Kwan Software Engineering, Inc. v. Foray Technologies, LLC

Filing 62

ORDER DENYING PLAINTIFF'S MOTION FOR A PRELIMINARY INJUNCTION; DENYING MOTIONS FOR LEAVE TO FILE SUPPLEMENTAL EVIDENCE 48 52 22 (Illston, Susan) (Filed on 1/22/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

United States District Court
For the Northern District of California

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KWAN SOFTWARE ENGINEERING, INC.,

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No. C 12-03762 SI
ORDER DENYING PLAINTIFF’S
MOTION FOR A PRELIMINARY
INJUNCTION; DENYING MOTIONS
FOR LEAVE TO FILE SUPPLEMENTAL
EVIDENCE

Plaintiff,
v.
FORAY TECHNOLOGIES, LLC,
Defendant.

/

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Plaintiff Kwan Software Engineering, Inc., d/b/a Veripic, Inc. (“Veripic”) has moved to enjoin

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defendant Foray Technologies LLC (“Foray”) from making certain public representations that allegedly

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constitute false advertising under § 43(a) of the Lanham Act and under California law. Foray has filed

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an opposition, and Veripic has replied. The Court held a hearing on the motion on December 17, 2012.

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Having considered the parties’ arguments, the Court hereby DENIES plaintiff’s motion for a preliminary

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injunction, for the reasons discussed below.

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BACKGROUND

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Veripic is a California corporation that provides software for handling digital evidence to police

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and fire departments, as well as to other entities that need to store and retrieve photos, video, and audio

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files. First Amended Complaint (“FAC”) ¶ 1, 7, 9. Veripic and Foray are direct competitors in the

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digital evidence-related software market, which mainly consists of law enforcement agencies. Id. ¶ 9.

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Veripic’s complaint states seven causes of action against Foray: (1) copyright infringement; (2)

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inducement of breach of contract; (3) contributory and induced copyright infringement; (4) violation

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of the Digital Millennium Copyright Act; (5) false advertising and unfair competition under the Lanham

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Act; (6) false advertising under California Law; and (7) unfair competition under California Law.

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However, Veripic’s instant motion only seeks to enjoin Foray’s behavior with respect to allegations of

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false advertising under § 43(a) of the Lanham Act (15 U.S.C. § 1125(a)) and under Cal. Bus. & Prof.

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Code § 17500, et seq.
Veripic produces and sells the “Digital Photo Lab” (“DPL”) software, which is “a centerpiece

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of its digital evidence management suite designed for law enforcement agencies.” FAC ¶ 8. The “most

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United States District Court
For the Northern District of California

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popular” feature of Veripic’s DPL software is the “Calibration Module,” which permits users to measure

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the real life length of objects (in inches or metric units) or distances between objects in a photo using

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a “simple point and click.” Id. ¶ 10. As a result, users can know the precise distances within photos and

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accurately print life-size or scaled images. Id. ¶ 11.

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Foray produces and sells the Authenticated Digital Asset Management System (“ADAMS”)

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software to the same customer base as Veripic targets with its DPL software.1 Id. ¶ 9. Foray’s ADAMS

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software has an “Image Calibration Utility” that performs substantially the same function as Veripic’s

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“Calibration Module” – to allow users to accurately abstract real-life distance from a photo. Id. ¶ 15-16.

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However, until July 2009, Foray’s Utility did so in a more “cumbersome” way than Veripic’s “simple

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point and click” method. Id. Foray’s Utility required customers to know the exact real life horizontal

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or vertical distance in a photo and to engage in a “multi-step process” in order to obtain real life

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measurements. Id. ¶ 16.

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The ADAMS software employs a “hash function,” which allows the user to validate whether a

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piece of digital evidence has been manipulated or altered between the time it is entered into the ADAMS

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software system and a later time when a user wishes to make use of that piece of digital evidence. Id.

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¶ 32. Veripic’s DPL software has technology that allows the user to validate not only whether digital

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Although “ADAMS” originally referred to the software at issue in this case, Foray now uses
“ADAMS” to cross-brand a suite of related products, including ADAMS Property & Evidence, ADAMS
Crime Scene Photo/Video, ADAMS Bag & Tag, ADAMS Latent/ACE-V, and ADAMS Video
Interview.
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evidence has been altered since it was entered in the Veripic software system, but also whether the

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digital evidence has been altered from the moment the picture was originally taken.
The gravamen of Veripic’s false advertising claim is that since 2008, Foray has misled the public

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about certain industry standards and the capabilities of Foray’s own software, and by implication, the

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capabilities of Veripic’s similar software, insofar as they comply with those standards. FAC ¶ 22-39.

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In particular, it is alleged that Foray falsely represents that its ADAMS software has the ability to

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“authenticate” images consistent with guidelines propounded by the Scientific Working Group on

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Imaging Technology (“SWGIT”). Id. ¶ 23-24. Accordingly, Veripic now seeks to enjoin Foray from

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(1) using the name “Authenticated Digital Asset Management System” or “ADAMS” or any other name

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United States District Court
For the Northern District of California

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that states or implies that Foray’s software authenticates digital assets; (2) stating that Foray’s software

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authenticates digital assets; (3) representing that SWGIT guidelines endorse the use of hash functions

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as the best way to authenticate digital assets and that Foray’s software complies with SWGIT guidelines;

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and (4) stating that Foray’s software is the only software that complies with the SWGIT “requirement”

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contained in the workflow described in SWGIT Section 13. If successful on this motion, Veripic also

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requests that Foray post in a prominent place on the landing site of its website that it has been

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preliminarily enjoined from making the above statements and linking a copy of the Court’s order

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granting the motion.

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LEGAL STANDARD

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“A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the

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merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance

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of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Nat. Res. Def.

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Council, Inc., 555 U.S. 7, 20 (2008). A preliminary injunction is an extraordinary remedy never

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awarded as of right. Id. at 24 (citing Munaf v. Geren, 553 U.S. 674, 689-690, (2008)). In each case,

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courts “must balance the competing claims of injury and must consider the effect on each party of the

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granting or withholding of the requested relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. at 24

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(citing Amoco Production Co. v. Village of Gambell, AK, 480 U.S. 531, 542 (1987)).

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DISCUSSION

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Veripic contends that an injunction is necessary in order to prevent a loss of prospective

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customers and damage to its goodwill. Veripic also contends that Foray’s misrepresentations threaten

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the effectiveness of criminal investigations and prosecutions nationwide, where law enforcement

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officials are erroneously relying on evidence management software that is not capable of doing what

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it purports to do. Foray responds that Veripic’s fears are overstated because the purchasers are highly

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sophisticated consumers capable of discerning whether the product they purchased is actually capable

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of performing the functions it purports to perform. More important, Foray denies that the three “false”

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statements at issue here are literally false, as required by the Lanham Act. Therefore, Foray contends

United States District Court
For the Northern District of California

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that Veripic has no likelihood of success on the merits. It is to that first issue the Court now turns.

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1.

Likelihood of Success on the Merits

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To succeed on a claim of false advertising under the Lanham Act, the plaintiff must show that:

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(1) the defendant made a false statement either about its own or another’s product; (2) in a commercial

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advertisement; (3) that deceived or has the tendency to deceive a substantial segment of its audience;

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(4) that the deception is material, in that it is likely to influence the purchasing decision; (5) that the

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defendant caused its false statement to enter interstate commerce; and (6) plaintiff has been or is likely

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to be injured as a result of the false statement, either by direct diversion of sales from itself to the

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defendant, or by a lessening of the goodwill associated with plaintiff’s product. Newcal Indus., Inc. v.

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Ikon Office Solutions, 513 F.3d 1038, 1052 (9th Cir. 2008).2

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To demonstrate falsity within the meaning of the Lanham Act, a plaintiff may show that the

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statement was literally false, either on its face or by necessary implication, or that the statement was

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literally true but likely to mislead or confuse consumers. Southland Sod Farms v. Stover Seed Co., 108

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F.3d 1134, 1139 (9th Cir. 1997). To be “literally false” the statement must be unambiguously false.

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In re Century 21-RE/MAX Real Estate Adver. Claims Litig., 882 F. Supp. 915, 923 (C.D. Cal. 1994).

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The parties agree that false advertising under California law requires the same showing of
falsity as the Lanham Act.
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When evaluating statements for literal falsity, the statements should be analyzed in their full

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context. Southland Sod Farms,108 F.3d at 1139. Where the statements were made to sophisticated

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consumers with unique background knowledge and experience, the court should consider that as part

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of the relevant context. See, e.g.,Core-Vent Corp. v. Nobel Industries, 163 F.3d 605, at * 4 (9th Cir.

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1998) (unpub.) (“Of course, we do not ignore the context in which these studies were presented ( . . .

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to a professional conference and . . . in a scientific journal); Campagnolo S.R.L. v. Full Speed Ahead,

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Inc., 2010 U.S. Dist. LEXIS 46176, at *18 (W.D. Wash. May 11, 2010) ( to determine literal falsity,

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“the first question is: what does the person to whom the advertisement is addressed find to be the

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message?”); Utah Medical Products v. Clinical Innovations, 79 F. Supp. 2d 1290, 1309 (D. Utah 1999)

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United States District Court
For the Northern District of California

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(“While actual consumer confusion is not necessary to assert a claim of literal falsity, the perspective

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of the relevant consumer population is necessary in determining whether the advertising could be

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viewed as false.”).

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Three statements are at the heart of Veripic’s false advertising claim. Foray contends that

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Veripic cannot establish falsity, materiality, and injury for any of the three statements. As to falsity,

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Veripic contends only that the statements are literally false. Veripic does not present any evidence that,

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in the alternative, the statements misled, confused, or deceived consumers. All three statements revolve

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around the meaning of the term “authenticity” as that term is understood by law enforcement customers

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and others in the market for digital evidence management software.

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A.

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Veripic alleges that Foray has disseminated the following false statement in advertisements and

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responses to requests for proposals: “Foray’s ADAMS software is the only software that complies with

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the SWGIT ‘requirement’ contained in the workflow described in Section 13, Best Practices for

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Maintaining the Integrity of Digital Images and Digital Video of the SWGIT Guidelines.” Mot. at 7.

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Connected with that statement, Foray also advertises “NOTE: While some vendors may claim they are

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ASCLD or SWGIT compliant, no other digital evidence management vendor complies with the SWGIT

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workflow #2 [described in Section 13 of the SWGIT Guidelines]. ONLY the FORAY ADAMS solution

Statement One

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meets this requirement!” Id. at 9. Foray made these statements to law enforcement agencies in Oakland

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County, Michigan and Seattle, Washington. Kwan Decl., Exs. A, B.

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Veripic argues that this statement is literally false in two ways: (1) the Section 13 SWGIT

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workflow (“Section 13”) referenced in Foray’s advertisement is not a “requirement,” but rather it is

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“workflow #2” of four “example” workflows listed in that section; (2) the word “only” is literally false

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because ADAMS is not alone among software consistent with this workflow, since Veripic’s DPL

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software is also consistent with this workflow. Foray contends that this statement is accurate in its

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context.
The “requirement” at issue here is referred to as an “example” in the SWGIT workflow. Siegel

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United States District Court
For the Northern District of California

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Decl., Ex 1 at 4. Each “workflow” is simply a list of steps users may take in order to achieve some

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software objective. SWGIT describes these workflows as “best practices” and prefaces that, “[t]he

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following . . . list of specific workflow examples . . . is not exhaustive as each situation requires tailoring

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a specific process that should be outlined in an organization’s SOPs.” Id. Veripic contends that calling

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an example a “requirement” is literally false. Foray argues that its use of “requirement” does not mean

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that its software is the only way to be consistent with the SWGIT workflow. Rather, its ADAMS

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software is one known way to comply with SWGIT. In context, the Court agrees with Foray. The

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Oxford English Dictionary defines “requirement” as “something wanted or needed.” Oxford English

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Dictionary, 3d Ed. Here, Foray states that its use of “requirement” is intended to convey that its

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software uses a series of steps known to be wanted or needed by the example workflow – i.e, consistent

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with it, as it is written. Foray argues that its use of “requirement” does not exclude the possibility that

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others can add or change steps in the workflow. Its use here only guarantees to customers that Foray’s

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software, at a minimum, is consistent with the example.

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Veripic also takes issue with Foray’s assertion that only its ADAMS software complies with

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workflow #2. Veripic contends that this use of “only” is literally false because Veripic’s DPL software

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also “fits within the same workflow.” Mot. at 10. However, Veripic undercuts its argument in the very

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same sentence, noting that in complying with the workflow, DPL “also provides other features to ensure

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the integrity of digital evidence stored in its stems.” Id. Veripic’s product cannot be literally consistent

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with the workflow where its product deviates from the steps listed in that workflow in order to “provide
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other features.” Foray contends that it uses “only” to mean that its software is the only one that meets

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the workflow’s specific series of steps, not its general outcome. As Foray points out, the left column

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of workflow #2 describes a series of steps in which copies of the original image are created, so that

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processing functions can be performed in an outside program, while maintaining the original image.

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See Kwan Decl., Ex. A at 13. In other words, the user can make working copies of digital files and work

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on them in other imaging software, such as Adobe Photoshop. Veripic specifically eschewed this

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process as cumbersome and brags that its DPL “has methods for enhancing images without changing

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the actual file, and without creating messy duplicates, allowing you to enhance your evidence but never

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compromise it.” Witzke Decl., Ex. A. Thus, Veripic’s DPL software does not simply have “other

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United States District Court
For the Northern District of California

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features.” Rather, it has an entirely different, perhaps better or simpler method for achieving the

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outcome described in workflow #2, that nonetheless does not literally comply with it. Moreover, Foray

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has shown that it literally complies with the specific set of steps described in the workflow, regardless

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of whether other workflows can be designed to achieve the same outcome. Therefore, the Court cannot

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say that Veripic is likely to succeed on the merits of its Lanham Act claim with respect to this statement,

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where it has not made a threshold showing of literal falsity.

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B.

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Veripic argues that Foray’s statement “that its ADAMS software complied with SWGIT

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guidelines that state that the use of a hash function is the best way to authenticate digital assets” is also

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literally false. According to Veripic, hash functions do not allow a user to authenticate, as SWGIT uses

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that term, but rather, hash functions validate integrity. Section 13 of the SWGIT guidelines, cited by

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Foray in support of the above statement, is entitled “Best Practices for Maintaining the Integrity of

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Digital Images and Digital Video.” Siegel Decl., Ex. 1. Veripic says this section has “nothing to do with

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authenticating digital assets.” Mot. at 10. On Veripic’s reading, SWGIT guidelines draw a bright line

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distinction between “integrity” and “authenticity.” SWGIT guidelines state, “authenticity differs

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significantly from integrity.” Siegel Decl., Ex. 1. Accordingly, “[i]ntegrity ensures that the information

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presented is complete and unaltered from the time of acquisition until its final disposition. For example,

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the use of a hash function can verify that a copy of a digital image file is identical to the file from which

Statement Two

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it was copied, but it cannot demonstrate the veracity of the scene depicted in the image.” Id., Ex. 2.

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Authenticating software, however, validates whether “a questioned image or video is an accurate

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representation of the original data by some defined criteria.” Id. In response, Foray argues that there

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are various industry understandings of “authenticity” and “integrity,” and that integrity as Veripic

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defines it, is really a subset of authenticity. In other words, there are at least two types of authenticity:

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(1) acquisition authenticity (what Veripic calls “integrity”), which ensures that the file itself has not

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been changed since created or acquired; and (2) subject matter authenticity, which ensures that the photo

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is what it purports to be, the substance of the photo has not been altered, and one can rely on the photo

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to draw real world conclusions, such as distance and position.

United States District Court
For the Northern District of California

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Although Veripic argues that the distinction between integrity and authenticity is inviolate, Foray

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presents significant evidence that the terms are ambiguous, overlapping, and sometimes interchangeable.

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Notwithstanding their warning that the terms are distinct, SWGIT’s guidelines, read in their entirety,

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use those terms loosely and interchangeably. For example, in Section 13, SWGIT states “authentication

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is the process of substantiating that the content is an accurate representation of what it purports to be.”

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Siegel Decl., Ex. 1. Yet in Section 14, SWGIT refers to authenticity, stating, “[i]n the absence of a

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witness who can testify to the origin of a questioned image or video, it may be possible for an examiner

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to authenticate such data by identifying its origin.” Id. Ex. 2. In other words, Section 14 suggests that

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authentication requires confirmation of the origin of data, which is precisely what Veripic says is part

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of integrity validation, not authentication. In fact, how would one know that data is an accurate

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representation of what it purports to be (Veripic’s “authenticity”) without necessarily confirming that

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the data is complete and unaltered (Veripic’s “integrity”) since its creation? Veripic’s own promotional

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materials define Foray’s ADAMS as “acquisition authentication” software, which “refers to knowing

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that a photo hasn’t changed starting from when it enters the computer moving forward.” Witzke Decl.,

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¶ 7, Ex. A, VeriPic FAQ ¶ 2 (emphasis in original).

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Moreover, law enforcement professionals in the industry use authenticity in a variety of ways,

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some of which are consistent with what Foray claims its ADAMS software actually does. According

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to Foray’s expert Kerri McClary, “authenticate” frequently refers to the various steps taken when

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capturing, processing and handling digital photographs to maintain their “authenticity” in order to
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provide a foundation in court that the digital photograph accurately portrays the scene.3 McClary Decl.,

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¶ 5. Veripic’s rebuttal declaration by Richard McEvoy, Jr., does not actually dispute this. See McEvoy

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Decl., ¶ 10 (“procedures for authentication of digital evidence must encompass the entire lifespan of that

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evidence . . . ”). Authenticity in the legal evidentiary context encompasses both acquisition and subject

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matter authenticity, i.e., a witness may testify that a photo accurately depicts the then-existing reality,

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and also by implication, that the photo file has not been manipulated.
The evidence presented by the parties demonstrates that at best, that term authenticity is

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ambiguous as used in Foray’s public statements. The SWGIT definition cited by Veripic states that

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authentication is used “to discern if a questioned image or video is an accurate representation of the

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United States District Court
For the Northern District of California

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original data by some defined criteria.” Siegel Decl., Ex. 2. However, SWGIT Guidelines nowhere

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define the criteria. Accordingly, Veripic has not shown that there is a clear-cut definition of authenticity

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from which Foray’s statements clearly and unambiguously deviate. Customers in the market for

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“authenticating” software have multiple understandings of what authenticating software is capable of

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doing and what criteria to use to set authentication expectations. Sellers and industry experts similarly

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have multiple understandings. Given this ambiguity, the Court cannot say that Veripic is likely to

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succeed on the merits of its Lanham Act claim based on this statement.

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C.

Statement Three

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The third Foray statement Veripic alleges is literally false is that the “ADAMS software

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‘authenticates’ digital assets” and that therefore, Foray misleads consumer in naming its software

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“Authenticated Digital Asset Management System” (i.e., ADAMS). The view that its software

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authenticates is “a foundational part of Foray’s markets and sales of its software.” Mot. at 12. In

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support, Veripic cites the signature block of Foray employee emails, which describe Foray as offering

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“image authentication solutions.” Kwan Decl., Ex. E. This signature block, noting that Foray offers

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“solutions” plural, actually supports Foray’s contention that it uses authentication to refer to its suite

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of products that involve not just crime scene photographs, but also latent fingerprints, footwear

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Veripic’s evidentiary objection to the McClary declaration, that it was unsigned, is
OVERRULED. Foray has properly validated the signature. See Docket No. 47.
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impressions, blood spatter, and other kinds of evidence that its software authenticates, as industry

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consumers think of that term. Moreover, the Court has already discussed why Veripic has not

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demonstrated literal falsity by using SWGIT guidelines as the standard from which Foray’s claims of

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authenticity deviate.
Veripic contends that Foray’s definition of authenticity is also inconsistent with the way the

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National Institute of Standards and Technology (“NIST”) uses that term. Foray advertises that, “[o]nly

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Foray Technologies uses a SHA-256 secure hash algorithm, which is the current NIST standard (NIST

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FIPTS 180-2 Secure Hash Algorithm) for authenticating digital evidence.” Kwan Decl., Ex. A. NIST

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FIPTS 180-02 has four algorithms, SHA-1, SHA-256, SHA-384, and SHA-512. Id., Ex. D. These

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United States District Court
For the Northern District of California

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algorithms, including SHA-256, “produce a condensed representation” of a computer file called a

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“message digest.” Id. And the message digest for each computer file is unique. Id. Thus, software can

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deduce whether a file has been altered by comparing message digests at different points in the life of

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a file. And according to NIST, “[t]hese algorithms enable the determination of a message’s integrity.”

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Id. Thus, Veripic contends that nowhere does NIST FIPTS 180-2 state that these algorithms have

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anything to do with authentication.

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NIST does mention authentication in the very next sentence, stating that message digests help

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generate “authentication codes,” which are part of confirming “integrity.” Kwan Decl, Ex. D. Thus,

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rather than resolve the ambiguity, Veripic’s reference to NIST only exacerbates it. Foray points to

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evidence from an October 2, 2012, press release in which NIST announced the winner of its five-year

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competition to find a new cryptographic hash algorithm, where it wrote, “[h]ash algorithms are use

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widely for cryptographic applications that ensure the authenticity of digital documents, such as digital

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signatures and message authentication codes.” Hennings Decl., ¶ 5, Ex. A. Moreover, Veripic’s

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president, John Kwan, used a similar understanding of authentication in a patent application, stating,

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“[t]his invention relates to methods of data authentication and more particularly, but not exclusively,

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provides a system and method for creating, attaching, and using [hash functions] of digital data to

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authenticate the claim.” Hennings Decl., ¶ 6, Ex. B.

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Veripic argues that Foray has for years used NIST and SWGIT as reference points to frame the

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meaning of “authentication” and it cannot now disclaim that use. As an example, Veripic points to a
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presentation by Foray’s vice president of program management, David Witzke, to the International

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Association for Identification, wherein he states that SWGIT “provide[s] us with the guidelines for the

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processing of anything digital.” Wu Decl., ¶¶ 3-4, Ex. W1. But later in that presentation, consistent

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with Foray’s position here, Witzke states, “[u]nder section 13 of the SWGIT guidelines we actually get

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into some of the requirements for tracking and maintaining the authentication of images.” Id. In other

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words, Foray is suggesting publicly that it understands SWGIT Section 13 to address acquisition

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authenticity.
Given the state of the evidence, Foray’s use of authenticity in its advertising is far from being

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literally false, understood in context. Veripic relies on a hair splitting, literal reading of NIST and

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United States District Court
For the Northern District of California

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SWGIT statements that are themselves inconsistent or ambiguous. Accordingly, Veripic has not offered

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evidence sufficient to justify an injunction because it has not shown likely success on the merits.

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Because Veripic is unlikely to be able to show falsity, the Court need not address the parties’ additional

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arguments regarding materiality and injury, except to say that Veripic’s arguments here likewise appear

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to be weak. Similarly, the Court need not address Foray’s argument that Veripic has unclean hands,

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and that Veripic’s authentication argument is actually an undeclared trademark infringement action.

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2.

Irreparable Harm

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Plaintiffs must also establish a likelihood that they will suffer irreparable harm absent injunctive

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relief. Winter v. Natural Resources Defense Council, 555 U.S. 7, 20 (2008). In particular, plaintiffs

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must establish that “remedies available at law, such as monetary damages, are inadequate to compensate

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for that injury.” Boomerangit, Inc. v. ID Armor, Inc., 2012 U.S. Dist. LEXIS 86382, at *11 (N.D. Cal.

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June 21, 2012).

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Veripic’s theory of irreparable harm is that it will lose prospective customers and business

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goodwill. While goodwill and loss of prospective customers may sometimes support a finding of

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irreparable harm, see Stuhlbarg Int’l Sale Co. v. John D. Brush & Co., 240 F.3d 832, 841 (9th Cir.

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2001), Veripic has presented no evidence of actual losses. At best, it presents a speculative declaration

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from its company president in which he states that six customers have told Veripic that it was their

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understanding that “Foray authenticated digital images in the same manner as Veripic.” Kwan Decl.
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¶ 25. Moreover, Kwan states that he only recently became aware of what Foray was telling customers

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to deceive them into believing Foray authenticates digital images. Id. ¶ 26. And “on information and

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belief,” Kwan believes that Veripic has lost several customers to whom Foray previously sent an

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advertisement regarding Foray’s alleged compliance with SWGIT Section 13’s “requirement.” Id. ¶ 27.

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Veripic’s arguments are unavailing for several reasons. First, as to the urgency of an injunction,

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Veripic was made aware, or should have been aware of, Foray’s alleged misrepresentations since at least

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June 1, 2011, when the City of Seattle made available to Veripic the Foray request for proposal response

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that contains the offending statements. See Kwan Decl., ¶ 8, Ex. B. Such a delay hardly bespeaks of

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the urgency typical in successful preliminary injunction motions. See Oakland Tribune, Inc. v.

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United States District Court
For the Northern District of California

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Chronicle Pub. Co., Inc. 762 F.2d 1374 (9th Cir. 1985) (“Plaintiff’s long standing delay seeking a

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preliminary injunction implies a lack of urgency and irreparable harm.”). Second, Veripic fails to

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present any evidence tending to show that the loss of customers is anything more than speculation or

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the result of legitimate competition. In fact, most customers purchase one of these competing software

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suites only after first reviewing responses to requests for proposals, company presentations and

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extensive research. Thus, any loss of customers may be due to the fact that as between ADAMS and

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DPL, customers with knowledge of the differences between the products – whether called integrity

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validation or authentication – prefer one brand over the other.

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19

Veripic has not shown that the harm it imagines is more than speculative. Accordingly, it has
not shown irreparable harm sufficient to justify a preliminary injunction.

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21

3.

Balance of Hardships

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Veripic seeks a broad, five part injunction, wherein Foray would be enjoined from (1) using the

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name “Authenticated Digital Asset Management System” or “ADAMS” or any other name that states

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or implies that Foray’s software authenticates digital assets; (2) stating that Foray’s software

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authenticates digital assets; (3) representing that SWGIT guidelines endorse the use of hash functions

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as the best way to authenticate digital assets and that Foray’s software complies with SWGIT guidelines;

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and (4) stating that Foray’s software is the only software that complies with the SWGIT “requirement”

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contained in the workflow described in SWGIT Section 13. Veripic also requests that Foray post in a
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1

prominent place on the landing site of its website that it has been preliminarily enjoined from making

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the above statements and linking a copy of the Court’s order granting the motion.

3

The scope of the relief sought goes far beyond preserving the status quo before trial. Veripic

4

effectively proposes that Foray discontinue or change the entire branding of its products. As Foray

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states, this would end its business during the pendency of this case. Such drastic relief cannot be

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supported only by speculation that future customers may not purchase Veripic products.

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4.

Public Interest
Veripic has not made a sufficient showing that the injunction it seeks is in the public interest.

10
United States District Court
For the Northern District of California

9

Veripic is correct that there may be crucial legal implications of having law enforcement erroneously

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rely on software that does not do what it purports to do. Veripic contends that ultimately, evidence may

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be thrown out of court because it was not properly authenticated. Mot. at 21. This concern, however,

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is overstated and unsupported. Here, sophisticated customers invest significant time and energy into

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purchasing this software, and also have precise understandings of what they need that software to be

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able to do in order to gather, store, and validate evidence in a legal setting. Veripic presents no evidence

16

to the contrary. Therefore, Veripic has not stated a compelling public interest in an injunction.

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18

CONCLUSION

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For the foregoing reasons, Veripic has not shown that an injunction should issue. Accordingly,

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the Court hereby DENIES Veripic’s motion for a preliminary injunction. The Court also DENIES as

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MOOT Foray’s motion for leave to file a declaration and deposition testimony and DENIES as untimely

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Veripic’s administrative motion for leave to file supplemental evidence. This order resolves Docket

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Nos. 22, 48 and 52.

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IT IS SO ORDERED.

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SUSAN ILLSTON
United States District Judge

Dated: January 22, 2013

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