IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT

Pursuant to Rule 56 of the Federal Rules of Civil Procedure, this Court’s second amended scheduling order (Dkt. No. 37), and the local rules, Defendants respectfully move for summary judgment holding that the Plaintiff may not recover pursuant to any claim except copyright infringement, and further move that any recoverable damages therefrom be restricted to consequential damages such as a disgorgement of profits.

TABLE OF CONTENTS

1. SUMMARY STATEMENT        1
2. ISSUES TO BE DECIDED BY THE COURT        2

1. Even if Plaintiff’s trade secret claim was properly pled, does the undisputed fact that Strand published its trade secret preclude Plaintiff’s theory of trade secret misappropriation as a matter of law?        2
2. Even if Plaintiff’s unfair competition claim was properly pled, does the undisputed fact that Strand has no brand recognition in the content of its copyrights preclude

Plaintiff’s theory of unfair competition as a matter of law?        2

3. Can Plaintiff prove any actual damages that are not merely speculative?        2
4. Does the undisputed fact that Plaintiff only registered its copyrights after discovering the Defendants’ alleged infringements preclude all statutory damages as a matter of law?        2

3. STATEMENT OF UNDISPUTED MATERIAL FACTS        2

1. Strand’s “Trade Secret” is Public        2
2. Strand Lacks Brand Recognition in its Copyrighted Content        3
3. Strand has not Produced Quantifiable Evidence of Actual Damages        3
4. Strand Alleges Infringement that Predates the Dates of its Copyright Registrations ... 4

4. SUMMARY JUDGMENT STANDARD        5
5. ARGUMENT AND AUTHORITIES        6

1. Because Strand’s Software is Public, it Cannot be a Trade Secret as a Matter of Law 6
2. Strand Cannot Prove Unfair Competition because it Lacks an Enforceable Brand        7
3. Any Actual Damages that Strand may Attempt to Prove are Merely Speculative        8
4. The Alleged Pre-registration Infringement Bars Recovery of any Statutory Damages 8

6. CONCLUSION        9

TABLE OF AUTHORITIES

CASES

Alcatel Usa, Inc. v. Cisco Systems, Inc., 239 F. Supp. 2d 660, 669-670 (E.D. Tex. 2002)

(J. Brown)        8

Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 236 & n.8 (5th Cir. 2010)        7

Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ............................................................... 5, 6

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)        6

Coreclarity, Inc. v. Gallup, Inc., Civil Action No. 4:20-CV-601 at *6 (E.D. Tex. 2020)

(J. Mazzant)        7

Geiserman v. MacDonald, 893 F.2d 787, 793 (5th Cir. 1990)        6

Lexmark Intern., Inc. v. Static Control Components, Inc., 572 U.S. 118, 134 (2014)        7

Mason v. Montgomery Data, Inc., 967 F.2d 135, 143-44 (5th Cir. 1992)        8

Matsushita Elec. Indus. v. Zenith Radio, 471 U.S. 574 (1986)        5

Metallurgical Indus., Inc. v. Fourtek, Inc., 790 F.2d 1195, 1208 (5th Cir.1986)        8

Procter & Gamble Co. Amway Corp., 242 F.3d 539 n.52 (5th Cir. 2001)        7

Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998)        6

ResMan, LLC v. Karya Prop. Mgmt., Civil Action 4:19-CV-00402 at * (E.D. Tex. Aug 04, 2021) (J. Mazzant)        6

19. Credentialing Support Servs., L. L.C. v. Hammond Surgical Hosp., L. L.C., 946 F.3d 780, 787 (5th Cir. 2020)        8

Savage Tavern, Inc. v. Signature Stag, LLC, 5:21-CV-078-H (N.D. Tex. Mar 08, 2022)        7

Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 450 (5th Cir. 2017)        7

SynQor, Inc. v. Vicor Corp., 2:14-CV-00287-RWS-JBB (E.D. Tex. Aug 11, 2022) (J. Schroeder)

......................................................................................................................................................... 5

STATUTES

17 U.S.C. § 412........................................................................................................................... 8, 9

RULES

Fed. R. Civ. P. 56(a) ................................................................................................................... 1, 5

TREATISES

NIMMER ON COPYRIGHT § 7.16(c) (2019)        8

EVIDENCE AND APPENDICES

App. A, Strand Dep. (Aug. 29, 2022) ................................................................................. 2, 3, 4, 5

App. B, Email from Douglas Rees, Doug.Rees@cooperscully.com (Sep. 1, 2022)        2

App. C, Strand Dep. Ex. 1, Copyright Public Catalog (Jul. 15, 2021)        2

App. E, Pl’s 2nd Am. Compl., Dkt. No. 25 pg. 6 ¶ 33 (May 4, 2022)        4

BRIEF IN SUPPORT OF MOTION

1. SUMMARY STATEMENT

1. Plaintiff has sued Defendants for copyright infringement, unfair competition, and trade secret misappropriation.1 Before the Court is the Defendants’ motion to dismiss all but the Plaintiff’s copyright infringement claim against Defendant Artec.2
2. Although the dismissal issue is fully briefed and remains ripe for justiciability3 discovery is now closed and the deadline for summary judgment motions are due.4
3. Thus, in an abundance of caution and subject to the Court’s disposition on Defendants’ motion to dismiss, Defendants have concurrently filed an answer and affirmative defenses and herein seek partial summary judgment on Plaintiff’s unfair competition and misappropriation of trade secrets claims, and further seek partial summary judgment as to any actual or statutory damages that Plaintiff may assert.
4. In effect, by this motion for partial summary judgment, Defendants seek that Plaintiff be permitted to pursue only its copyright infringement claim, and that any recoverable damages therefrom be restricted to a disgorgement of the Defendants’ profits.

1  Dkt. No. 25.

2  Dkt. No. 34.

3 Dkt Nos. 34, 38, and 42.

4 See Dkt. No. 37.

2. ISSUES TO BE DECIDED BY THE COURT

1. Even if Plaintiff’s trade secret claim was properly pled, does the undisputed fact that Strand published its trade secret preclude Plaintiff’s theory of trade secret misappropriation as a matter of law?5

2. Even if Plaintiff’s unfair competition claim was properly pled, does the undisputed fact that Strand has no brand recognition in the content of its copyrights preclude Plaintiff’s theory of unfair competition as a matter of law?6

3. Can Plaintiff prove any actual damages that are not merely speculative?7

4. Does the undisputed fact that Plaintiff only registered its copyrights after

discovering the Defendants’ alleged infringements preclude all statutory damages as a matter of law?8

3. STATEMENT OF UNDISPUTED MATERIAL FACTS

1. Strand’s “Trade Secret” is Public

5. Strand registered a copyright for the trade secret it asserts against the Defendants in this dispute.9
6. Strand’s counsel acknowledges that a registered copyright is publicly available.10

7. Strand acknowledges that the underlying content of Strand’s copyrights have been published and does not consider Strand’s assertions that the content is “proprietary” and “confidential” to necessarily mean that they are not publicly available.11

5 Compare supra ¶¶ 1-2 with infra Parts III.A and V.A. 6 Compare supra ¶¶ 1-2 with infra Parts III.B and V.B. 7 Compare supra ¶¶ 1-2 with infra Parts III.C and V.C. 8 Compare supra ¶¶ 1-2 with infra Parts III.D and V.D.

9 App. A, Strand Dep. 65:20-66:3 (Aug. 29, 2022). See also App. C, Strand Dep. Ex. 1, Copyright Public Catalog (Jul. 15, 2021).

10 App. B, Email from Douglas Rees, Doug.Rees@cooperscully.com (Sep. 1, 2022) (“The copy registration is publicly available and . . . you can look them up yourself . . . You could have ordered copies from the copyright office at any time[.]”).

11 Compare App. A, Strand Dep. 19:14-20:5 and App. A, Strand Dep. 21:2-25. See also App. C, Strand Dep. Ex. 1, Copyright Public Catalog.

2. Strand Lacks Brand Recognition in its Copyrighted Content

8. Strand’s prospective clients might recognize Strand by its name, but not by the content subject to the present dispute.12
9. Strand’s existing clients would only recognize Strand by its content “if they worked with them for a while.”13

3. Strand has not Produced Quantifiable Evidence of Actual Damages

10. Strand does not know what its damages have been.14

11. Strand has never licensed its copyrights, never conducted any study, report, or reviewed data to determine the reasonable royalties of a copyright license, and isn’t sure how it would calculate such damages.15
12. Strand doesn’t know how it would prove any of its damages without reliance on an expert witness.16
13. Strand’s only inquiry into damages has been to present the topic to its expert witness David Leathers, but neither knows which questions have actually been presented to him nor how he has used the data available to him.17
14. Plaintiff can’t confirm which of Strand’s damage theories it relies on expert witness David Leathers to prove and had hoped he would opine on all available damage theories.18

12 App. A, Strand Dep. 70:3-23.

13 Id. at 70:4-71:4.

14 Id. at 76:4.

15 Id. at 77:25-78:6.

16 Id. at 74:22-75:9; 76:4.

17 Id. at 76:5-76:24; 77:25-78:6.

18 App. A, Strand Dep. 72:10-22; 74:3-17; 76:5-8.

15. Strand did not provide their expert David Leathers with information from which he could calculate their lost profits.19
16. Leathers did not conduct any research into potential loss by Plaintiff of its market share.20
17. Leathers reviewed the competitive impact of Defendants’ actions but did not

include any of this in his report because its “very difficult to quantity the copyright owners’ or trade secret owners’ actual losses” and he couldn’t find anything quantifiable that he could include.21

18. Leathers inquired about the Plaintiff’s costs of corrective advertising but didn’t have the information to make that calculation and thus never reported on it.22
19. Leathers never requested information about Strand’s reasonable royalty rates and never received information from which he could calculate Strand’s reasonable royalty rates.23

4. Strand Alleges Infringement that Predates the Dates of its Copyright Registrations

20. Plaintiff alleges that “Defendants’ infringement began prior to the successful registration of copyrights for the Strand Plans and Strand Program.”24
21. Even though, “over the years”, third party entities have allegedly copied

Plaintiff’s standard notes and details, Strand did not register any copyrights for these materials until after Defendants allegedly copied them.25

19 App. D, Leathers Dep. 27:16-19 (Aug. 19, 2022). See also Id. at 31:7-9.

20 Id. at 27:20-22.

21  Id. at. 27:23-28:19.

22  Id. at 28:20-29:18.

23 Id. at 29:19-30:7.

24 App. E, Pl’s 2nd Am. Compl., Dkt. No. 25 pg. 6 ¶ 33 (May 4, 2022).

22. Strand delayed registering its copyrights for seven years––until after it believed they had been copied.26
23. Strand is unsure if it would have ever registered any of its copyrights except for the purpose of pursuing litigation against the Defendants.27
24. Leathers’ report does not discuss statutory damages beyond the possibility that it may be available, and Leathers does not expect to opine further.28

4. SUMMARY JUDGMENT STANDARD29

25. Federal Rule of Civil Procedure 56 requires that summary judgment be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.”30 A factual dispute is genuine if the evidence could lead

a reasonable jury to find for the nonmoving party.31 The applicable substantive law identifies which facts are material.32

26. In determining whether a genuine issue for trial exists, a court views all inferences drawn from the factual record in the light most favorable to the nonmoving party.33 The moving party bears “the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and

26 App. A, Strand Dep. 20:16-21:1.

27 Id. at 25:1-13.

28 Compare App. D, Leathers Dep. . 15:18-21 and App. D, Leathers Dep. 18:10-14.

29 This section is copied verbatim from SynQor, Inc. v. Vicor Corp., 2:14-CV-00287-RWS-JBB (E.D. Tex. Aug 11, 2022) (J. Schroeder).

30  Fed. R. Civ. P. 56(a).

31 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

32 Id.

admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.”34

27. Once a party has made that showing, the nonmoving party bears the burden of establishing otherwise by supporting his contentions with some evidence.35 The non-moving party cannot “rest upon mere allegations or denials of [the] pleading but must set forth specific facts showing there is a genuine issue for trial.”36 “Summary judgment is appropriate if the nonmovant fails to make a showing sufficient to establish the existence of an element essential to a party’s case.”37

5. ARGUMENT AND AUTHORITIES

1. Because Strand’s Software is Public, it Cannot be a Trade Secret as a Matter of Law

28. “Information that is public knowledge or generally known in an industry cannot be a trade secret. In addition, information that is generally known or readily available by

independent investigation is not a trade secret”.38

29. Here, both Plaintiff’s representative and its counsel acknowledge that the Strand “trade secret”, as alleged, is publicly available as a copyright.39
30. Accordingly, even if the Plaintiff’s misappropriation pleadings survive the Defendants’ motion to dismiss, the issue cannot survive the present motion for summary judgment because publicly available information is not a trade secret as a matter of law.

34 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotations omitted); Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).

35 Geiserman v. MacDonald, 893 F.2d 787, 793 (5th Cir. 1990) (citing Celotex, 477 U.S. at 324).

36 Anderson, 477 U.S. at 248 (citation omitted).

37 Bluebonnet Hotel Ventures, LLC v. Wells Fargo Bank, N.A., 754 F.3d 272, 276 (5th Cir. 2014) (quoting Celotex, 477 U.S. at 322).

38 ResMan, LLC v. Karya Prop. Mgmt., Civil Action 4:19-CV-00402 at * (E.D. Tex. Aug 04, 2021) (J. Mazzant) (quoting and sustaining jury instructions).

39 See supra Section III.A.

2. Strand Cannot Prove Unfair Competition because it Lacks an Enforceable Brand

31. The Lanham Act applies the same test for unfair competition as it does for trademark infringement actions.40
32. Thus, to prevail on a claim for unfair competition “in violation of the Lanham Act, a plaintiff must [prove] that: (1) the plaintiff possesses a legally protectable trademark and

(2) the defendant’s use of this trademark creates a likelihood of confusion as to source, affiliation, or sponsorship.”41

33. Here, Strand acknowledges that neither its clients nor prospective clients associate any brand or source identifying attributes to the copyrighted content subject to this dispute.42 Further, Plaintiff does not apparently have evidence that a reasonable fact finder might rely upon to conclude the likelihood of a consumer confusing the source of either Party’s content with that of the other.
34. Strand cannot therefore prove that Defendants’ actions threaten a likelihood of source confusion with a legally protected trademark and, absent any dispute of material fact on this point––even if Plaintiff’s unfair competition pleadings survive the Defendants’ motion to dismiss––the issue cannot survive the present motion for summary judgment.

40 See, e.g., Savage Tavern, Inc. v. Signature Stag, LLC, 5:21-CV-078-H (N.D. Tex. Mar 08, 2022) (citing, inter alia, Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 236 & n.8 (5th Cir. 2010)); cf. Coreclarity, Inc.

v. Gallup, Inc., Civil Action No. 4:20-CV-601 at *6 (E.D. Tex. 2020) (J. Mazzant) (citing to Amazing Spaces, 608 F.3d 225 at n.8). See also Procter & Gamble Co. Amway Corp., 242 F.3d 539 n.52 (5th Cir. 2001) (“there is no essential difference between trade-mark infringement and what is loosely called unfair competition”), abrogated on other grounds by Lexmark Intern., Inc. v. Static Control Components, Inc., 572 U.S. 118, 134 (2014).

41 Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 450 (5th Cir. 2017) (cleaned up).

42 See supra Part III.B.

3. Any Actual Damages that Strand may Attempt to Prove are Merely Speculative

35. “Estimation of damages . . . should not be based on sheer speculation. If too few facts exist to permit the trier of fact to calculate proper damages, then a reasonable remedy in law is unavailable.”43
36. Here, Plaintiff does not know its own damages and is not even sure how it would prove any such damages without reliance on its expert witness, David Leathers.44 Yet Mr. Leathers has neither attempted to report on Strand’s reasonable royalty rates, lost profits, lost market share, or corrective advertising, nor has he been provided information sufficient to calculate such.45
37. Consequently, Plaintiff simply cannot present nonspeculative information sufficient to permit the trier of fact to calculate actual damages––which are thus unavailable.

4. The Alleged Pre-registration Infringement Bars Recovery of any Statutory Damages

38. Barring a 3-month grace period for published works, statutory damages may not be recovered for copyright infringement that predates the effective date of the registration.46
39. In Southern Credentialing Support Services v. Hammond Surgical Hospital, 946 F.3d 780 (5th Cir. 2020), the Fifth Circuit interpreted the statute to strictly mean “Congress prohibited statutory damages when any infringement precedes registration.”47

43 Alcatel Usa, Inc. v. Cisco Systems, Inc., 239 F. Supp. 2d 660, 669-670 (E.D. Tex. 2002) (J. Brown), quoting Metallurgical Indus., Inc. v. Fourtek, Inc., 790 F.2d 1195, 1208 (5th Cir.1986).

44 See supra Part III.C.

45 See Id.

46 See 17 U.S.C. § 412.

47 S. Credentialing Support Servs., L.L.C. v. Hammond Surgical Hosp., L.L.C., 946 F.3d 780, 787 (5th Cir. 2020) (emphasis added). See also 2 NIMMER ON COPYRIGHT § 7.16(c) (2019) (“The bar on awarding heightened damages applies . . . even if the sole defendant, after registration, engaged in a different type of infringement from its preregistration conduct.”); Mason v. Montgomery Data, Inc., 967 F.2d 135, 143-44 (5th Cir. 1992).

40. Here, Plaintiff has alleged that “Defendants’ infringement began prior to the successful registration of copyrights for the Strand Plans and Strand Program”, admits delaying registration for seven years, and only registered the copyrights for the purpose of pursuing litigation against the Defendants after learning of the alleged infringement.48
41. Accordingly, even if Plaintiff establishes copyright infringement against one or more of the Defendants at trial, 17 U.S.C. § 412 bars recovery of statutory damages as a matter of law.

6. CONCLUSION

42. The Parties do not dispute that Strand published its trade secret, and publicly available information cannot be a trade secret as a matter of law.49 Therefore, even if Plaintiff’s trade secret claim was properly pled, the publication of its trade secret precludes Plaintiff’s trade secret misappropriation claim.
43. The Parties do not dispute that Strand has no brand recognition in the content of its copyrights, and absent an enforceable brand there is no Lanham Act claim for unfair competition as a matter of law.50 Thus, even if Plaintiff’s unfair competition claim was properly pled, Strand’s lack of an enforceable brand preclude Plaintiff’s unfair competition claim.
44. The Parties do not dispute that Plaintiff has made no quantifiable showing actual damages, and a Party cannot recover damages that are merely speculative.51 Any claim for actual damages that Plaintiff may assert are therefore precluded.

48 See supra Part III.D.

49 Compare supra ¶¶ 1-2 with Parts III.A and V.A, supra. 50 Compare supra ¶¶ 1-2 with Parts III.B and V.B, supra. 51 Compare supra ¶¶ 1-2 with Parts III.C and V.C, supra.

45. The Parties do not dispute that Plaintiff only registered its copyrights after discovering the Defendants’ alleged infringements, and any infringement predating a copyright registration precludes all statutory damages as a matter of law.52 Accordingly, the relevant statutes prohibited Plaintiff from recovering any statutory damages.

Dated: September 9, 2022

  /Brandon J. Leavitt/ Brandon James Leavitt State Bar No. 24078841 brandon@uslawpros.com

LEAVITT & ELDREDGE LAW FIRM

4204 SW Green Oaks Blvd., Suite 140 Arlington, TX 76107

(214) 727-2055

CERTIFICATE OF SERVICE

By my signature above I hereby certify that all counsel of record was served with the foregoing document via CM/ECF and electronic mail.

52 Compare supra ¶¶ 1-2 with Parts III.D and V.D, supra.

Exhibit A

Exhibit B

Exhibit C

Exhibit D

Exhibit E