21, 2020

Joel M. L. Huotari, Troy E. Haggestad, Patricia Lois Hall, Scott Collins Sullivan, WilliamsMcCarthy LLP, Rockford, IL, for Plaintiff.

Jeffrey Ira Kaplan, Michael Robert Gilman, Kaplan Breyer Schwarz LLP, Matawan, NJ, Michael William Huseman, Dreyer Foote Streit Furgason & Slocum, P.A., Aurora, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Iain D. Johnston, United States District Judge Plaintiff ExactLogix, doing business as AccuLynx.com, brings this action against JobProgress, LLC, Double D Construction, LLC, Dennis A. Darrow, and David Buzzelli ("Defendants"). It claims violations of the Computer Fraud and Abuse Act (CFAA) and the Illinois Trade Secret Act, (ITSA), breach of contract, fraud, unjust enrichment, conspiracy, and common law unfair competition. Before the Court are cross motions for summary judgment. For the reasons below, Plaintiff's motion for partial summary judgment [157] is denied. Defendants’ motion for summary judgment [123] is granted in part and denied in part.

I. Background

The following facts are taken from the statements of undisputed facts filed by both sides as part of the summary judgment motion briefing, and to some extent, from the depositions directly. At issue are two competing software programs that aid construction companies with various administrative and job-tracking tasks. Dkt. 171, ¶ 5. Plaintiff's software, Acculynx, came first. Defendant Double D Construction—which is owned by Defendant Dennis Darrow—was a subscriber to that software. Id. ¶ 3. The gist of the complaint is that the Defendants used Double D Construction's access to Acculynx to build a competing product, JobProgress, and are now in direct competition with Plaintiff's software. Id. ¶ 2; Dkt. 178, ¶ 43. Dennis Darrow hired David Buzzelli to work in sales at Double D Construction in April 2013. Dkt. 178, ¶ 18. They then started JobProgress, LLC together. Dkt. 171, ¶ 2; David Buzzelli became the Managing Partner of JobProgress, LLC, while Dennis Darrow became the President of JobProgress, LLC. Id. ¶¶ 3–5.

Specifically, Plaintiff alleges that Defendants and their consultants used their Acculynx customer login credentials to build a competing product based on the functionality of Acculynx. Defendants, however, contend that they merely set out to develop a better product and used their Acculynx customer login credentials to migrate their information from Acculynx to the new system. The factual assertions in this case are numerous, as are the disputes.

Plaintiff demonstrates its software, Acculynx, at trade shows, in online presentations, and in other demonstrations to win over prospective customers. Id. ¶ 12. They show depictions of parts of the software on large screens at these trade shows, and Plaintiff instructs it's Acculynx sales representatives to give follow-up presentations if any prospective customer has additional questions. Id. ¶¶ 13–14. These sessions are not bound by confidentiality agreements. Id. ¶ 17. Once someone becomes a customer, however, they are contractually bound by a Master Subscription Agreement that includes confidentiality provisions and a non-compete clause. That customer then may have multiple users that operate under the same subscription agreement. Though they operate under the Master Subscription Agreement, each user must reaffirm their consent to the terms and conditions of use each time they login to the Acculynx software.¹ Dkt. 178, ¶ 11.

Though the reason is disputed, Double D Construction became a subscribing customer to the Acculynx software in 2013. Id. ¶¶ 17–18. Plaintiff sees this as part of larger conspiracy, but whatever the reason, David Buzzelli then hired Logiciel, a software development company in India, to develop the JobProgress software—eventually spending nearly $300,000 on development services with Logiciel. Dkt. 175, ¶ 8. Defendants do not dispute that they shared their Acculynx login credentials with Logiciel and that Logiciel used those credentials to access Acculynx beginning in September 2014.² Dkt. 178, ¶ 32. They do, however, dispute the reason for that sharing. Although Plaintiff sees it as part of a larger conspiracy that resulted in Logiciel using Acculynx login credentials to copy the software, Defendants claim the Logiciel consultants merely needed the login credentials to migrate Defendants’ information to the new JobProgress software.

Still, Logiciel employees explained that having the Acculynx login credentials made it easier to understand how Defendants wanted JobProgress to be developed. Id. ¶ 29. These logins were all recorded. Plaintiff notes that it maintains logs of all access attempts and that those logs are monitored infrequently at the request of customers or on suspicion of nefarious activity. Dkt. 171, ¶ 10. Defendant characterizes Plaintiff's review of its logging system as quarterly and that it would have known "immediately when it saw logins from India," which is where the Logiciel consultants worked. Id. But this language is not supported by the cited deposition, which explicitly states that the reviews are done infrequently at the customer's request. At a minimum, Defendants’ characterization of the testimony is not a reasonable inference of fact and is not accepted. Hernandez v. Foster , 657 F.3d 463, 473 (7th Cir. 2011).

When David Buzzelli signed Double D Construction up for Acculynx's software, he signed a Master Subscription Agreement and a Training Agreement. Dkt. 178, ¶¶ 10, 14, 17. These agreements were signed before JobProgress, LLC was formed. Dkt. 171, ¶ 35. The agreements made Double D Construction a licensee of the Acculynx software, which permitted Double D Construction to create multiple user accounts for its employees and agents. Id. ¶ 52. Acculynx could then bill Double D Construction for each user that it created. Id. Still, Defendants shared their login credentials with the Logiciel consultants instead of creating separate credentials for them. No one disputes that the login credentials were shared. Furthermore, no one disputes that this is the extent of the network security issues. No one is accused of any further malicious cyber activity and Plaintiff does not allege any physical systems damage, corruption of data, or service interruption. Id. ¶ 9.

Defendants do not dispute that David Buzzelli and Dennis Darrow both logged into the Acculynx system and agreed to the terms and conditions. Dkt. 178, ¶ 14. Those terms and conditions included a provision, in all caps, that stated, "By accessing or using all or any portion of the software, you are agreeing to be bound by the terms of this agreement .... If you do not agree to the terms of this agreement ... do not access or use the software." Id. ¶ 16. The terms then included provisions banning the sharing of login information and requiring that subscribers ensure Acculynx access is only afforded to those individuals for whom license fees are paid. Id. (quoting § 1.3 and § 1.4.4). The terms and conditions also prohibited licensees from reverse engineering Acculynx or creating derivative works. Id. (quoting § 1.4.1). They also included a provision preventing licensees from making "the Software available to any third party other than Users." Id. (quoting § 1.4.3). The terms and conditions also noted that "the Software and all of its components are trade secrets." Id. (quoting § 1.5). If Acculynx discovered any sharing of login credentials, the terms and conditions allowed for retroactive and automatic billing of the credit card on file. Id. (quoting § 2.7).

After Buzzelli subscribed to Acculynx on behalf of Double D Construction, Dennis Darrow expressed dissatisfaction with Acculynx and the two agreed to create their own product. Dkt. 174, ¶ 18. They wanted to create a "streamlined efficient version of what Acculynx offers." Id. At times, they proposed names for their new software that were similar to Acculynx—names like Accuwork, AccuBench, and AccuJob. Id. They finally settled on JobProgress, which also happens to be the name of one of the Acculynx screens. Id. They proceeded to create JobProgress in Acculynx's likeness, at least in part. In conversations with the Logiciel consultants, Buzzelli noted that Defendants had access to Acculynx. Furthermore, he sent those consultants a link to software used to clone websites. Id. ¶¶ 19–20. In response, Defendants do not dispute those facts. They do contend, however, that JobProgress was developed from scratch over the course of nine months, at significant cost to them, and any similarities in function with Acculynx are similarities shared with other competing software on the market. Id. ¶ 19.

After contracting with Logiciel, Defendant Buzzelli appears to have taken screenshots of Acculynx and shared those screenshots with the consultants as part of the effort to create JobProgress—the reasonable inference being that he wanted JobProgress to be developed to look similar to Acculynx. Although not disputing that, Defendants respond that those screenshots of the Acculynx software that were shared with the Logiciel consultants were public information because they are available either through simple Google searches or through one of the Acculynx demonstrations, or both. Id. ¶ 22. Ajay Sharma—from Logiciel—noted that these screenshots helped him better understand how Buzzelli wanted him to create JobProgress. Id. ¶ 25. Defendants even recorded an Acculynx webinar that showed licensed customers a new beta version of the dashboard. Defendants then shared that recording with the Logiciel consultants for them to use as a benchmark and to possibly incorporate those new ideas into the JobProgress software. Id. ¶¶ 34–35.

Though disputes exist, at a minimum, the facts show...