Maddog Software, Inc. v. Sklader, CIV.04-CV-482-JD.
| Decision Date | 09 August 2005 |
| Docket Number | No. CIV.04-CV-482-JD.,CIV.04-CV-482-JD. |
| Citation | 382 F.Supp.2d 268 |
| Parties | MADDOG SOFTWARE, INC. v. Michael A. SKLADER |
| Court | U.S. District Court — District of New Hampshire |
Daniel P. Schwarz, Flygare Schwarz & Closson, Exeter, NH, for Maddog Software, Inc.
Michael A. Sklader, Henniker, NH, pro se.
Maddog Software, Inc., has moved for a preliminary injunction against its former employee, Michael A. Sklader, to prevent him from distributing certain software for use in the intermodal trucking industry.1 Maddog alleges that Sklader's software, known as "IMX," infringes on Maddog's copyright in a program known as "FastFreight" and, furthermore, that his distribution of it violates the terms of a non-competition agreement between the parties. Sklader, proceeding pro se, objects to the motion. The court held an evidentiary hearing on Maddog's motion on June 1, 2005.
The court makes the following preliminary findings of fact based on the testimony and exhibits received at the hearing. Fed.R.Civ.P. 52(a); TEC Eng'g Corp. v. Budget Molders Supply, Inc., 82 F.3d 542, 544 (1st Cir.1996). Maddog is owned entirely by Jim McKenna, the president of Manchester Motor Freight ("MMF"), an intermodal trucking company. In early 1994, Maddog hired Sklader to design a computer program to assist MMF with its dispatch and billing functions. Maddog also hoped to sell the program to other intermodal truckers. Later that year, the parties entered into a written employment agreement, which provided in relevant part that "upon termination of [Sklader's] employment for any reason, he will not directly engage in the same line of business, now carried on by Maddog Software, for a period of three years and within the territory of New England, New York, New Jersey, and Pennsylvania." Ex. 1, ¶ 2.
By early 1996, Sklader had finished designing the program, dubbed "FastFreight." He then assigned all of his interest in the program to Maddog through an "Assignment of Copyright" agreement, so named despite the fact that no copyright on the program had been registered at that point. The agreement describes FastFreight as "a motor freight intermodal transportation tracking and dispatch system, written in Microsoft Access," a popular database program distributed by Microsoft. Ex. 2, at 3. FastFreight also incorporates a number of other Windows-based applications distributed by third parties, including FaxWorks Pro Lan, PaperBridge, and ProComm Plus. Although the evidence remains sketchy on this point, FastFreight appears to function as a specialized database which ferries information on an intermodal trucking company's shipments among the various "departments" which need the data, e.g., scheduling, dispatch, accounts receivable, and the like. To that end, like most databases, FastFreight permits the entry of such data on a number of different forms, which have themselves been designed to accommodate the standard practices of the industry. Maddog ultimately sold about a dozen copies of FastFreight to various intermodal trucking companies across the country, none of which was located in any of the New England states or New York.
Eventually, the third party applications that interfaced with FastFreight started to become obsolete, creating difficulties for Maddog customers who wished to continue using the program. These difficulties became more acute with Microsoft's release of Windows XP, which superseded the Windows 98 version of the ubiquitous operating system on which FastFreight had been designed to run. According to McKenna, after Sklader failed to address these problems in an expeditious fashion, Maddog terminated him effective April 30, 2002. Sklader recalls, however, that his termination came about because he had by that point fully automated MMF's operations through FastFreight and McKenna no longer wished to pursue sales of the program to other intermodal truckers.
The terms of the separation are likewise a matter of some dispute. McKenna acknowledges telling Sklader that, notwithstanding the non-competition provision of his employment agreement, he was free to "service the existing customers" of Maddog. McKenna denies, however, saying that he was leaving the software business or otherwise authorizing Sklader to sell competing software to Maddog's customers. In fact, before Sklader left Maddog, he met with the employees of a software development company that McKenna had hired to design a new version of FastFreight. Although that company has since been replaced, Maddog continues to redevelop FastFreight, and plans to market it as soon as the new version is saleable.
Sklader testified that, prior to his separation from Maddog, McKenna indicated he wanted out of the software business and encouraged Sklader to "[t]ake the software, take the customers, just take it." In fact, McKenna acknowledges personally directing certain Maddog customers to Sklader for support with their FastFreight systems following his termination. By and large, these customers had sought help from Maddog for difficulties with FastFreight arising from the obsolescence of the Windows 98 operating system and its accompanying 16-bit format. Based on his observation that McKenna did not intend to honor Maddog's commitments to provide ongoing support to its FastFreight customers, Sklader took McKenna's words to heart, making his services available to several of Maddog's customers.
Sklader maintains that the services he actually provided amounted to little more than upgrades of FastFreight, tailored to the needs of each particular customer. His work included, for example, aiding in the conversion of FastFreight forms created with an older version of Microsoft Access into a format compatible with a contemporary version of that program. Nevertheless, Sklader peddled his services as a distinct software package bearing the name "IMX." On October 31, 2002, Sklader received $3,500 from a Maddog customer in New Jersey for the installation of "IMX Software." Ex. 4. Sklader also sold IMX, together with related installation, training, and conversion services, to another Maddog customer, Hammer Express in Illinois, in early 2003.2 In obtaining this sale, Sklader described IMX as a new program, rather than as an upgrade.
At the hearing, Sklader explained that while he does not consider IMX to constitute software, he marketed it as such in order to distinguish his services from anything to do with hardware, which he installed as part of the work he performed for Maddog but no longer offers. He also suggested that he used the term "software" in marketing materials in an attempt to describe his services in a way familiar to laypeople, although the term "upgrade" appeared to serve that purpose just as well at the injunction hearing. In any event, McKenna takes the position that nobody, not even Maddog's customers, can modify the FastFreight forms or tables, because "the forms and tables are part of FastFreight, which is [a] copyrighted product."
Sklader testified that he created the bulk of FastFreight simply by using the familiar "Wizard" function in Microsoft Access. As he demonstrated at the hearing, albeit with the version of Access now in circulation instead of the less advanced predecessor available at the genesis of FastFreight, the Wizard assists in designing forms by allowing the user to choose from a menu of options as to which fields and buttons to include. Access then generates source code, i.e., a series of instructions to a computer rendered in a language comprehensible to humans, corresponding to that form. Sklader also testified that he copied most of the FastFreight forms from a sample database distributed with Access. He acknowledged, however, that creating FastFreight required him to write his own code at least on occasion. Nevertheless, rather than creating this code from whole cloth, Sklader recounted that he arrived at much of it "from samples and bits and pieces" of sample code publicly available within the programming community. He also explained that many of the FastFreight forms embody mathematical formulae, such as that used to calculate the charge for a certain kind of freight transport, that cannot be expressed any way other than how they are in the code underlying the forms in question.
Stanley M. Metcalf, an experienced software engineer, examined FastFreight while developing the updated version of the program for MMF. He explained that while Microsoft Access provides "a programming language so that people can write their own customized functions and programs within Access," he considers this simply a tool that a programmer can use to create software. In writing a large and complex program, according to Metcalf, a programmer would inevitably encounter problems that could be solved only by actually writing code, as opposed to using Microsoft Access to generate it.
Metcalf confirmed that a newer version of Microsoft Access could aid in the conversion of files created with an older version of the program, as Sklader claims to have done in upgrading FastFreight with IMX. Nevertheless, the Access conversion function would not complete the task successfully on its own, requiring some programming expertise to finish the job. This course, rather than writing a new program from scratch, is the appropriate way to service a customer whose Microsoft Access forms have become outdated, according to Metcalf.
Metcalf has also examined IMX in the course of developing the updated version of FastFreight for Maddog. Although he could not access much of the actual IMX source code due to the program's password protection, he testified that a "huge percentage" of the program is "identical" to FastFreight. Specifically, Metcalf related that IMX contains a series of queries, or means of accessing a database, which appear to have been copied wholesale from FastFreight, resulting in forms which look...
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