Advanced Technology Services, Inc. v. KM Docs, LLC

Filing 53

ORDER GRANTING IN PART AND DENYING IN PART Defendants' 42 Motion for Summary Judgment. The Court declines to exercise supplemental jurisdiction of the remaining state law claims. This action is remanded to the Superior Court of Fulton County. Signed by Judge Thomas W. Thrash, Jr. on 4/9/2013. (mdy)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ADVANCED TECHNOLOGY
SERVICES, INC.,
Plaintiff,
v.

CIVIL ACTION FILE
NO. 1:11-CV-3121-TWT

KM DOCS, LLC, et al.,
Defendants.

ORDER

This is an action for copyright infringement. It is before the Court on the
Defendants’ Motion for Summary Judgment [Doc. 42]. For the reasons set forth
below, the Court GRANTS IN PART and DENIES IN PART the Defendants’ Motion
for Summary Judgment [Doc. 42]. The Court declines to exercise supplemental
jurisdiction of the remaining state law claims and the action is remanded to the
Superior Court of Fulton County.
I. Background
The Plaintiff, Advanced Technology Services, Inc. (“ATS”), sells a document
imaging software program called OptiDoc. (Compl. ¶ 5.) OptiDoc is a complete
document management program that integrates with other software packages.
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(Mischke Aff. ¶¶ 7-8.) The Defendants Miles Waldron and Harvey Heath are both
former employees of ATS. Waldron was a lead software engineer for ATS and had
access to the source code for OptiDoc while employed by the company. (Compl. ¶¶
7 & 11.) While at ATS, Waldron signed a Trade Secrets Agreement and a NonCompetition, Non-Solicitation and Non-Disclosure Agreement. (Compl. ¶ 10.)
Waldron resigned from ATS on June 1, 2010 (Compl. ¶ 12) and Heath resigned on or
about July 7, 2010. (Compl. ¶ 13.) On July 17, 2010, Waldron and Heath announced
their company KM Docs with screen shots of their software DocUnity and DocDNA.
(Compl. ¶ 14.) DocUnity and DocDNA are document imaging products that compete
with ATS’ OptiDoc software. ATS states that DocUnity and DocDNA are similar in
look and function to OptiDoc. (Compl. ¶¶ 14-15.) The Plaintiff alleges that
“[d]efendants Heath and Waldron conspired together during the last year of
employment with ATS to unlawfully take, misappropriate and steal the OptiDoc
software.” (Pl.’s Br. in Opp’n to Defs.’ Mot. to Dismiss, at 5.)
The Complaint was filed in the Superior Court of Fulton County, Georgia on
September 8, 2011, and was removed to this Court on September 15, 2011 [Doc. 1].
The Plaintiff brings claims for Misappropriation, Conversion, Tortious Interference
with Waldron’s Contract, Tortious Interference with ATS’ Contract with Customers,
Breach of Contract, Fraud, Violation of the Georgia RICO Act, Injunctive Relief,

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Breach of Fiduciary Duty to ATS, Theft of Corporate Opportunity, Conspiracy,
Punitive Damages, Attorneys’ Fees, and Copyright Infringement. The Court granted
in part and denied in part the Defendants’ Motion to Dismiss in its Order of November
21, 2011 [Doc. 11]. The Defendants filed this Motion for Summary Judgment on
February 4, 2013 [Doc. 42].
II. Summary Judgment Standard
Summary judgment is appropriate only when the pleadings, depositions, and
affidavits submitted by the parties show that no genuine issue of material fact exists
and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
The court should view the evidence and any inferences that may be drawn in the light
most favorable to the nonmovant. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59
(1970). The party seeking summary judgment must first identify grounds that show
the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S.
317, 323-24 (1986). The burden then shifts to the nonmovant, who must go beyond
the pleadings and present affirmative evidence to show that a genuine issue of material
fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).

III. Discussion

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A.

Copyright

The Plaintiff alleges that the Defendants’ DocUnity/DocDNA product infringed
on its copyright for OptiDoc. To maintain a claim for copyright infringement, a
plaintiff must prove: (1) ownership of a valid copyright, and (2) copying of
constituent elements of the work that are original. Feist Publications, Inc. v. Rural
Telephone Serv. Co., 499 U.S. 340, 361 (1991). The second prong requires the Court
to consider: “1) whether the defendant, as a factual matter, copied portions of the
plaintiff’s program; and 2) whether, as a mixed question of fact and law, those
elements of the program that have been copied are protected expressions and of such
importance to the copied work that the appropriation is actionable.” MiTek Holdings,
Inc. v. Arce Eng’g Co., 89 F.3d 1548, 1554 (11th Cir. 1996). Proof of actual copying
may be shown by direct evidence or by inferences drawn from indirect evidence
demonstrating that a defendant had access to the copyrighted work and that probative
similarities exist between the allegedly infringing work and the copyrighted work. Id.
In addition to copying, infringement only occurs if the copied portions satisfy the
constitutional requirement of originality. Id.
“[I]n order for a plaintiff to prevail...the court must find...that the copying of
the copyrighted material was so extensive that it rendered the offending and
copyrighted works substantially similar.” Id. “Substantial similarity exists where an

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average lay observer would recognize the alleged copy as having been appropriated
from the copyrighted work.” Original Appalachian Artworks, Inc. v. Toy Loft, Inc.,
684 F.2d 821, 829 (11th Cir. 1982) (internal quotations omitted). “[P]roof of access
and substantial similarity raises only a presumption of copying which may be rebutted
by the defendant with evidence of independent creation.” Id.
The Eleventh Circuit recognizes a distinction between literal and nonliteral
elements of copyrighted works. “The ‘literal elements’ of a computer program are its
source and object code.” MiTek, 89 F.3d at 1556 n.15. “‘[N]onliteral elements’ of
a program...are the products that are generated by the code’s interaction with computer
hardware and operating program(s). Examples of nonliteral elements of a computer
program include its screen displays and the main menu and submenu command
structure tree contained thereon.” Id. Nonliteral elements are held to a higher
standard than being substantially similar; nonliteral elements must be “virtual[ly]
identical[]” to be found infringing. Id. at 1558.
Without examining the Defendants’ source code, the Plaintiff does not have
direct evidence of copying.1 The Plaintiff must therefore demonstrate indirect

1

Steven Bales, an ATS employee, stated that a source code comparison
would be a reasonable and scientific way of comparing similarities between the two
products, and would tell someone a lot more than visually comparing screen shots.
(Bales Dep. at 30.)
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evidence of copying, by showing that the Defendants had access to OptiDoc and that
OptiDoc and DocDNA/DocUnity are substantially similar. Although the Plaintiff has
shown that the Defendants had an opportunity to access the OptiDoc source code, the
Plaintiff has not shown that the two products are substantially similar.
ATS’ President, Maureen Mitchell, swore that the two products were practically
identical in function and appearance. (Mitchell Aff. ¶¶ 14-16.) However, it is unclear
upon what Ms. Mitchell bases her opinion. ATS has not examined the source code
or optic code, so they have foregone the opportunity to compare the two products’
literal elements.2 None of the Plaintiff’s representatives have even seen an actual
working version of the Defendants’ software product. (Mitchell Dep. at 97.) ATS has
not retained an expert to testify as to the similarity of the two products. As far as the
nonliteral elements are concerned, ATS has not come close to demonstrating that the
two products are “virtually identical.” Ms. Mitchell based her opinion of similarity

2

The Plaintiff’s employee and affiant, Don Mischke, “is of the opinion
that Defendant’s source code would have likely been modified such that it would no
longer resemble source code used by ATS in August, 2010, particularly since Plaintiff
had notified Defendants of their intent to file this action.” (Mischke Aff. ¶ 10.)
Nevertheless, the Plaintiff, believing that the evidence of copyright infringement was
soon to be destroyed by the Defendants, waited approximately a year to file its
Complaint, and did not file a preliminary injunction. The Plaintiff then did not
conduct an examination of the Defendants’ source code or object code, speculating
that such an exercise would likely be futile.

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upon a screen shot of DocUnity/DocDNA, without having actually used the product.3
At her deposition, Ms. Mitchell herself admitted that she was “[p]robably” not
qualified to render the opinion that OptiDoc and DocUnity/DocDNA appeared similar,
and that she could not say that DocUnity/DocDNA was a copy of OptiDoc, nor could
she say that DocUnity/DocDNA was substantially derived from OptiDoc. (Mitchell
Dep. at 153, 157.)
The Plaintiff’s designated technical witness, Don Mischke, similarly has not
examined the source code or used a working version of the DocUnity/DocDNA
software.

After viewing YouTube videos, Mr. Mischke concluded that the

Defendants’ product is inferior to OptiDoc, and “[doesn’t] really have much of the
functionality that OptiDoc has, but they’re trying to. They allude to things.”
(Mischke Dep. at 68.) The Plaintiff’s evidence has not created a jury question
regarding whether the two products are virtually identical or even substantially
similar. Therefore, the Court grants summary judgment on the Plaintiff’s claim for
copyright violation.
B.

Supplemental Jurisdiction

3

Mr. Bales stated that screen shots would reveal nothing about product
functionality because the images can be easily manipulated. (Bales Dep. at 28.) Mr.
Bales further stated that it was “very possible” that other document management
software looks similar. (Bales Dep. at 38.)
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The Court has supplemental jurisdiction with respect to the remaining state law
claims. The Court has discretion pursuant to 28 U.S.C. § 1367(c) to decline to
exercise jurisdiction as to these claims. The interpretation of the Georgia Trade
Secrets Act, O.C.G.A. § 10-1-760 et seq., and the definition of “trade secret”
contained therein, is a matter of state law clearly within the competence of the state
courts. Therefore, this action is remanded to the state court. The Defendants’ Motion
for Summary Judgment as to the remaining state law claims is denied without
prejudice. The motion may be renewed in state court.
IV. Conclusion
For the reasons set forth above, the Court GRANTS IN PART and DENIES IN
PART the Defendants’ Motion for Summary Judgment [Doc. 42]. This action is
remanded to the Superior Court of Fulton County.
SO ORDERED, this 9 day of April, 2013.

/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge

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