Peakspeed, Inc. v. Emerson
| Decision Date | 29 December 2020 |
| Docket Number | Civil No. 20-1630 (JRT/BRT) |
| Parties | PEAKSPEED, INC., Plaintiff, v. TIMOTHY EMERSON, Defendant. |
| Court | U.S. District Court — District of Minnesota |
Shannon L. Bjorklund, Payton E. George, Donna Reuter, Forrest Tahdooahnippah, and R. J. Zayed, DORSEY & WHITNEY LLP, 50 South Sixth Street, Suite 1500, Minneapolis, MN, for plaintiff.
Christopher Liimatainen Evans, CHRIS EVANS FIRM LLC, 7260 East Geddes Place, Centennial, CO 80112; and Dawn C. Van Tassel, VAN TASSEL LAW FIRM, 2909 South Wayzata Boulevard, Minneapolis, MN 55405, for defendant.
Plaintiff Peakspeed, Inc. ("Peakspeed") alleges that it has the exclusive right to own and use the copyright to the source code of a computer program, TrueView, and that Defendant Timothy Emerson has no such right. Peakspeed also alleges that Emerson impermissibly locked it out of servers and a cloud computing account, and that Emerson converted its property. Peakspeed has filed a Motion for a Preliminary Injunction, asking the Court to enjoin Emerson from claiming ownership of the source code and from interfering with or challenging Peakspeed's right to own and use the source code. Peakspeed also seeks an order restoring Peakspeed's access to the cloud account and destroying all copies of the source code. Emerson filed a Motion to Dismiss for lack of personal jurisdiction.
Because Peakspeed has made a prima facie showing of jurisdiction, the Court will deny Emerson's Motion to Dismiss. Additionally, because the facts presented thus far demonstrate that Peakspeed and Emerson are likely joint authors of the source code, the Court will grant Peakspeed's Motion for a Preliminary Injunction enjoining Emerson from interfering with and challenging Peakspeed's right to own and use the source code. Because Emerson is likely a joint author of the source code and the sole administrator of the cloud account, the Court will deny Peakspeed's Motion in all other respects.
In early 2019, Emerson started EmersonAI to develop geospatial applications for Field Programmable Gate Arrays ("FPGAs"). Emerson was particularly interested in developing applications for Xilinx's next-generation hardware, the Versal Adaptive Compute Acceleration Platform ("ACAP"), because the ACAP uses both an FPGA chip anda more traditional Central Processing Unit ("CPU") chip.1 (Id. ¶¶ 12-15.) Emerson negotiated a Development and Marketing Agreement with Xilinx on March 22, 2019. (Id. ¶¶ 15-16.)
Emerson opened a bank account, in the name of EmersonAI, at a Wells Fargo branch in Colorado. (Id. ¶ 11.) Seeking a business advisor, he met with Dave Eaton, and Eaton orally agreed to manage the business with the expectation that he would gain an ownership interest in EmersonAI or EmersonAI's successor. (Id. ¶¶ 43-46.) Eaton was added to EmersonAI's bank account so that he could pay bills and make deposits. (Id. ¶ 51.)
EmersonAI's main focus was developing a particular geospatial application, TrueView. (See id. ¶ 55.) Oscar Kramer was brought on as an independent contractor in May 2019 to help write its source code. Kramer brought decades of experience working with aerial imaging and developing orthorectification software to run on FPGAs. (Id. ¶¶ 3-9.)His contract said nothing about who would own the intellectual property developed by Kramer while consulting for EmersonAI.2 (Id. ¶ 23.)
TrueView's source code would consist of two parts: a host processing code, which would run on a traditional CPU, and an FPGA code. .) Kramer worked on the CPU host programming code. (2nd Kramer Decl. ¶¶ 24-25.) Emerson worked on the FPGA code. (Emerson Depo. at 97:12-98:7.) At this time, Kramer began to write "property of EmersonAI" in the copyright header of TrueView's source code. (See id. at 99:6-7.)
In September 2019, a prototype of TrueView was completed, which could run on Xilinx's current-generation hardware, the U250, but not on the next-generation ACAP hardware. By late December, TrueView could also run on a specific FPGA platform, the F1 instance, though it was slower than the U250 version. (1st Emerson Decl. ¶¶ 62-64; 2nd Emerson Decl. ¶ 3, Ex. 3, Oct. 1, 2020, Docket No. 35-3.)
EmersonAI always struggled financially, however. Emerson had only contributed $3,100 and some computer equipment to the company, (Decl. of Payton George ("George Decl.") ¶ 4, Ex. C ("Emerson Tr.") at 38:18-39:3, Oct. 8, 2020, Docket No. 48-3), and any money derived from the Xilinx agreement came in sporadically, (Emerson Tr. at 36:18-25.) As a result, Eaton had twice injected personal funds into EmersonAI to keep it afloat in 2019: $10,000 in May,3 and another $25,000 in mid-December.4
Thus, by the end of 2019, Eaton wanted to start a new company to further develop TrueView. (See Eaton Depo. at 232:17-24.) Eaton and Emerson verbally agreed to form and equally own Peakspeed. (1st Emerson Decl. ¶ 68.) Eaton believed that Emerson agreed to contribute any interest he had in TrueView in exchange for his ownership share.5 (See 2nd Emerson Decl., Ex. 8 at 7, Oct. 1, 2020, Docket No. 35-8.)
The transition from EmersonAI to Peakspeed began in early 2020.6 (See Emerson Depo. at 80:18-20.) Eaton would be Chief Executive Officer of Peakspeed, Emerson its Chief Technology Officer ("CTO"), and Dave Zimmerman would be Vice President of Engineering. Kramer, who had stopped consulting for EmersonAI in December 2019, emailed Eaton to inquire about joining Peakspeed; Kramer then came aboard as Chief Geospatial Scientist.7 (2nd Kramer Decl. ¶¶ 29-31, 36.)
On January 30, 2020, Emerson sent an email to Zimmerman saying that Peakspeed should let their business partners know that EmersonAI was reorganizing from an LLC to a C-corp.8 .) Peakspeed was incorporated the next day, on January 31, in Delaware, (2nd Emerson Decl., Ex. 5, Oct. 1, 2020, Docket No. 35-5), with its principal place of business in Minnesota, (Compl. ¶ 5;Decl. of David Zimmerman ¶ 9, Oct. 1, 2020, Docket No. 41.) The TrueView coding team, with the exception of Emerson, now considered themselves to be working for Peakspeed, not EmersonAI.9 (See e.g., Decl. of Joe Greshik ¶¶ 3-4, Oct. 1, 2020, Docket No. 38.)
From February to July 2020, Peakspeed gradually took EmersonAI's place. In late February, Kramer referred to TrueView as a product of "EmersonAI/Peakspeed" when promoting it. (1st Emerson Decl. ¶ 71.) At the same time, "Peakspeed" was inserted into the copyright header of TrueView's source code in place of EmersonAI, and Emerson applauded this.10 (Reuter Decl. ¶ 7, Ex. 6, Oct. 1, 2020, Docket No. 43-6.) Then, Emerson, as President and CTO of Peakspeed, signed a non-disclosure agreement with Xilinx on March 7, 2020. (Reuter Decl. ¶ 8, Ex. 7, Oct. 1, 2020, Docket No. 43-7.) Emerson also renewed EmersonAI's Xilinx license in Peakspeed's name on March 17. (Reuter Decl. ¶ 14, Ex. 13 at 1, Oct. 1, 2020, Docket No. 43-13.)
Invoices for the Amazon Web Services ("AWS") cloud account, opened in 2019 in EmersonAI's name and administered solely by Emerson, (2nd Emerson Decl., Ex. 2 ("Eaton Tr.") at 155:11-16, 157:10-17, Oct. 1, 2020, Docket No. 35-2), continued to be sent to Emerson. (2nd Emerson Decl. ¶ 4, Ex. 9, Oct. 1, 2020, Docket No 35-9.) On March 14, 2020, Emerson alerted Eaton to this, and Eaton said that he would work on switching the AWS account over to Peakspeed. (See George Decl. ¶ 6, Ex. E at 3, Oct. 8, 2020, Docket No. 48-5.) On April 15, 2020, Zimmerman informed Emerson that the AWS account had been put in Peakspeed's name. (George Decl. ¶ 8, Ex. G, Oct. 8, 2020, Docket No. 48-7.) Amazon had previously issued $2,500 in free credits to the AWS account after Zimmerman and Emerson, as CTO of Peakspeed, had applied for them in late March. (George Decl. ¶ 11, Ex. J at 2-4, Oct. 8, 2020, Docket No. 48-10.)
At the time of Peakspeed's incorporation in January 2020, TrueView had reached various stages of development depending upon the specific platform on which it would run. (2nd Emerson Decl., Ex. 10.) Going forward, Emerson believed that TrueView only required the addition of one feature and some bug fixes. (Emerson Tr. at 101:24-102:8.)
Kramer, on the other hand, thought that TrueView was not close to being a finished product at this time: the CPU host code was only in the early stages of development and the FPGA code had serious issues. (2nd Kramer Decl. ¶¶ 41, 44.) In particular, the FPGA code had four major imaging flaws and portions of the code that Emerson had writtenneeded to be better documented. (Eaton Tr. at 243:9-245:11.) The FPGA code consists of approximately 817 lines, of which Emerson wrote about 95%, and it constitutes about 10.6% of the total code.
Around May 2020, conflict began to grow between Emerson and Zimmerman, and Emerson thought h...
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