GlobeRanger Corp. v. Software AG
| Decision Date | 20 June 2014 |
| Docket Number | Civil Action No. 3:11–CV–0403–B. |
| Citation | 27 F.Supp.3d 723 |
| Parties | GLOBERANGER CORPORATION, Plaintiff, v. SOFTWARE AG, Software AG USA, Inc., Naniq Systems, LLC, and Main Sail LLC, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Charles Christopher Groves, Kerry C. Peterson, Matthew Daniel Rinaldi, Miller, Egan, Molter & Nelson LLP, Ophelia F. Camina, David Dean Shank, Susman Godfrey LLP, Dallas, TX, Brian D. Melton, Katherine H. Kunz, Missy Downey, Susman Godfrey LLP, Houston, TX, for Plaintiff.
William D. Sims, Jr., Jeremy Michael Reichman, Manuel G. Berrelez, Tyler J. Bexley, Vinson & Elkins LLP, Dallas, TX, James T. Drakeley, Craig A. Harris, David S. Henry, II, Hiersche Hayward Drakeley & Urbach PC, Addison, TX, Eric G. Walraven, The Harris Firm PC, Rodney Acker, Barton Wayne Cox, Karl G. Dial, Fulbright & Jaworski LLP, Dallas, TX, Ronald P. Friedberg, Meyers Roman Friedberg & Lewis, Cleveland, OH, for Defendants.
Software AG USA, Inc. and Software AG, Inc. (together, “SAG”), joined by Naniq Systems LLC (“Naniq”) (collectively, “Defendants”),1 move for summary judgment on Plaintiff GlobeRanger Corporation's (“GlobeRanger”) four state law claims, which include trade secret misappropriation, tortious interference with a contract, unfair competition, and conspiracy. Having conducted a lengthy review of the parties' briefing and submissions, the Court finds summary judgement appropriate solely for GlobeRanger's tortious interference claim. Accordingly, the Court GRANTS IN PART and DENIES IN PART Defendants' Motions for Summary Judgment (docs. 135, 138).
This case centers on Defendants' alleged misappropriation of GlobeRanger's radio frequency identification (“RFID”) technology. GlobeRanger installed the RFID solution at issue for the U.S. Navy (the “Navy Solution”)2 as part of a subcontract signed in 2007. GlobeRanger claims that SAG improperly gained access to the Navy Solution while working on a subsequent RFID project for the Navy, and that SAG used this access to reverse-engineer its own commercial RFID solution. SAG now argues in its Motion for Summary Judgement that its actions were lawful because the Navy had the right to disclose the Navy Solution under federal procurement regulations. The facts pertinent to this analysis, gleaned from the summary judgment record, are as follows.
RFID is wireless technology that uses radio wave signals for the purpose of automatically identifying and tracking objects. This automatic identification system starts with RFID “tags” and “readers.” The tag is attached to the desired object and stores information, such as “identification numbers, location, or specifications of the tagged product.”3 The reader emits radio waves that signal tags, as they come in range, to automatically send back their stored data, which the RFID reader “then relays to a computer system installed with identification software.”4
New technological developments over the past three decades have led commercial and government entities to adopt RFID across various applications, including electronic highway toll collectors, employee ID cards, and automatic payment systems.5 Relevant to this analysis, RFID technology has become a powerful inventory management tool for many organizations. It allows enterprises to tag inventory as it arrives, automatically track that inventory as it moves within warehouses or to new facilities and eventually to the end-users. The enterprise can use the data its RFID readers automatically compile in a central computer system to analyze customer spending and automate business processes like inventory re-ordering.
Established in 1999, GlobeRanger is a small Texas-based company that has spent years implementing automatic identification technology for both private and government customers. In the early 2000s, GlobeRanger was hired by companies that include Anheuser Busch, Ford Motor Company and John Deere to install automatic identification systems for purposes such as asset tracking and warehouse inventory processing. (Pl.'s App., Doc. 146, at 1–7, 415.) In the mid–2000s, GlobeRanger's business improved markedly after the Department of Defense (“DoD”) issued a series of mandates requiring all DoD entities to implement RFID technology in an effort to improve inventory logistics.6 The record shows GlobeRanger subcontracted7 on various RFID projects aimed at complying with these DoD mandates.
The most prominent example of GlobeRanger's work for the DoD was the RFID solutions it installed for the Defense Logistics Agency (“DLA”), an agency tasked with acquiring goods and supplies from commercial suppliers and distributing those goods and supplies to U.S. and foreign military services. GlobeRanger performed this work pursuant to its non-exclusive resale agreement that it signed in 2005 with Psion Teklogix (“Psion”). This agreement made Psion—an RFID hardware manufacturer—a non-exclusive reseller of GlobeRanger's RFID products and services to government agencies. (See id. at 8–18.) Under this agreement, GlobeRanger implemented RFID solutions at various depots operated by the DLA starting in 2005. (Id. at 19–21, 416–17.) And since the DoD's mandate required commercial suppliers to integrate with these RFID systems, GlobeRanger sold similar RFID solutions to DLA suppliers, including Honeywell Aeuropace and Sopacko Packaging. (Id. at 62–66, 336, 417.) By 2007, an industry analyst noted that “GlobeRanger currently has over 89 deployments of its [RFID technology].” (Id. at 67.)
GlobeRanger benefitted from this widespread deployment of its RFID technology across various enterprises. It “provided GlobeRanger with the knowledge of how to deploy and orchestrate a myriad of types and brands of hardware” and the ability to “integrate” its technology “with enterprise business systems ... and automate enterprise business processes.” (Id. at 416.) This experience led to the development of GlobeRanger's “proprietary RFID Solution,” which it calls the “GlobeRanger Solution.” (Pl.'s Br. Supp. Resp. (“Pl.'s Resp.”), Doc. 145, at 1.)
The GlobeRanger Solution is a package of RFID technology that GlobeRanger developed and assembled to license to customers.8 At the GlobeRanger Solution's core is the iMotion platform, which is a combination of software and other components that GlobeRanger has licensed to customers since 2001 for tracking and processing purposes.9 (Pl.'s App. 337, 414–15.) GlobeRanger later developed and added Solution Accelerators and Expansion Packs to round out its GlobeRanger Solution. Though not clearly defined, Solution Accelerators and Expansion Packs appear to be packages of technology that are added to the iMotion platform to perform certain functions, such as integrating and communicating with the RFID technology or the enterprise's computer systems. (See id. at 336–39, 415.) Functionally, the GlobeRanger Solution filters raw RFID reads “into meaningful business events, on a real time basis, through four layers,” starting with the device adapter and ending with a workflow, which “is a series of instructions or rules telling a computer what to do in response to various inputs.” (Id. at 415–16.)
The GlobeRanger Solution is not a one-size-fits-all product; it must be molded according to each customer's RFID needs and computer systems. This customization includes adding “components, workflows, and business processes,” with the end product being a custom RFID “solution.” (Id. at 414.) For example, the Navy Solution, discussed in more detail later, was built using the GlobeRanger Solution as its base and adding customized features unique to the Navy that may differ from those GlobeRanger built into the “Daisy Solution” for Daisy Brand. (Id. at 417.)
Ultimately, GlobeRanger spent over $30 million to develop the GlobeRanger Solution. (Id. at 414.) To protect its investment, GlobeRanger requires that users “review and click ‘agree’ to the terms of” GlobeRanger's End User License Agreement (“EULA”) before that solution may be activated or moved to a different device. (Id. at 426.) Under its EULA, GlobeRanger retains all intellectual property rights in its solution, and prohibits disclosure of its product without GlobeRanger's written consent.10 GlobeRanger also uses license keys that are both device specific and node-locked, which “means that once a license file is activated, the program cannot be moved to a different device, or the program will lock” until a new license is activated. (Id. ) GlobeRanger's further protects its information by making employees sign non-disclosure agreements (“NDAs”) when hired, and requiring employees to sign certifications that all confidential information has been returned upon severance. (Id. at 419.) GlobeRanger similarly requires contractors working on its solutions to sign NDAs agreeing not to disclose or claim title to GlobeRanger's intellectual property. (Id. at 419.)
In 2005, the Navy entered into contracts with prime contractors CACI International, Inc. (“CACI”) and Science Applications International Corp. (“SAIC”) to assist in implementing an RFID system per the DoD's RFID mandate. (See Def.'s App., Doc. 137, at 196–240, 379–393.) SAIC, in turn, entered into a renewable subcontract with GlobeRanger, in 2007, providing that GlobeRanger would participate in the implementation of RFID solutions at selected sites. (See id. at 86–115.) Pursuant to its subcontract, GlobeRanger built and implemented the Navy Solution at three different Navy locations: Kanehoe Bay (“K–BAY”), Pearl Harbor, and San Diego. (Id. at 51.)
By 2008, the Navy decided to implement a centralized, enterprise-wide RFID system to cover 700 different sites. (Id. at 138.) To evaluate what platform to use in building this enterprise-wide RFID solution, an Architecture...
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