Globeranger Corp. v. Software AG United States, Inc.
| Decision Date | 11 June 2015 |
| Docket Number | CIVIL ACTION NO. 3:11-CV-0403-B |
| Parties | GLOBERANGER CORPORATION Plaintiff, v. SOFTWARE AG USA, INC. et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Before the Court are Defendants' Rule 50(b) Motion for Judgment as a Matter of Law ("Motion for JMOL") and Rule 59 Motion for a New Trial and Alternatively, for a Remittitur ("Motion for New Trial or Remittitur" or "Motion for New Trial"). For the reasons that follow, the Court DENIES both Motions (docs. 372 & 374).
The Court begins by addressing the Motion for JMOL filed by Defendants Software AG USA, Inc. and Software AG, Inc. (together, "Software AG"). Software AG timely filed this Motion following the Court's entry of judgment in accordance with the jury's verdict, finding in favor of Plaintiff GlobeRanger Corporation ("GlobeRanger") on its trade secret misappropriation claim and awarding GlobeRanger $15 million in compensatory damages. Software AG now asserts that "[t]he Court should vacate its judgment and render judgment in favor of Software AG for multiple,independent reasons." Doc. 373, Def.'s Br. Supp. Rule 50(b) Mot. J. Matter Law ("Def.'s Mot. JMOL") 1.
The first ground Software AG offers in support of their request for judgment as a matter of law is that GlobeRanger's claim "is preempted by the Copyright Act." Id. Second, in the event GlobeRanger's claim is not preempted, Software AG asserts that the Court must conclude that it "lacks subject-matter jurisdiction and [that] remand is the only appropriate option." Id. at 1-2. Third, Software AG next submits in support of their Motion for JMOL that "GlobeRanger failed to present legally sufficient evidence to support elements of its misappropriation claim." Id. at 2-3. Fourth, Software AG argues that GlobeRanger also failed to present "legally sufficient evidence" of its damages. Id. at 3. Before taking up these contentions, the Court briefly addresses the applicable standard of review.
Rule 50(b) of the Federal Rules of Civil Procedure allows a party to file a renewed motion for judgment as a matter of law following the entry of judgment. FED. R. CIV. P. 50(b). Such motions "should be granted if the evidence is legally insufficient, such that 'the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict.'" Abraham & Veneklasen Joint Venture v. Am. Quarter Horse Ass'n, 776 F.3d 321, 327 (5th Cir. 2015) (quoting Boeing v. Shipman, 411 F.2d 365, 374 (5th Cir. 1969) (en banc), overruled on other grounds by Gautreaux v. Scurlock Marine, Inc., 107 F.3d 331, 336 (5th Cir. 1997) (en banc)). In reviewing a Rule 50(b) motion, "facts are viewed, and inferences made, in the light most favorable to the nonmovant." X Technologies, Inc. v. Marvin Test Sys., Inc., 719 F.3d 406, 411 (5th Cir. 2013) (citing Arthur J. Gallagher & Co. v. Babcock, 703 F.3d 284, 293 (5th Cir. 2012)).
Software AG first moves for judgment as a matter of law on the ground that GlobeRanger's trade secret misappropriation claim is preempted by the Copyright Act. "The Copyright Act expressly preempts all causes of action falling within its scope, with a few exceptions." Daboub v. Gibbons, 42 F.3d 285, 288 (5th Cir. 1995) (referencing 17 U.S.C. § 301(a)). Before finding a claim is preempted by the Copyright Act, the Fifth Circuit "has held that both prongs of a two-factor test must be satisfied." Carson v. Dynegy, Inc., 344 F.3d 446, 456 (5th Cir. 2003). Under the first prong, "the claim is examined to determine whether it falls 'within the subject matter of copyright' as defined by 17 U.S.C. § 102." Id. (citing Daboub, 42 F.3d at 289). For the second prong, "'the cause of action is examined to determine if it protects rights that are equivalent to any of the exclusive rights of a federal copyright, as provided in 17 U.S.C. § 106.'" Id. (quoting Daboub, 42 F.3d at 289).
Here, the parties solely dispute whether the second prong of the copyright preemption analysis is satisfied for GlobeRanger's trade secret misappropriation claim. As mentioned, the second prong of the copyright preemption analysis asks whether the state law claim at issue "protects rights that are 'equivalent' to any of the exclusive rights of a federal copyright," which include "the exclusive right to reproduce, distribute, perform, and display the copyrighted work." Daboub, 42 F.3d at 289 (citations omitted); see 17 U.S.C. § 106 (). "The test for evaluating the equivalency of rights is commonly referred to as the 'extra element' test." Carson, 344 F.3d at 456 (citing Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772, 787 (5th Cir. 1999)). Under this test, "if the act or acts of [the defendant] about which [the plaintiff] complains would violate both [state] law and copyright law, then the state right is deemed equivalent to copyright." Alcatel, 166 F.3d at 787 (citation omitted). On the other hand, if the state law claimcarries "one or more qualitatively different elements" in comparison to a federal copyright claim, "then the right granted under state law does not lie within the general scope of copyright, and preemption does not occur." Id. (citation and quotation marks omitted).
Before addressing the parties' dispute with respect to the second prong, some background on the evolution of the preemption issue over the four-year course of these proceedings is helpful.
At the inception of this case, Software AG argued that GlobeRanger's trade secret misappropriation claim was preempted by the Copyright Act. See Doc. 1, Def.'s Notice of Removal 2-5. At that time, the Court found Software AG's contentions persuasive and granted their Rule 12(b)(6) motion to dismiss on copyright preemption grounds. See Doc. 27, Mem. Op. & Or. Denying Mot. Remand ("Order Denying Remand"); Doc. 28, Mem. Op. & Or. Granting Mot. Dismiss. 4-5. In finding GlobeRanger's trade secret misappropriation claim preempted based on the pleadings, the Court concluded that the first prong was satisfied based on language in GlobeRanger's original petition suggesting "that this action centers on the software and not the process, and thus is within the subject matter of the Copyright Act." Order Denying Remand 6-7. In regard to the second prong, the Court similarly focused on "the core of GlobeRanger's misappropriation of trade secrets . . . allegations." Id. at 8. These core allegations, the Court found, merely suggested that "Defendants wrongfully copied and misused GlobeRanger's RFID Solution software," thereby "destroy[ing] the competitive advantage GlobeRanger obtained by spending considerable time and money on development." Id. Since this alleged theory of liability seemed to cover "the same purpose as the Copyright Act and [to] protec[t] the same interests," the Court concluded that the second prong was also satisfied, and that GlobeRanger's trade secrets claim was, therefore, preempted. Id.
GlobeRanger promptly appealed the Court's Rule 12(b)(6) dismissal. On September 14, 2012, the Fifth Circuit reversed this Court's finding of preemption. See GlobeRanger Corp. v. Software AG, 691 F.3d 702 (5th Cir. 2012). In doing so, the Fifth Circuit concluded that the first prong of the preemption analysis was not satisfied under the Rule 12(b)(6) standard of review, given that "GlobeRanger ha[d] pled factual allegations that at least in part fall outside the scope of copyright." Id. at 710. And with the first prong of the analysis unsatisfied, the Fifth Circuit declined to address the second prong with respect to GlobeRanger's trade secret misappropriation claim. See id. at 709-10. Furthermore, the Fifth Circuit noted that it only meant to "reach [] modest conclusions" in reversing this Court's dismissal on the pleadings, and that the Court should consider Software AG's copyright preemption defense anew on remand, "with the aid of a more developed record." See id. (emphasis added).
On remand, however, copyright preemption took a back seat to other complex issues in this case—that is, until Software AG re-urged the preemption defense in a Rule 50 motion at the close of GlobeRanger's case-in-chief in November 2014. For its part, after remand from the Circuit, GlobeRanger amended and refined its claims, and ultimately "decided to streamline a complex case by jettisoning the aspects of its claims that were not focused on [Software AG's] misappropriation of GlobeRanger's proprietary software . . . and the trade secrets embedded therein." Doc. 385, Pl.'s Resp. Opp'n Mot. JMOL 2-3. GlobeRanger, accordingly, in response to Software AG's reassertion of copyright preemption at trial, conceded that the first prong had been satisfied. See id. at 3. That left only the second prong to consider, which the Court does below, mindful of the foregoing procedural history.
Software AG argues, in its Motion for JMOL, that the Court should simply adopt its prior determination, at the pleadings stage, that GlobeRanger's trade secret misappropriation claim satisfies the second prong of the copyright preemption analysis. See Def.'s Mot. JMOL 5-7. In Software AG's view, a contrary finding would require the Court to "reverse" itself on its prior ruling. Id. at 6. The Court should not do this, Software AG submits, because its prior ruling that trade secret misappropriation is equivalent to copyright is "in line with the only other precedent from within the Northern District of Texas[,] . . . the only Texas state court to consider this issue[,] . . . [and] decisions from other federal district courts within Texas." Id. at 6-7.2
GlobeRanger counters first by highlighting all the developments in this case that brought its trade secret misappropriation claim to this point...
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